Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2016 | Nov. 10, 2016 | |
Document And Entity Information | ||
Entity Registrant Name | Geospatial Corp | |
Entity Central Index Key | 1,011,395 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2016 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Is Entity a Well-known Seasoned Issuer? | No | |
Is Entity a Voluntary Filer? | No | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 225,229,740 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2,016 |
Consolidated Balance Sheets (Un
Consolidated Balance Sheets (Unaudited) - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 114,810 | $ 16,962 |
Accounts receivable | 67,971 | 44,100 |
Prepaid expenses and other current assets | 88,956 | 111,927 |
Total current assets | 271,737 | 172,989 |
Property and equipment: | ||
Field equipment | 354,281 | 339,079 |
Field vehicles | 43,285 | 43,285 |
[PropertyPlantAndEquipmentGross] | 397,566 | 382,364 |
Less: accumulated depreciation | (327,878) | (245,208) |
Net property and equipment | 69,688 | 137,156 |
Total assets | 341,425 | 310,145 |
Current liabilities: | ||
Accounts payable | 346,936 | 533,578 |
Accrued expenses | 810,608 | 2,028,220 |
Due to related parties | 157,286 | |
Current portion of capital lease liability to related party | 3,555 | 3,479 |
Notes payable | 1,495,475 | 1,488,748 |
Accrued registration payment arrangement | 536,515 | 547,315 |
Total current liabilities | 3,193,089 | 4,758,626 |
Non-current liabilities: | ||
Capital lease liability to related party | 603 | 3,278 |
Total non-current liabilities | 603 | 3,278 |
Total liabilities | 3,193,692 | 4,761,904 |
Stockholders' deficit: | ||
Series C Convertible Preferred stock | 4,544 | |
Common stock, $.001 par value; 750,000,000 and 350,000,000 shares authorized at September 30, 2016 and December 31, 2015; 188,867,740 and 143,336,073 shares issued and outstanding at September 30, 2016 and December 31, 2015, respectively | 188,868 | 143,336 |
Additional paid-in capital | 38,357,940 | 36,031,156 |
Additional paid-in capital, warrants | 54,278 | |
Accumulated deficit | (41,457,897) | (40,626,251) |
Total stockholders' deficit | (2,852,267) | (4,451,759) |
Total liabilities and stockholders' deficit | $ 341,425 | $ 310,145 |
Consolidated Balance Sheets (U3
Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares | Sep. 30, 2016 | Dec. 31, 2015 |
Common Stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common Stock, shares authorized | 750,000,000 | 350,000,000 |
Common Stock, shares issued | 188,867,740 | 143,336,073 |
Common Stock, shares outstanding | 188,867,740 | 143,336,073 |
Undesignated Preferred Stock [Member] | ||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred Stock, shares authorized | 10,000,000 | 20,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Series B Preferred Stock [Member] | ||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred Stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Series C Preferred Stock [Member] | ||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred Stock, shares authorized | 10,000,000 | 0 |
Preferred stock, shares issued | 4,543,654 | 0 |
Preferred stock, shares outstanding | 4,543,654 | 0 |
Consolidated Statements of Oper
Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Income Statement [Abstract] | ||||
Sales | $ 132,371 | $ 572,371 | $ 20,800 | |
Cost of sales | 54,838 | $ 33,545 | 185,374 | 113,114 |
Gross profit (loss) | 77,533 | (33,545) | 386,997 | (92,314) |
Selling, general and administrative expenses | 463,657 | 698,559 | 1,240,381 | 2,021,897 |
Net loss from operations | (386,124) | (732,104) | (853,384) | (2,114,211) |
Other income (expense): | ||||
Interest expense | (47,334) | (41,794) | (180,106) | (163,709) |
Gain on extinguishment of debt | 58,603 | 73,181 | 192,124 | 219,544 |
Registration payment arrangements | (482,863) | 9,720 | 1,190,446 | |
Total other income (expense) | (471,594) | 31,387 | 21,738 | 1,246,281 |
Net loss before income taxes | (857,718) | (700,717) | (831,646) | (867,930) |
Net loss | $ (857,718) | $ (700,717) | $ (831,646) | $ (867,930) |
Basic and fully-diluted net loss per share of common stock (in dollars per share) | $ (0.01) | $ (0.01) | $ (0.01) | $ (0.01) |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholders' Deficit (Unaudited) - 9 months ended Sep. 30, 2016 - USD ($) | Preferred Stock [Member] | Common Stock [Member] | Additional Paid-In Capital [Member] | Additional Paid-In Capital, Warrants [Member] | Accumulated Deficit [Member] | Total |
Balance at Dec. 31, 2015 | $ 143,336 | $ 36,031,156 | $ (40,626,251) | $ (4,451,759) | ||
Balance (in shares) at Dec. 31, 2015 | 143,336,073 | |||||
Sale of Series C Convertible Preferred Stock, net of issuance costs | $ 2,750 | 540,623 | 543,373 | |||
Sale of Series C Convertible Preferred Stock, net of issuance costs, shares | 2,750,000 | |||||
Sale of common stock, net of issuance costs | $ 1,375 | 98,625 | 100,000 | |||
