Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Mar. 20, 2015 | Jun. 30, 2014 | |
Document And Entity Information | |||
Entity Registrant Name | Renovacare, Inc. | ||
Entity Central Index Key | 1016708 | ||
Document Type | 10-K | ||
Document Period End Date | 31-Dec-14 | ||
Amendment Flag | FALSE | ||
Current Fiscal Year End Date | -19 | ||
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 | 66,575,122 | ||
Public Float | $20,585,780 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2014 |
CONSOLIDATED_BALANCE_SHEETS
CONSOLIDATED BALANCE SHEETS (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Current assets | ||
Cash and cash equivalents | $683,098 | $1,508,843 |
Prepaid expenses | 7,448 | 1,230 |
Total current assets | 690,546 | 1,510,073 |
Note receivable from Duke Mountain | 80,000 | |
Intangible Assets | 162,854 | 162,854 |
Total assets | 853,400 | 1,752,927 |
Current liabilities | ||
Accounts payable and accrued liabilities | 6,182 | 11,222 |
Accrued expenses - related parties | 7,255 | 44,219 |
Contract and contribution payable | 187,500 | |
Total current liabilities | 200,937 | 55,441 |
Contract and contribution payable, less current portion | 178,125 | |
Total liabilities | 379,062 | 55,441 |
STOCKHOLDERS' EQUITY | ||
Preferred stock: $0.0001 par value: Authorized: 10,000,000 shares, Issued and outstanding: nil | ||
Common stock: $0.00001 par value: Authorized: 500,000,000 shares, issued and outstanding: 66,575,122 shares | 666 | 666 |
Additional paid-in capital | 8,128,860 | 7,220,612 |
Accumulated deficit | -7,655,188 | -5,523,792 |
Total stockholders' equity | 474,338 | 1,697,486 |
Total liabilities and stockholders' equity | $853,400 | $1,752,927 |
CONSOLIDATED_BALANCE_SHEETS_Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
STOCKHOLDERS' EQUITY | ||
Preferred stock, par value | $0.00 | $0.00 |
Preferred stock, Authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares Issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $0.00 | $0.00 |
Common stock, Authorized | 500,000,000 | 500,000,000 |
Common stock, shares Issued | 66,575,122 | 66,575,122 |
Common stock, shares outstanding | 66,575,122 | 66,575,122 |
CONSOLIDATED_STATEMENTS_OF_OPE
CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Consolidated Statements Of Operations | ||
Revenue | ||
Expenses | ||
Research and development expenses | 975,667 | |
General and administrative expenses | 1,155,729 | 628,545 |
Total operating expenses | 2,131,396 | 628,545 |
Loss from continuing operations | -2,131,396 | -628,545 |
Discontinued operations | ||
Gain on disposal of assets (oil and gas) | 49,338 | |
Loss on disposal of subsidiary (Fostung) | -453,581 | |
Loss on discontinued operations | -404,243 | |
Net loss | ($2,131,396) | ($1,032,788) |
Earnings per share | ||
Loss per common share continuing operations | ($0.03) | ($0.01) |
Loss per common share discontinued operations | $0 | ($0.01) |
Net loss per common share | ($0.03) | ($0.02) |
Weighted average shares outstanding | 66,575,122 | 63,401,149 |
CONSOLIDATED_STATEMENT_COMPREH
CONSOLIDATED STATEMENT COMPREHENSIVE LOSS (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Consolidated Statement Comprehensive Loss | ||
Net loss | ($2,131,396) | ($1,032,788) |
Other comprehensive loss | ||
Reclassification adjustment on disposal of subsidiary | 4,104 | |
Total comprehensive loss | ($2,131,396) | ($1,028,684) |
CONSOLIDATED_STATEMENTS_OF_STO
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (USD $) | Common Stock | Additional Paid-In Capital | Accumulated deficit | Accumulated other comprehensive (loss) | Total |
Beginning Balance, Amount at Dec. 31, 2012 | $631 | $5,462,236 | ($4,491,004) | ($4,104) | $967,759 |
Beginning Balance, Shares at Dec. 31, 2012 | 63,075,122 | ||||
Stock based compensation - Series A Warrant | 237,971 | 237,971 | |||
Stock based compensation - options | 15,440 | 15,440 | |||
Issuance of Units, shares | 3,500,000 | ||||
Issuance of Units, Value | 35 | 1,504,965 | 1,505,000 | ||
Reclassification adjustment on disposal of subsidiary | 4,104 | 4,104 | |||
Net Loss | -1,032,788 | -1,032,788 | |||
Ending Balance, Amount at Dec. 31, 2013 | 666 | 7,220,612 | -5,523,792 | 1,697,486 | |
Ending Balance, Shares at Dec. 31, 2013 | 66,575,122 | ||||
Stock based compensation - Series A Warrant | 848,388 | 848,388 | |||
Stock based compensation - options | 59,860 | 59,860 | |||
Reclassification adjustment on disposal of subsidiary | |||||
Net Loss | -2,131,396 | -2,131,396 | |||
Ending Balance, Amount at Dec. 31, 2014 | $666 | $8,128,860 | ($7,655,188) | $474,338 | |
Ending Balance, Shares at Dec. 31, 2014 | 66,575,122 |
CONSOLIDATED_STATEMENTS_OF_CAS
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Cash flows from operating activities | ||
Net loss | ($2,131,396) | ($1,032,788) |
Adjustments to reconcile net loss to net cash flows from operating activities: | ||
Stock based compensation expense | 59,860 | 15,440 |
Stock based consulting expense | 848,388 | 237,971 |
Gain on disposal of oil and gas properties | -49,338 | |
Loss on disposal of subsidiary | 453,581 | |
Bad debt expense | 80,000 | |
Changes in operating assets and liabilities: | ||
Decrease (increase) in receivables | 800 | |
Decrease (increase) in prepaid expenses | -6,218 | 6,332 |
(Decrease) increase in accounts payable and accrued expenses | -42,004 | 18,104 |
(Decrease) increase in contract and contribution payable | 365,625 | |