Sale of common stock, net of issuance costs, shares | 1,375,000 | |||||
Issuance of common stock in settlement of liabilities | $ 33,049 | 1,168,127 | 1,201,176 | |||
Issuance of common stock in settlement of liabilities, shares | 33,048,667 | |||||
Issuance of Series C Convertible Preferred Stock in settlement of liabilities | $ 1,794 | 356,937 | 358,731 | |||
Issuance of Series C Convertible Preferred Stock in settlement of liabilities, shares | 1,793,654 | |||||
Conversion of liabilities to warrants to purchase common stock | $ 54,278 | 54,278 | ||||
Issuance of convertible securities with beneficial conversion features | 62,500 | 62,500 | ||||
Issuance of common stock for registration penalty | $ 108 | 972 | 1,080 | |||
Issuance of common stock for registration penalty, shares | 108,000 | |||||
Net loss | (831,646) | (831,646) | ||||
Balance at Sep. 30, 2016 | $ 4,544 | $ 188,868 | $ 38,357,940 | $ 54,278 | $ (41,457,897) | $ (2,852,267) |
Balance (in shares) at Sep. 30, 2016 | 4,543,654 | 188,867,740 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Cash flows from operating activities: | ||
Net income (loss) | $ (831,646) | $ (867,930) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation | 82,670 | 90,856 |
Amortization of deferred debt issue costs | 53,114 | |
Amortization of discount on notes payable | 62,500 | |
Gain on extinguishment of debt | (192,124) | (219,544) |
Accrued registration payment arrangement | (9,720) | (1,190,446) |
Accrued interest payable | 95,586 | 104,207 |
Changes in operating assets and liablities: | ||
Accounts receivable | (23,871) | 32,800 |
Prepaid expenses and other current assets | 22,971 | (29,880) |
Accounts payable | (10,832) | 115,676 |
Accrued expenses | 74,127 | 575,100 |
Due to related parties | (504) | 41,262 |
Net cash used in operating activities | (730,843) | (1,294,784) |
Cash flows from investing activities: | ||
Purchase of property, plant and equipment | (15,202) | |
Net cash used in investing activities | (15,202) | |
Cash flows from financing activities: | ||
Proceeds from issuance of notes payable | 250,000 | 1,780,000 |
Proceeds from issuance of notes payable to related parties | 6,891 | |
Principal payments on notes payable | (156,881) | (590,655) |
Principal payments on capital lease liabilities | (2,599) | (2,525) |
Debt issuance costs paid | (53,250) | |
Proceeds from sale of common stock, net of offering costs | 100,000 | 159,802 |
Proceeds from sale of Series C Convertible Preferred Stock, net of offering costs | 543,373 | |
Proceeds from exercise of warrants to purchase common stock, net of offering costs | 110,000 | |
Net cash provided by financing activities | 843,893 | 1,300,263 |
Net change in cash and cash equivalents | 97,848 | 5,479 |
Cash and cash equivalents at beginning of period | 16,962 | 17,723 |
Cash and cash equivalents at end of period | 114,810 | 23,202 |
Supplemental disclosures: | ||
Cash paid during period for interest | 22,020 | 6,386 |
Non-cash transactions: | ||
Issuance of common stock in settlement of liabilities | 1,201,176 | $ 1,569,029 |
Issuance of Series C Convertible Preferred Stock in settlement of liabilities | 358,731 | |
Issuance of warrants to purchase common stock in settlement of liabilities | 54,278 | |
Issuance of notes payable in steelement of liabilities | 33,416 | |
Issuance of common stock for registration penalty | $ 1,080 |
Basis of Presentation
Basis of Presentation | 9 Months Ended |
Sep. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Note 1 – Basis of Presentation The Unaudited Consolidated Financial Statements included herein have been prepared by Geospatial Corporation (the “Company”) in accordance with accounting principles generally accepted in the United States of America for interim financial information and regulations issued pursuant to the Securities Exchange Act of 1934, as amended. Accordingly, the accompanying Unaudited Consolidated Financial Statements do not include all the information and notes required by accounting principles generally accepted in the United States of America for complete financial statements. The accompanying Unaudited Consolidated Financial Statements as of and for the three and nine months ended September 30, 2016 should be read in conjunction with the Company’s Financial Statements as of and for the year ended December 31, 2015. In the opinion of the Company’s management, all adjustments considered necessary for a fair statement of the accompanying Unaudited Consolidated Financial Statements have been included, and all adjustments, unless otherwise discussed in the Notes to the Unaudited Consolidated Financial Statements, are of a normal and recurring nature. Operating results for the three and nine months ended September 30, 2016 are not necessarily indicative of the results that may be expected for the year ending December 31, 2016, or any other interim periods, or any future year or period. The use of accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates. The Consolidated Financial Statements include the accounts of the Company and its subsidiaries, Geospatial Mapping Systems, Inc. and Utility Services and Consulting Corporation, which ceased operations in 2011. All intercompany accounts and transactions have been eliminated. |