Net cash flows from operating activities | -825,745 | -349,898 |
Cash flows from investing activities: | ||
Proceeds from disposal of oil and gas properties | 3,000 | |
Acquisition of intellectual property | -162,854 | |
Net cash flows from investing activities | -159,854 | |
Cash flows from financing activities: | ||
Sale of common stock and warrants | 1,505,000 | |
Net cash flows from financing activities | 1,505,000 | |
Change in cash and cash equivalents | 825,745 | 995,248 |
Cash and cash equivalents, beginning of period | 1,508,843 | 513,595 |
Cash and cash equivalents, end of period | 683,098 | 1,508,843 |
Supplemental disclosure of cash flow information: | ||
Non-cash investing and financing activities - Note received on disposal of subsidiary | $80,000 |
Organization_Nature_and_Contin
Organization, Nature and Continuance of Operations | 12 Months Ended |
Dec. 31, 2014 | |
Notes to Financial Statements | |
Note 1. Organization, Nature and Continuance of Operations | RenovaCare, Inc., together with its wholly owned subsidiary (the “Company”), focuses on the acquisition, research, development and, if warranted, commercialization of autologous (using a patient’s own cells) cellular therapies that can be used for medical and aesthetic applications. The Company was previously involved in the exploration and development of both mineral exploration properties and oil and gas properties. The Company sold its oil and gas properties on February 18 and 19, 2013 and sold its subsidiary which controlled various mineral leases and mining claims on December 31, 2013. |
On July 12, 2013, the Company, together with its wholly owned subsidiary, RenovaCare Sciences Corp. (“RenovaCare Sciences”), a Nevada corporation formerly known as Janus Acquisition Corp., entered into an asset purchase agreement with Dr. Jörg Gerlach, MD, PhD, pursuant to which RenovaCare Sciences purchased all of Dr. Gerlach’s rights, title and interest to a treatment methodology for skin isolation , spraying and associated equipment for the regeneration of human skin cells (the “Cell Deposition Device”), along with the associated US and foreign patents and patent applications. The development of the Cell Deposition Device is in the early stages and we anticipate that significant time and financial resources will be required to further develop the technology and determine whether a commercially viable product can be developed. | |
On December 31, 2013, we entered into a stock purchase agreement with Duke Mountain Resources, Inc. (“Duke”), a Nevada corporation, pursuant to which we sold to Duke 100% of the issued and outstanding shares of Fostung Resources Ltd. (“Fostung Resources”), a corporation organized under the laws of Ontario, Canada and a wholly owned subsidiary of ours, for a promissory note in the amount of $80,000, which amount approximated the fair value of the leases and mining claims controlled by Fostung Resources, as concluded by an independent third-party geological consultant. During 2014 management determined that collection of any portion of the principal outstanding under the promissory note from Duke was no longer probable. As a result, the Company wrote off the balance of principal due under the note amounting to $83,200, including interest receivable of $3,200, during the year ended December 31, 2014. | |
The Company has recently incurred net operating losses and operating cash flow deficits. The Company’s total accumulated deficit is $7.7 million as of December 31, 2014. The Company does not currently generate revenues and will continue to incur losses from operations and operating cash flow deficits in the future. Management believes that the Company’s cash and cash equivalent balances, anticipated cash flows from operations and other external sources of capital will be sufficient to meet our cash requirements through December 31, 2015. The future of the Company after December 2015 will depend in large part on its ability to successfully raise capital from external sources to fund operations. |
Significant_Accounting_Policie
Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2014 | |
Notes to Financial Statements | |
Note 2. Significant Accounting Policies | Basis of Presentation and Principles of Accounting |
As the Company is devoting substantially all of its efforts to establishing a new business, and while planned principal operations have commenced, there has been no revenue generated from sales, license fees or royalties, and as such, the Company is considered a development stage company. Accordingly, the Company’s consolidated financial statements are presented in accordance with authoritative accounting guidance related to a development stage enterprise. | |
In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements – Going Concern (Topic 915): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, which states that in connection with preparing financial statements for each annual and interim reporting period, an entity’s management should evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued (or within one year after the date that the financial statements are available to be issued when applicable). The adoption of this update did not have a material effect on the Company’s financial statements. | |