Accrued Expenses
Accrued Expenses | 9 Months Ended |
Sep. 30, 2016 | |
Payables and Accruals [Abstract] | |
Accrued Expenses | Note 2 – Accrued Expenses Accrued expenses consisted of the following: September 30, December 31, 2016 2015 Payroll and taxes $ 639,660 $ 1,832,937 Accounting 53,762 50,737 Insurance — 34,014 Contractors and subcontractors 10,227 20,227 Interest 1,967 7,800 Other 104,992 82,505 Accrued expenses $ 810,608 $ 2,028,220 |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2016 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Note 3 – Related-Party Transactions The Company leases its headquarters building from Mark A. Smith, the Company’s Chairman and Chief Executive Officer. The building has approximately 3,200 square feet of office space, and is used by the Company’s corporate, technical, and operations staff. Mr. Smith has agreed to suspend collection of rent effective April 1, 2016. The lease is cancellable by either party upon 30 days’ notice. The Company incurred no lease expense during the three months ended September 30, 2016, and $19,500 of lease expense during the nine months ended September 30, 2016. The Company incurred lease expense of $19,500 and $58,500 during the three and nine months, respectively, ended September 30, 2015. On November 9, 2012, the Company and Mr. Smith entered into a Lease Agreement, pursuant to which the Company leases a field vehicle from Mr. Smith. The lease is for 60 months, and is for substantially the same terms for which Mr. Smith leases the vehicle from the manufacturer. Interest on the lease amounted to $34 and $59 for the three months ended September 30, 2016 and 2015, respectively, and $197 and $137 for the nine months ended September 30, 2016 and 2015, respectively. The lease is recorded as a capital lease. At September 30, 2016, gross assets recorded under the lease and associated accumulated depreciation were $16,870 and $13,074, respectively. Future minimum payments under the capital lease are as follows as of September 30, 2016: Balance of 2016 $ 907 Year ending December 31, 2017 3,326 Thereafter — Total minimum payments 4,233 Less: minimum interest payments (76 ) Minimum principal payments $ 4,157 On May 18, 2016, the Company and Mr. Smith entered into a Conversion Agreement (the “Smith Conversion Agreement”), pursuant to which Mr. Smith converted accrued salaries totaling $766,833 to 19,170,831 shares of the Company’s common stock and warrants to purchase 23,004,998 shares of the Company’s common stock at an exercise price of $0.04 per share. Mr. Smith also converted pursuant to the Smith Conversion Agreement, $156,782 of unreimbursed business expenses and unpaid rent on the Company’s offices to 783,912 shares of the Company’s Series C Convertible Preferred Stock. On May 18, 2016, the Company and Troy G. Taggart, the Company’s President, entered into a Conversion Agreement, pursuant to which Mr. Taggart converted accrued salaries totaling $215,490 to 5,387,241 shares of the Company’s common stock and warrants to purchase 6,464,689 shares of the Company’s common stock at an exercise price of $0.04 per share. On May 18, 2016, the Company and Thomas R. Oxenreiter, the Company’s Chief Financial Officer, entered into a Conversion Agreement (the “Oxenreiter Conversion Agreement”), pursuant to which Mr. Oxenreiter converted accrued salaries totaling $226,458 to 5,661,460 shares of the Company’s common stock and warrants to purchase 6,793,753 shares of the Company’s common stock at an exercise price of $0.04 per share. Mr. Oxenreiter also converted, pursuant to the Oxenreiter Conversion Agreement, $5,000 of unreimbursed business expenses to 25,000 shares of the Company’s Series C Convertible Preferred Stock. |
Notes Payable
Notes Payable | 9 Months Ended |
Sep. 30, 2016 | |
Debt Disclosure [Abstract] | |
Notes Payable | Note 4 – Notes Payable Current notes payable consisted of the following: September December Secured Promissory Note, payable to an individual, bearing interest at 10% per annum, due January 31, 2017, net of discount. The note is convertible to common stock at 75% of the weighted average trading price, and is secured by substantially all the assets of the Company $ 1,419,236 $ 1,075,833 Unsecured Promissory Note, payable to an individual, bearing interest at 10% per annum — 67,817 Unsecured Convertible Promissory Notes, payable to individuals, bearing interest at 10% per annum, convertible to common stock at prices ranging from $0.20 to $0.25 per share — 190,453 Notes payable under settlement agreements with former employees, payable monthly with terms of up to twelve months, with interest rates ranging from 0% to 20% 76,239 154,645 Current notes payable $ 1,495,475 $ 1,488,748 |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2016 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 5 – Income Taxes The Company’s provision for (benefit from) income taxes is summarized below: Three Months Three Months Nine Months Nine Months Current: Federal $ — $ — $ — $ — State — — — — — — — — Deferred: Federal (116,029 ) (220,406 ) (261,352 ) (742,996 ) State (36,834 ) (69,970 ) (82,969 ) (235,872 ) (152,863 ) (290,376 ) (344,321 ) (978,868 ) Total income taxes (152,863 ) (290,376 ) (344,321 ) (978,868 ) Less: valuation allowance 152,863 290,376 344,321 978,868 Net income taxes $ — $ — $ — $ — The reconciliation of the federal statutory income tax rate to the effective income tax rate is as follows: Three Three Nine Nine Federal statutory rate 35.0 % 35.0 % 35.0 % 35.0 % State income taxes (net of federal benefit) 6.5 6.5 6.5 6.5 Valuation allowance (41.5 ) (41.5 ) (41.5 ) (41.5 ) Effective rate 0.0 % 0.0 % 0.0 % 0.0 % Significant components of the Company’s deferred tax assets and liabilities are summarized below. A valuation allowance has been established as realization of such assets has not met the more-likely-than-not threshold requirement under FASB ASC 740. September 30, 2016 December 31, Start-up costs $ 30,116 $ 37,491 Depreciation (37,132 ) (37,759 ) Accrued expenses 187,254 687,212 Net operating loss carryforward 16,520,449 15,669,422 Deferred income taxes 16,700,687 16,356,366 Less: valuation allowance (16,700,687 ) (16,356,366 ) Net deferred income taxes $ — $ — At September 30, 2016, the Company had federal and state net operating loss carryforwards of approximately $38,441,000. The federal and state net operating loss carryforwards will expire beginning in 2021 and 2026, respectively. The amount of the state net operating loss carryforward that can be utilized each year to offset taxable income is limited by state law. |
Net Income (Loss) Per Share of
Net Income (Loss) Per Share of Common Stock | 9 Months Ended |
Sep. 30, 2016 | |
Earnings Per Share [Abstract] | |
Net Income (Loss) Per Share of Common Stock | Note 6 – Net Income (Loss) Per Share of Common Stock Basic net income (loss) per share of common stock are computed by dividing earnings available to common stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted net income (loss) per share reflects per share amounts that would have resulted if dilutive potential common stock had been converted to common stock. Dilutive potential common shares are calculated in accordance with the treasury stock method, which assumes that proceeds from the exercise of all warrants and options are used to repurchase common stock at market value. The number of shares remaining after the proceeds are exhausted represents the potentially dilutive effect of the securities. The following reconciles amounts reported in the financial statements: Three Months Three Months Nine Months Nine Months Net income (loss) $ (857,718 ) $ (700,717 ) $ (831,646 ) $ (867,930 ) Weighted average number of shares of common stock outstanding 149,451,206 138,056,264 146,393,639 136,022,394 Dilutive potential shares of common stock 149,451,206 138,056,264 146,393,639 136,022,394 Net income (loss) per share of common stock: Basic $ (0.01 ) $ (0.01 ) $ (0.01 ) $ (0.01 ) Diluted $ (0.01 ) $ (0.01 ) $ (0.01 ) $ (0.01 ) The following securities were not included in the computation of diluted net loss per share, as their effect would have been anti-dilutive: Three Months Three Months Nine Months Nine Months Series B Convertible Preferred Stock — — — 1,325,123 Series C Convertible Preferred Stock 77,503,160 — 53,222,914 — Options and warrants to purchase common stock 71,378,151 14,345,798 68,205,580 14,345,798 Warrants to purchase Series B Convertible Preferred Stock — 67,646 — 67,646 Secured Promissory Note 1,698,231 6,732,841 15,097,294 4,310,455 Senior Convertible Redeemable Notes — — — 1,464,024 Total 150,579,542 21,146,055 136,525,788 21,513,046 |
Stock-Based Payments
Stock-Based Payments | 9 Months Ended |
Sep. 30, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock-Based Payments | Note 7 – Stock-Based Payments During the nine months ended September 30, 2016, stock appreciation rights (“SAR’s”) on 4,500,000 shares of the Company’s common stock were issued to eligible employees and consultants pursuant to the Company’s 2013 Equity Incentive Plan, and SAR’s on 3,896,000 shares of the Company’s common stock were forfeited. During the nine months ended September 30, 2016, the Company granted warrants to purchase 41,226,000 shares of the Company’s common stock to consultants and to lenders in connection with loans to the Company, and warrants to purchase 36,263,440 to the Company’s officers in connection with the conversion of debt owed to the officers to equity. On May 10, 2016, the Company entered into a Conversion Agreement with an investor whereby the investor converted (i) an Unsecured Convertible Note Payable (the “Note Payable”) due from the Company in the amount of $54,278, and (ii) warrants to purchase 3,075,000 shares of the Company’s common stock in exchange for warrants to purchase 10,000,000 shares of the Company’s common stock at $0.01 per share for a term of five years (the “Warrant”). The Company recorded the Warrant on the Consolidated Balance Sheet as “Additional paid-in capital, warrant” at the carrying value of the Note Payable. |