In June 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements. ASU 2014-10 eliminates the distinction of a development stage entity and certain related disclosure requirements, including the elimination of inception-to-date information on the statements of operations, cash flows and stockholders’ equity. The amendments in ASU 2014-10 will be effective prospectively for annual reporting periods beginning after December 15, 2014, and interim periods within those annual periods, however early adoption is permitted. The Company adopted ASU 2014-10 during the quarter ended June 30, 2014, thereby no longer presenting or disclosing any information required by Topic 915. | |
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes the revenue recognition requirements in Accounting Standards Codification (“ASC”) 605, Revenue Recognition. The new revenue recognition standard requires entities to recognize revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. ASU 2014-09 is effective for interim and annual reporting periods beginning after December 15, 2016 and is to be applied retrospectively. The Company does not currently have any revenue. As such, ASU 2014-09 will not have any effect on the Company’s results of operations and financial position. If the Company begins generating revenue prior to the effective date of ASU 2014-09, it will evaluate the effect that ASU 2014-09 will have on its results of operations and financial position. | |
Principles of Consolidation | |
These consolidated financial statements have been prepared in accordance with US GAAP and include the accounts of the Company and its wholly owned subsidiary, RenovaCare Sciences. All significant intercompany transactions and balances have been eliminated. RenovaCare Sciences was incorporated under the laws of the State of Nevada on June 12, 2013. | |
Applicable Accounting Guidance | |
Any reference in these notes to applicable accounting guidance is meant to refer to the authoritative non-governmental US GAAP as found in the Financial Accounting Standards Board’s Accounting Standards Codification. | |
Accounting Estimates | |
The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the reported amounts of revenues and expenses during the reporting period. Actual results, as determined by future events, may differ from these estimates. | |
Cash and Cash Equivalents | |
The Company considers all highly liquid instruments purchased with an original maturity of three months or less to be cash equivalents. Cash and cash equivalents may at times exceed federally insured limits. | |
Note Receivable from Duke Mountain | |
The note receivable from Duke Mountain is unsecured, bears interest at 4.0%, and principal and interest are due on December 31, 2015. During 2014 management determined that collection of any portion of the principal outstanding under the promissory note from Duke was no longer probable. As a result, the Company wrote off the balance due under the note amounting to $83,200, including interest receivable of $3,200, during the year ended December 31, 2014. | |
Fair Value of Financial Instruments | |
The carrying amounts for cash and cash equivalents, and payables approximate fair value based on observable quoted prices for active markets – Level 1 inputs. | |
Research and Development Costs | |
The Company intends to outsource its research and development efforts and expense related costs as incurred, including the cost of manufacturing product for testing, licensing fees and costs associated with planning and conducting clinical trials. The value ascribed to patents and other intellectual property acquired will be capitalized as it relates to particular research and development projects that may have alternative future uses. | |
Intangible Assets | |
The intangible asset consists primarily of Cell Deposition Device technology that the Company acquired during 2013 and is recorded at cost. At the time of acquisition, the technology had not reached technological feasibility. The amount capitalized is accounted for as an indefinite-lived intangible asset, subject to impairment testing until completion or abandonment. Upon successful completion, a determination will be made as to the then useful life of the intangible asset, generally determined by the period in which substantially all of the cash flows are expected to be generated, and begin amortization. The Company tests the intangible asset for impairment at least annually or more frequently if impairment indicators exist after performing a qualitative analysis. Management has multiple criteria that it considers when performing the qualitative analysis. The results of this review are then weighed and prioritized. If the totality of the relevant events and circumstances indicate that the intangible asset is not impaired, additional impairment tests are not necessary. | |
The Company assessed the following qualitative factors that could affect any change in the fair value of the intangible asset: analysis of the technology’s current phase, additional testing necessary to bring the technology to market, development of competing products, changes in projections caused by delays, changes in regulations, changes in the market for the technology and changes in cost projections to bring the technology to market. Based on a qualitative assessment, management concluded that a positive assertion can be made from the qualitative assessment that it is more likely than not that the intangible asset is not impaired. | |
Stock Options | |