Gains on Extinguishment of Debt
Gains on Extinguishment of Debt | 9 Months Ended |
Sep. 30, 2016 | |
Gains On Extinguishment Of Debt | |
Gains on Extinguishment of Debt | Note 8 – Gains on Extinguishment of Debt Due to significant cash flow problems, the Company has negotiated concessions on the amounts of certain liabilities and extensions of payment terms. The Company accounts for such concessions in accordance with Financial Accounting Standards Board Accounting Standards Codification (“ASC”) 470-60, Troubled Debt Restructurings by Debtors Extinguishment of Liabilities |
Registration Payment Arrangemen
Registration Payment Arrangements | 9 Months Ended |
Sep. 30, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Registration Payment Arrangements | Note 9 – Registration Payment Arrangements The Company is contractually obligated to issue shares of its common stock to certain investors for failure to register shares of its common stock under the Securities Act of 1933, as amended (the “Securities Act”). The Company has recorded a liability for the estimated number of shares to be issued at the fair value of the stock to be issued. The Company measures fair value by the price of its common stock at its most recent sale. The Company reviews its estimate of the number of shares to be issued and the fair value of the stock to be issued quarterly. The liability is included on the Consolidated Balance Sheet under the heading “accrued registration payment arrangement,” and amounted to $536,515 at September 30, 2016, and $547,315 at December 31, 2015. Gains or losses resulting from changes in the carrying amount of the liability are included in the Consolidated Statement of Operations in other income and expense under the heading “registration payment arrangements”. During the three months ended September 30, 2016, the Company had a loss of $482,863. There were no such gains or losses during the three months ended September 30, 2016. The Company had losses of $9,720 and $1,190,446 during the three and nine months, respectively, ended September 30, 2015. |
Capital Stock
Capital Stock | 9 Months Ended |
Sep. 30, 2016 | |
Equity [Abstract] | |
Capital Stock | Note 10 – Capital Stock On March 16, 2016, the Company filed a Certificate of Designations, Powers, Preferences and Rights of Series C Convertible Preferred Stock (the “Certificate of Designations”) with the Nevada Secretary of State, designating 10,000,000 shares of the Company’s undesignated preferred stock, par value $0.001 per share, as Series C Preferred Stock (“Series C Stock”) The Series C Stock shall be convertible at the option of the holder, at any time after an amendment to the Company’s Articles of Incorporation is filed and effective increasing the Company’s authorized shares of common stock to at least 680,000,000 shares of common stock, par value $0.001 per share, of the Company (“Common Stock”) at a conversion ratio of one (1) share of Series C Preferred into twenty (20) shares of Common Stock, subject to adjustments for stock dividends, splits, combinations and similar events as described in the Certificate of Designations (the “Conversion Ratio”). After the Filing Date, each share of Series C Convertible Preferred Stock will be automatically be converted into shares of Common Stock at the Conversion Ratio, upon the earlier of (i) the closing of a public or private offer and sale of Common Stock for the account of the Company in which the aggregate offering price (before deduction of underwriters’ discounts and commissions, if any) such price per share of Common Stock subject to certain adjustments described in the Certificate of Designations, or (ii) the written consent of the holders of not less than a majority of the then outstanding shares of Series C Preferred Stock to the conversion of all then outstanding Series C Preferred Stock. On August 15, 2016, the Company amended its Articles of Incorporation to change the number of authorized shares of Common Stock to 750,000,000. |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Payables and Accruals [Abstract] | |
Schedule of accrued expenses | Accrued expenses consisted of the following: September 30, December 31, 2016 2015 Payroll and taxes $ 639,660 $ 1,832,937 Accounting 53,762 50,737 Insurance — 34,014 Contractors and subcontractors 10,227 20,227 Interest 1,967 7,800 Other 104,992 82,505 Accrued expenses $ 810,608 $ 2,028,220 |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Related Party Transactions [Abstract] | |