The Company measures all stock-based compensation awards using a fair value method on the date of grant and recognizes such expense in its consolidated financial statements over the requisite service period. The Company uses the Black-Scholes pricing model to determine the fair value of stock-based compensation awards on the date of grant. The Black-Scholes pricing model requires management to make assumptions regarding option lives, expected volatility, and risk free interest rates. | |
Income Taxes | |
The Company recognizes income taxes on an accrual basis based on tax positions taken, or expected to be taken, in tax returns. A tax position is defined as a position in a previously filed tax return or a position expected to be taken in future tax filing that is reflected in measuring current or deferred income tax assets and liabilities. Tax positions are recognized only when it is more likely than not (i.e., likelihood of greater than 50%), based on technical merits, that the position would be sustained upon examination by taxing authorities. Tax positions that meet the more likely than not threshold are measured using a probability-weighted approach as the largest amount of tax benefit that is greater than 50% likely of being realized upon settlement. Income taxes are accounted for using an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in our financial statements or tax returns. A valuation allowance is established to reduce deferred tax assets if all, or some portion, of such assets will more than likely not be realized. No provision for income taxes was recorded during the periods presented because the Company had a net taxable loss. Should they occur, our policy is to classify interest and penalties related to tax positions as interest expense. Since our inception, no such interest or penalties have been incurred. | |
Discontinued Operations | |
The assets and financial results of the Company’s oil and gas and mineral assets are being reported as discontinued operations as a result of the sale of the oil and gas properties in February 2013 and the sale of the Company’s subsidiary which controlled various mineral leases and claims in December 2013. Certain amounts reported in the prior periods presented have been reclassified to conform to the current period financial statement presentation. These reclassifications have no effect on previously reported net income (loss). See “Note 3. Discontinued Operations” for a summary of the amounts reclassified for the periods presented herein. | |
Earnings (Loss) Per Share | |
The Company presents both basic and diluted earnings per share (“EPS”) amounts. Basic EPS is calculated by dividing net income (loss) by the weighted average number of common shares outstanding during the period presented. Diluted EPS amounts are based upon the weighted average number of common and common equivalent shares outstanding during the period presented. Potentially dilutive shares of common stock consisted of warrants to purchase shares of common stock (8,200,000 shares for 2014 and 2013) and options to purchase shares of common stock (185,000 shares for 2014 and 80,000 shares for 2013). During the periods presented, potentially dilutive shares of common stock were not included in the computation of dilutive loss per share as to do so would be anti-dilutive. | |
Comprehensive Income (Loss) | |
Comprehensive loss is comprised of net loss, and a reclassification on disposal of subsidiary for the periods presented. | |
Related Party Transactions | |
A related party is generally defined as (i) any person who holds 10% or more of the Company’s securities and their immediate families; (ii) the Company’s management; (iii) someone who directly or indirectly controls, is controlled by or is under common control with the Company; or (iv) anyone who can significantly influence the financial and operating decisions of the Company. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties. See “Note 7. Related Party Transactions,” for further discussion. |
Discontinued_Operations
Discontinued Operations | 12 Months Ended |
Dec. 31, 2014 | |
Notes to Financial Statements | |
Note 3. Discontinued Operations | On February 18 and 19, 2013, we completed the sale and assignment of our working interests in our oil wells. Consideration for the sale and assignment was $3,000 cash. The carrying amount of the oil and gas properties was $24,127 on the date of disposal. The related asset retirement obligation amounted to $57,532 and liabilities assumed amounted to $12,932. Including the $3,000 cash received, the Company recognized a gain of $49,338 in the year ended December 31, 2013, as a result of the disposal. |
On December 31, 2013, we entered into a stock purchase agreement with Duke, pursuant to which we sold to Duke 100% of the issued and outstanding shares of Fostung Resources, a wholly owned subsidiary of ours, for a promissory note in the amount of $80,000, which amount approximated the fair value of the leases and mining claims controlled by Fostung Resources, as concluded by an independent third-party geological consultant. Principal and interest at 4.0% are payable on December 31, 2015. Including the $80,000 of consideration received, the Company recognized a loss on the disposal of the subsidiary of $453,581. On December 31, 2014, we determined that it was unlikely that we would collect the principal and interest due on the promissory note from Duke and wrote off the outstanding balance of both the note and the interest receivable. | |