Schedule of future minimum capital leases | Future minimum payments under the capital lease are as follows as of September 30, 2016: Balance of 2016 $ 907 Year ending December 31, 2017 3,326 Thereafter — Total minimum payments 4,233 Less: minimum interest payments (76 ) Minimum principal payments $ 4,157 |
Notes Payable (Tables)
Notes Payable (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Debt Disclosure [Abstract] | |
Schedule of current notes payable | Current notes payable consisted of the following: September December Secured Promissory Note, payable to an individual, bearing interest at 10% per annum, due January 31, 2017, net of discount. The note is convertible to common stock at 75% of the weighted average trading price, and is secured by substantially all the assets of the Company $ 1,419,236 $ 1,075,833 Unsecured Promissory Note, payable to an individual, bearing interest at 10% per annum — 67,817 Unsecured Convertible Promissory Notes, payable to individuals, bearing interest at 10% per annum, convertible to common stock at prices ranging from $0.20 to $0.25 per share — 190,453 Notes payable under settlement agreements with former employees, payable monthly with terms of up to twelve months, with interest rates ranging from 0% to 20% 76,239 154,645 Current notes payable $ 1,495,475 $ 1,488,748 |
Income Taxes (Tables)
Income Taxes (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Income Tax Disclosure [Abstract] | |
Schedule of the provision for (benefit from) income taxes | The Company’s provision for (benefit from) income taxes is summarized below: Three Months Three Months Nine Months Nine Months Current: Federal $ — $ — $ — $ — State — — — — — — — — Deferred: Federal (116,029 ) (220,406 ) (261,352 ) (742,996 ) State (36,834 ) (69,970 ) (82,969 ) (235,872 ) (152,863 ) (290,376 ) (344,321 ) (978,868 ) Total income taxes (152,863 ) (290,376 ) (344,321 ) (978,868 ) Less: valuation allowance 152,863 290,376 344,321 978,868 Net income taxes $ — $ — $ — $ — |
Reconciliation of the federal statutory income tax rate to the effective income tax rate | The reconciliation of the federal statutory income tax rate to the effective income tax rate is as follows: Three Three Nine Nine Federal statutory rate 35.0 % 35.0 % 35.0 % 35.0 % State income taxes (net of federal benefit) 6.5 6.5 6.5 6.5 Valuation allowance (41.5 ) (41.5 ) (41.5 ) (41.5 ) Effective rate 0.0 % 0.0 % 0.0 % 0.0 % |
Schedule of deferred tax assets and liabilities | Significant components of the Company’s deferred tax assets and liabilities are summarized below. A valuation allowance has been established as realization of such assets has not met the more-likely-than-not threshold requirement under FASB ASC 740. September 30, 2016 December 31, Start-up costs $ 30,116 $ 37,491 Depreciation (37,132 ) (37,759 ) Accrued expenses 187,254 687,212 Net operating loss carryforward 16,520,449 15,669,422 Deferred income taxes 16,700,687 16,356,366 Less: valuation allowance (16,700,687 ) (16,356,366 ) Net deferred income taxes $ — $ — |
Net Income (Loss) Per Share o21
Net Income (Loss) Per Share of Common Stock (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Earnings Per Share [Abstract] | |
Schedule of earnings per share | The following reconciles amounts reported in the financial statements: Three Months Three Months Nine Months Nine Months Net income (loss) $ (857,718 ) $ (700,717 ) $ (831,646 ) $ (867,930 ) Weighted average number of shares of common stock outstanding 149,451,206 138,056,264 146,393,639 136,022,394 Dilutive potential shares of common stock 149,451,206 138,056,264 146,393,639 136,022,394 Net income (loss) per share of common stock: Basic $ (0.01 ) $ (0.01 ) $ (0.01 ) $ (0.01 ) Diluted $ (0.01 ) $ (0.01 ) $ (0.01 ) $ (0.01 ) |
Schedule of antidilutive securities excluded from computation of earnings | The following securities were not included in the computation of diluted net loss per share, as their effect would have been anti-dilutive: Three Months Three Months Nine Months Nine Months Series B Convertible Preferred Stock — — — 1,325,123 Series C Convertible Preferred Stock 77,503,160 — 53,222,914 — Options and warrants to purchase common stock 71,378,151 14,345,798 68,205,580 14,345,798 Warrants to purchase Series B Convertible Preferred Stock — 67,646 — 67,646 Secured Promissory Note 1,698,231 6,732,841 15,097,294 4,310,455 Senior Convertible Redeemable Notes — — — 1,464,024 Total 150,579,542 21,146,055 136,525,788 21,513,046 |
Accrued Expenses (Details)
Accrued Expenses (Details) - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 |
Accrued Expenses Details | ||
Payroll and taxes | $ 639,660 | $ 1,832,937 |
Accounting | 53,762 | 50,737 |
Insurance | 34,014 | |
Contractors and subcontractors | 10,227 | 20,227 |
Interest | 1,967 | 7,800 |