The Company reported no revenue in discontinued operations for the years ended December 31, 2014 and December 31, 2013. The Company’s net loss reported in discontinued operations for the years ended December 31, 2014 and December 31, 2013 were $0 and $(404,243), respectively. The Company has not recognized any revenue nor incurred expenses with respect to its previously owned oil and gas and mineral assets since their respective sales, and will not recognize any continuing cash flows with respect to these properties in the future. |
Intangible_Assets_Intellectual
Intangible Assets - Intellectual Property | 12 Months Ended | ||||
Dec. 31, 2014 | |||||
Notes to Financial Statements | |||||
Note 4. Intangible Assets - Intellectual Property | On July 12, 2013, the Company, together with its wholly owned subsidiary, RenovaCare Sciences, entered into an asset purchase agreement with Dr. Jörg Gerlach, MD, PhD, pursuant to which RenovaCare Sciences purchased all of Dr. Gerlach’s rights, title and interest in the Cell Deposition Device. The Company plans to further the development of the Cell Deposition Device, if commercially viable, bring the product to market. Acquisition related costs amounted to $52,852 and were capitalized together with the cash payment in 2013 of $100,002. Additional costs capitalized during 2013, and which related to a wound cap technology, amounted to $10,000. At December 31, 2014 and 2013, intangible assets amounted to $162,854. | ||||
This asset purchase agreement was amended on September 9, 2014 (the “Amended APA”). Pursuant to the terms of the Amended APA, upon the closing of the transaction in July 2013, the Company paid Dr. Gerlach $100,002. An additional $300,000 will be paid in four installments: (a) $100,000 on December 31, 2014; (b) $50,000 on December 31, 2015; (c) $50,000 on December 31, 2016; and (d) $100,000 on December 31, 2017. The Company paid the first installment of $100,000 in January 2015. At December 31, 2014, $150,000 of the amount payable to Dr. Gerlach was recorded as current liabilities and $150,000 was recorded as long term liabilities in the accompanying consolidated balance sheet. | |||||
As further consideration for the Cell Deposition Device, the Company issued to Dr. Gerlach a Series A Stock Purchase Warrant (the “Series A Warrant”) entitling him to purchase 1,200,000 shares (each a “Warrant Share”) of the Company’s common stock at an exercise price of $0.35 per share. Pursuant to the terms of the Amended APA, the Series A Warrant will now vest in five equal installments of 240,000 shares on each of July 12, 2014, July 12, 2015, July 12, 2016, July 12, 2017 and July 12, 2018. Vesting will no longer be contingent on the achievement of certain milestones and on Dr. Gerlach’s continuing to provide consulting services to the Company, but instead on the passage of time. Prior to September 9, 2014, the effective date of the Amended APA, the value of the Series A Warrant was recognized as consulting expenses over the vesting term. In addition, the fair value of each Warrant Share was estimated at the end of each reporting period during which Dr. Gerlach rendered services using the Black-Scholes option pricing model. Effective September 9, 2014, the Company measured and expensed the value of the Series A Warrant in full and recorded this value as research and development costs. The fair value of each Warrant Share as of September 9, 2014, using the Black-Scholes option pricing model, was $0.91. | |||||
Assumptions required for the Black-Scholes model are as follows: | |||||
2014 | |||||
Risk-free interest rate | 1.72 | % | |||
Expected life in years | 4.75 | ||||
Expected Volatility | 93.8 | % | |||
Expected dividend yield | 0 | % | |||
Consulting expense associated with the Series A Warrant amounted to $311,173 and $237,971 during the years ended December 31, 2014 and 2013, respectively. Research and development costs associated with the Series A Warrant amounted to $537,215 and $nil in the years ended December 31, 2014 and 2013, respectively. |
Common_Stock_Options
Common Stock Options | 12 Months Ended | ||||||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||||||
Notes to Financial Statements | |||||||||||||||||||||||||
Note 5. Common Stock Options | Approval of the 2013 Long-Term Incentive Plan | ||||||||||||||||||||||||
On June 20, 2013, the Board of Directors (the “Board”) adopted, subject to receiving shareholder approval, the 2013 Long-Term Incentive Plan (the “Incentive Plan”). The Incentive Plan provides for the issuance of stock options of up to 20,000,000 shares (subject to adjustment) of the Company’s common stock to officers, directors, key employees and consultants of the Company. Options granted to employees under the Incentive Plan, including directors and officers who are employees, may be incentive stock options or non-qualified stock options; options granted to others under the Incentive Plan are limited to non-qualified stock options. | |||||||||||||||||||||||||