Other | 104,992 | 82,505 |
Accrued expenses | $ 810,608 | $ 2,028,220 |
Related-Party Transactions (Det
Related-Party Transactions (Details Narrative) | May 18, 2016USD ($)$ / sharesshares | Sep. 30, 2016USD ($)ft² | Sep. 30, 2015USD ($) | Sep. 30, 2016USD ($)ft² | Sep. 30, 2015USD ($) |
Interest on lease | $ 88 | $ 41 | |||
Issuance of common stock in settlement of liabilities | $ 1,201,176 | ||||
Issuance of Series C Convertible Preferred Stock in settlement of liabilities | $ 358,731 | ||||
Board of Directors Chairman [Member] | |||||
Area of office space | ft² | 3,200 | 3,200 | |||
Lease expense | 19,500 | $ 19,500 | $ 58,500 | ||
Lease term | 60 months | ||||
Interest on lease | $ 34 | $ 59 | 197 | $ 137 | |
Gross assets under capital lease | 16,870 | 16,870 | |||
Accumulated depreciation | $ 13,074 | $ 13,074 | |||
Issuance of common stock in settlement of liabilities | $ 766,833 | ||||
Issuance of common stock in settlement of liabilities, shares | shares | 19,170,831 | ||||
Issuance of Series C Convertible Preferred Stock in settlement of liabilities | $ 156,782 | ||||
Issuance of Series C Convertible Preferred Stock in settlement of liabilities, shares | shares | 783,912 | ||||
Shares called by warrants issued | shares | 23,004,998 | ||||
Warrants exercise price | $ / shares | $ 0.04 | ||||
President [Member] | |||||
Issuance of common stock in settlement of liabilities | $ 215,490 | ||||
Issuance of common stock in settlement of liabilities, shares | shares | 537,241 | ||||
Shares called by warrants issued | shares | 6,464,689 | ||||
Warrants exercise price | $ / shares | $ 0.04 | ||||
Chief Financial Officer [Member] | |||||
Issuance of common stock in settlement of liabilities | $ 226,458 | ||||
Issuance of common stock in settlement of liabilities, shares | shares | 5,661,460 | ||||
Issuance of Series C Convertible Preferred Stock in settlement of liabilities | $ 5,000 | ||||
Issuance of Series C Convertible Preferred Stock in settlement of liabilities, shares | shares | 25,000 | ||||
Shares called by warrants issued | shares | 6,793,753 | ||||
Warrants exercise price | $ / shares | $ 0.04 |
Related-Party Transactions (D24
Related-Party Transactions (Details) | Sep. 30, 2016USD ($) |
Related Party Transactions [Abstract] | |
Balance of 2016 | $ 907 |
Year ending December 31, 2017 | 3,326 |
Total minimum payments | 4,233 |
Less: minimum interest payments | (76) |
Minimum principal payments | $ 4,157 |
Notes Payable (Details Narrativ
Notes Payable (Details Narrative) - $ / shares | 9 Months Ended | |
Sep. 30, 2016 | Dec. 31, 2015 | |
Secured Promissory Note [Member] | ||
Debt due date | Jan. 31, 2017 | |
Debt conversion percentage | 75.00% | |
Interest rate | 10.00% | |
Unsecured Convertible Promissory Notes [Member] | ||
Interest rate | 10.00% | |
Unsecured Convertible Promissory Notes [Member] | ||
Interest rate | 10.00% | |
Unsecured Convertible Promissory Notes [Member] | Maximum [Member] | ||
Debt conversion price per share | $ .20 | |
Unsecured Convertible Promissory Notes [Member] | Minimum [Member] | ||
Debt conversion price per share | $ .25 | |
Notes Payable Settlement Former Employees [Member] | Maximum [Member] | ||
Interest rate | 20.00% | |
Term of debt | 12 months | |
Notes Payable Settlement Former Employees [Member] | Minimum [Member] | ||
Interest rate | 0.00% |
Notes Payable (Details)
Notes Payable (Details) - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 |
Current notes payable | $ 1,495,475 | $ 1,488,748 |
Secured Promissory Note [Member] | ||
Current notes payable | 1,419,236 | 1,075,833 |
Unsecured Convertible Promissory Notes [Member] | ||
Current notes payable | 67,817 | |
Unsecured Convertible Promissory Notes [Member] | ||
Current notes payable | 190,453 | |
Notes Payable Settlement Former Employees [Member] | ||
Current notes payable | $ 76,239 | $ 154,645 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) | Sep. 30, 2016USD ($) |
Income Taxes Details Narrative | |
Federal and state net operating loss carryforwards | $ 38,441,000 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Deferred: | ||||
Federal | $ (116,029) | $ (220,406) | $ (261,352) | $ (742,996) |
State | (36,834) | (69,970) | (82,969) | (235,872) |
Deferred Federal and State | (152,863) | (290,376) | (344,321) | (978,868) |
Total income taxes | (152,863) | (290,376) | (344,321) | (978,868) |
Less: valuation allowance | $ 152,863 | $ 290,376 | $ 344,321 | $ 978,868 |
Income Taxes (Details 1)
Income Taxes (Details 1) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Income Taxes Details 1 | ||||
Federal statutory rate | 35.00% | 35.00% | 35.00% | 35.00% |
State income taxes (net of federal benefit) | 6.50% | 6.50% | 6.50% | 6.50% |
Valuation allowance | (41.50%) | (41.50%) | (41.50%) | (41.50%) |
Effective rate | 0.00% | 0.00% | 0.00% | 0.00% |
Income Taxes (Details 2)
Income Taxes (Details 2) - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 |