The Incentive Plan is administered by the Board or a committee designated by the Board. Subject to the provisions of the Incentive Plan, the Board has the authority to determine the officers, employees and consultants to whom options will be granted, the number of shares covered by each option, vesting rights and the terms and conditions of each option that is granted to them; however, no person may be granted in any of the Company’s fiscal year, options to purchase more than 2,000,000 shares under the Incentive Plan, and the aggregate fair market value (determined at the time the option is granted) of the shares with respect to which incentive stock options are exercisable for the first time by an optionee during any calendar year cannot exceed $100,000. Options granted pursuant to the Incentive Plan are exercisable no later than ten years after the date of grant. | |||||||||||||||||||||||||
The exercise price per share of common stock for options granted under the Incentive Plan will be the fair market value of the Company’s common stock on the date of grant, using the closing price of the Company’s common stock on the last trading day prior to the date of grant, except for incentive stock options granted to a holder of ten percent or more of the Company’s common stock, for whom the exercise price per share will not be less than 110% of the fair market value. No option can be granted under the Incentive Plan after June 20, 2023. | |||||||||||||||||||||||||
As of December 31, 2014, there were 19,815,000 shares available for grant. | |||||||||||||||||||||||||
Stock Option Activity | |||||||||||||||||||||||||
On August 1, 2013, the Company granted to Messrs. Kirkland and Sierchio (20,000 stock options each) for stock options granted on August 1, 2013. The exercise price per share is $0.65; 10,000 options vested on the grant date and, subject to continued service as a member of our Board, the remaining 10,000 options vested on August 1, 2014. The Options Shares may be exercised on a “cashless basis” using the formula contained therein. | |||||||||||||||||||||||||
Effective December 1, 2013, we appointed Mr. Bold as our President & CEO and entered into an at-will consulting agreement (the “Consulting Agreement”) with Mr. Bold. Pursuant to the terms of the Consulting Agreement, Mr. Bold is expected to serve on a part-time basis and will receive an annual fee of $50,000, payable in 12 equal installments, which is prorated for any partial months during the term of the Consulting Agreement. In addition to Mr. Bold’s fee, he was issued a stock option to purchase up to 40,000 shares of our common stock at a price of $0.75 per share, the closing price of our common stock as quoted on the OTCQB on November 29, 2013. The shares may be exercised on a “cashless basis” using the formula contained therein and, subject to Mr. Bold’s continued service as our President and Chief Executive Officer, vest as follows: (a) 20,000 shares vested on December 1, 2014; and (b) 20,000 shares vest on December 1, 2015. | |||||||||||||||||||||||||
On April 1, 2014, the Company appointed Ms. Patsy Trisler as its Vice President – Clinical & Regulatory Affairs and entered into an at-will consulting agreement (the “Trisler Consulting Agreement”) with Ms. Trisler. Pursuant to the terms of the Trisler Consulting Agreement, Ms. Trisler was issued an option to purchase up to 50,000 shares of the Company’s common stock at a price of $1.05 per share, the closing price of the Company’s common stock as quoted on the OTCQB on April 1, 2014. The shares may be exercised on a “cashless basis” using the formula contained therein and, subject to Ms. Trisler’s continued service as the Company’s Vice President – Clinical & Regulatory Affairs, the shares vest as follows, 10,000 on: (a) April 1, 2015; (b) April 1, 2016; (c) April 1, 2017; (d) April 1, 2018; and (e) April 1, 2019. | |||||||||||||||||||||||||
On April 20, 2014, the Company appointed Andrew Danielson as its Director of Business Development and issued Mr. Danielson a stock option to purchase 5,000 shares of the Company’s common stock at a price of $1.05 per share, the closing price of the Company’s common stock as quoted on the OTCQB on April 17, 2014. The shares may be exercised on a “cashless basis” using the formula contained therein and, subject to Mr. Danielson’s continued service with the Company, vest on April 20, 2015. | |||||||||||||||||||||||||
On August 14, 2014, the Company granted to each of Messrs. Kirkland and Sierchio a stock option to purchase 20,000 shares of the Company’s common stock. The exercise price per share is $0.80; 10,000 options vested on the grant date and, subject to continued service as a member of the Company’s Board, the remaining 10,000 options vest on August 14, 2015 and may be exercised on a “cashless basis” using the formula contained therein. | |||||||||||||||||||||||||
On August 14, 2014, the Company granted to Ms. Rhonda Rosen, the Company’s Chief Financial Officer, a stock option to purchase 10,000 shares of the Company’s common stock. The exercise price per share is $0.80; 5,000 options vested on the grant date and, subject to her continued service as an executive of the Company, the remaining 5,000 options vest on August 14, 2015 and may be exercised on a “cashless basis” using the formula contained therein. | |||||||||||||||||||||||||
The following table summarizes stock option activity for the year ended December 31, 2014. | |||||||||||||||||||||||||
Weighted Average Remaining Contractual Life (Years) | |||||||||||||||||||||||||
Weighted Average Exercise Price | Aggregate Intrinsic Value | ||||||||||||||||||||||||
Options Outstanding | |||||||||||||||||||||||||