Income Taxes Details 2 | ||
Start-up costs | $ 30,116 | $ 37,491 |
Depreciation | (37,132) | (37,759) |
Accrued expenses | 187,254 | 687,212 |
Net operating loss carryforward | 16,520,449 | 15,669,422 |
Deferred income taxes | 16,700,687 | 16,356,366 |
Less: valuation allowance | $ (16,700,687) | $ (16,356,366) |
Net Income (Loss) Per Share o31
Net Income (Loss) Per Share of Common Stock (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Net Income Loss Per Share Of Common Stock Details | ||||
Net income (loss) | $ (857,718) | $ (700,717) | $ (831,646) | $ (867,930) |
Weighted average number of shares of common stock outstanding | 149,451,206 | 138,056,264 | 146,393,639 | 136,022,394 |
Dilutive potential shares of common stock | 149,451,206 | 138,056,264 | 146,393,639 | 136,022,394 |
Net income (loss) per share of common stock: | ||||
Basic (in dollars per share) | $ (0.01) | $ (0.01) | $ (0.01) | $ (0.01) |
Diluted (in dollars per share) | $ (0.01) | $ (0.01) | $ (0.01) | $ (0.01) |
Net Income (Loss) Per Share o32
Net Income (Loss) Per Share of Common Stock (Details 1) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Total number of securities anti diliutive | 150,579,542 | 21,146,055 | 136,525,788 | 21,513,046 |
Series B Preferred Stock [Member] | ||||
Total number of securities anti diliutive | 1,325,123 | |||
Series C Preferred Stock [Member] | ||||
Total number of securities anti diliutive | 77,503,160 | 53,222,914 | ||
Options and warrants to purchase common stock [Member] | ||||
Total number of securities anti diliutive | 71,378,151 | 14,345,798 | 68,205,580 | 14,345,798 |
Secured Promissory Note [Member] | ||||
Total number of securities anti diliutive | 1,698,231 | 67,646 | 15,097,294 | 4,310,455 |
Senior Convertible Redeemable Notes [Member] | ||||
Total number of securities anti diliutive | 6,732,841 | 1,464,024 | ||
Warrants to purchase Series B Convertible Preferred Stock [Member] | ||||
Total number of securities anti diliutive | 67,646 |
Stock-Based Payments (Details N
Stock-Based Payments (Details Narrative) | 9 Months Ended |
Sep. 30, 2016USD ($)$ / sharesshares | |
Issuance of common stock in settlement of liabilities | $ | $ 1,201,176 |
Issuance of Series C Convertible Preferred Stock in settlement of liabilities | $ | 358,731 |
Unsecured Convertible Promissory Notes [Member] | |
Issuance of common stock in settlement of liabilities | $ | $ 54,278 |
Warrants [Member] | |
Shares called by warrants issued | 41,226,000 |
Warrants [Member] | Unsecured Convertible Promissory Notes [Member] | |
Shares called by warrants issued | 10,000,000 |
Warrants exercise price | $ / shares | $ 0.01 |
Warrants [Member] | Officers [Member] | |
Shares called by warrants issued | 36,263,440 |
Warrants Cancelled [Member] | Unsecured Convertible Promissory Notes [Member] | |
Shares called by warrants issued | 3,075,000 |
2013 Equity Incentive Plan [Member] | Stock Appreciation Rights [Member] | |
Number of awards forfeited | 3,896,000 |
Gains on Extinguishment of De34
Gains on Extinguishment of Debt (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Gains On Extinguishment Of Debt | ||||
Gain on extinguishment of debt | $ 58,603 | $ 73,181 | $ 192,124 | $ 219,544 |
Registration Payment Arrangem35
Registration Payment Arrangements (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | ||||
Accrued registration payment arrangement | $ 536,515 | $ 536,515 | $ 547,315 | |
Registration payment arrangements | $ (482,863) | $ 9,720 | $ 1,190,446 |
Capital Stock (Details Narrativ
Capital Stock (Details Narrative) - $ / shares | 9 Months Ended | ||
Sep. 30, 2016 | Aug. 15, 2016 | Dec. 31, 2015 | |
Shares issuable upon conversion of Series C Preferred Stock | 680,000,000 | ||
Common Stock [Member] | |||
Preferred Stock, shares authorized | 750,000,000 | ||
Series C Preferred Stock [Member] | |||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 | |
Preferred Stock, shares authorized | 10,000,000 | 0 | |
Conversion ratio description | conversion ratio of one (1) shares of Series C Preferred into twenty (20) shares of Common Stock, subject to adjustments for stock dividends, splits, combinations and similar events as described in the Certificate of Designations | ||
Conversion settlement terms | After the Filing Date, each share of Series C Convertible Preferred Stock will be automatically be converted into shares of Common Stock at the Conversion Ratio, upon the earlier of (i) the closing of a public or private offer and sale of Common Stock for the account of the Company in which the aggregate offering price (before deduction of underwriters’ discounts and commissions, if any) such price per share of Common Stock subject to certain adjustments described in the Certificate of Designations, or (ii) the written consent of the holders of not less than a majority of the then outstanding shares of Series C Preferred Stock to the conversion of all then outstanding Series C Preferred Stock. |