Balance January 1, 2014 | 80,000 | $ | 0.7 | 8.75 | $ | 24,800 | |||||||||||||||||||
Options granted | 105,000 | $ | 0.93 | 9.41 | $ | 1,500 | |||||||||||||||||||
Balance December 31, 2014 | 185,000 | $ | 0.83 | 9.12 | $ | 9,300 | |||||||||||||||||||
Exercisable at December 31, 2014 | 85,000 | $ | 0.72 | 8.97 | $ | 7,850 | |||||||||||||||||||
The fair value of each stock option is estimated at the date of grant using the Black-Scholes option pricing model. The estimated weighted-average fair value of stock options granted during 2013 was approximately $0.49 to $0.57 per share. Assumptions regarding volatility, expected term, dividend yield and risk-free interest rate are required for the Black-Scholes model. The volatility assumption is based on the Company’s historical experience. The risk-free interest rate is based on a U.S. treasury note with a maturity similar to the option award’s expected life. The expected life represents the average period of time that options granted are expected to be outstanding. The assumptions for volatility, expected life, dividend yield and risk-free interest rate are presented in the table below: | |||||||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||||||
Risk-free interest rate | 1.58 – 1.62% | 1.43 – 1.49% | |||||||||||||||||||||||
Expected life in years | 5.5 | 5.5 | |||||||||||||||||||||||
Weighted Avg Expected Volatility | 94.4% - 105.3% | 99.5 – 103.4% | |||||||||||||||||||||||
Expected dividend yield | 0% | 0% | |||||||||||||||||||||||
During the years ended December 31, 2014 and 2013, stock-based compensation expense of $59,860 and $15,440, respectively, was recognized as general and administrative expenses. There were 85,000 stock options vested and 100,000 unvested, as of December 31, 2014. As of December 31, 2014, the Company had $42,959 of total unrecognized compensation cost related to unvested stock options, which is expected to be recognized by December 31, 2019. | |||||||||||||||||||||||||
The following table summarizes information about stock options outstanding and exercisable under our stock incentive plan at December 31, 2014: | |||||||||||||||||||||||||
Number Outstanding | Weighted Average Remaining Contractual Life (Years) | Weighted Average Exercise Price | Number Exercisable | Weighted Average Remaining Contractual Life (Years) | Weighted Average Exercise Price | ||||||||||||||||||||
$0.50 to $1.00 | 130,000 | 9.07 | $ | 0.74 | 85,000 | 8.96 | $ | 0.72 | |||||||||||||||||
$1.01 to $1.50 | 55,000 | 9.25 | 1.05 | 0 | - | - | |||||||||||||||||||
185,000 | 9.12 | 0.83 | 85,000 | 8.96 | 0.72 | ||||||||||||||||||||
The Company issues new shares when options are exercised. |
Commitments
Commitments | 12 Months Ended |
Dec. 31, 2014 | |
Notes to Financial Statements | |
Note 6. Commitments | On August 1, 2013, the Company engaged Vector to assist the Company with identifying subject matter experts in the medical device and biotechnology industries and to assist the Company with its ongoing research, development and eventual commercialization of its Regeneration Technology (collectively, the “Services”). In consideration of the Services, the Company will pay Vector a monthly consulting fee of $5,000. The consulting agreement with Vector continues until December 31, 2014, unless earlier terminated by either party upon five days prior written notice. The Company has verbally agreed to continue paying Vector a monthly consulting fee of $5,000 in 2015. |
In connection with the Company’s anticipated Section 510(k) submission of its proprietary Cell Deposition Device to the Food and Drug Administration, in June 2014 the Company engaged StemCell System GmbH (“StemCell Systems”) to provide it with prototypes and related documents. Pursuant to this engagement, the Company incurred expenses of $137,508 in the year ended December 31, 2014. | |
On September 25, 2014, the Company entered into a Charitable Grant Agreement with the University of Pittsburgh (the “University”), pursuant to which the Company committed to provide a charitable donation to the University in the aggregate amount of $75,000 (the “Grant”). The Company will pay the Grant in eight quarterly installments of $9,375, with the first payment made on or before October 2014 and the final payment to be made on or before July 31, 2016. Dr. Gerlach, from whom the Company purchased the Cell Deposition Device, is a professor at the University. At December 31, 2014, $37,500 of the amount payable to the University was recorded as current liabilities and $28,125 was recorded as long term liabilities in the accompanying consolidated balance sheet. | |
See also “Note 7. Related Party Transactions.” |
Related_Party_Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2014 | |
Notes to Financial Statements | |
Note 7. Related Party Transactions | As compensation for their service on the Board, Dr. Kirkland and Mr. Sierchio will receive an annual retainer of $6,000, payable in equal yearly installments in arrears and prorated for any partial years of service. Additionally, on August 14, 2014, the Company granted to each of Dr. Kirkland and Mr. Sierchio an incentive stock option to purchase up to 20,000 shares of the Company’s common stock at an exercise price of $0.80 per share, the closing price of the Company’s common stock as quoted on the OTC Markets Group Inc. QB tier (the “OTCQB”) on the day prior to the grant. Subject to their continued service as a member of the Board, 10,000 of the shares vested immediately and 10,000 of the shares vested on the first anniversary of date of grant and may be exercised on a “cashless basis” using the formula contained therein. |
Effective September 30, 2013, Ms. Rosen resigned as President and Chief Executive Officer and the Company entered into an At-Will Executive Services Agreement (the “Rosen Services Agreement”), pursuant to which Ms. Rosen will serve as the Company’s Chief Financial Officer. Pursuant to the Rosen Services Agreement, Ms. Rosen will provide the Company with services consistent with that of a Chief Financial Officer on a part-time basis, for which she will be paid a monthly fee of $2,400 and will be reimbursed for any business related expenses. The Rosen Services Agreement is terminable by either the Company or Ms. Rosen upon advance written notice. On August 14, 2014, the Company granted to Ms. Rhonda Rosen, the Company’s Chief Financial Officer, 10,000 stock options. The exercise price per share is $0.80; 5,000 options vested on the grant date and, subject to her continued service as an executive of the Company, the remaining 5,000 options will vest on August 14, 2015 and may be exercised on a “cashless basis” using the formula contained therein. | |
On November 29, 2013, the Company entered into a subscription agreement with Kalen Capital Corporation (the “Investor”), a private Alberta corporation wholly owned by Mr. Harmel S. Rayat and a majority shareholder of the Company’s, pursuant to which the Investor purchased 3,500,000 Units at a purchase price of $0.43 per Unit, for an aggregate purchase amount of $1,505,000. Each Unit consists of: (a) one share of common stock; (b) one Series B Warrant exercisable for one share of Common Stock at an exercise price of $0.43 per share if exercised within the first eighteen months or $0.46 per share if exercised after the first eighteen months and prior to expiration on November 29, 2018; and (c) one Series C Warrant exercisable for one share of common stock at an exercise price of $0.43 per share if exercised within the first eighteen months or $0.49 per share if exercised after the first eighteen months and prior to expiration on November 29, 2018. Each of the Series B Warrant and Series C Warrant contains a provision allowing the holder to exercise the respective warrant on a cashless basis as further set forth therein. The Unit price of $0.43 represents a 30% discount to the 20 day average closing price of the Common Stock as quoted on the OTCQB as of October 31, 2013, the last trading date prior to us entering into a non-binding term sheet with the Investor regarding the purchase of the Units. | |
On December 1, 2013, the Company appointed Mr. Bold as its President & CEO and entered into the Consulting Agreement with Mr. Bold. Pursuant to the terms of the Consulting Agreement, Mr. Bold is expected to serve on a part-time basis and will receive an annual fee of $50,000, payable in 12 equal installments, which is prorated for any partial months during the term of the Consulting Agreement. In addition to Mr. Bold’s fee, he was issued an option to purchase up to 40,000 shares of the Company’s common stock at a price of $0.75 per share the closing price of the Company’s common stock as quoted on the OTCQB on November 29, 2013. The shares may be exercised on a “cashless basis” using the formula contained therein and, subject to Mr. Bold’s continued service as the Company’s President and Chief Executive Officer, 20,000 shares vested on December 1, 2014 and 20,000 shares will vest on December 1, 2015. | |
On December 31, 2013, the Company completed the sale of 100% of the issued and outstanding shares of Fostung Resources to Duke for a promissory note in the amount of $80,000, which amount approximated the fair value of the leases and mining claims controlled by Fostung Resources, as concluded by an independent third-party geological consultant. Principal and interest at 4.0% are payable on December 31, 2015. Mr. Herdev S. Rayat, the majority shareholder of Duke, is the brother of Mr. Harmel S. Rayat, the Company’s majority shareholder. On December 31, 2014, we determined that it was unlikely that we would collect the principal and interest due on the promissory note from Duke and wrote off the outstanding balance of both the note and the interest receivable. | |
On April 1, 2014, the Company appointed Ms. Patsy Trisler as its Vice President – Clinical & Regulatory Affairs and entered into the Trisler Consulting Agreement with Ms. Trisler. Pursuant to the terms of the Trisler Consulting Agreement, Ms. Trisler will receive a monthly fee of $5,000, which covers her services for up to 40 hours in any given month and will pay her an hourly fee of $125 for every hour in excess of forty, prorated for any partial hour. The Consulting Agreement may be terminated at any time by either Ms. Trisler or the Company. In addition to Ms. Trisler’s fee, she was issued an option to purchase up to 50,000 shares of the Company’s common stock at a price of $1.05 per share, the closing price of the Company’s common stock as quoted on the OTCQB on March 31, 2014. The Options Shares may be exercised on a “cashless basis” using the formula contained therein and, subject to Ms. Trisler’s continued service as the Company’s Vice President – Clinical & Regulatory Affairs, vest as follows, 10,000 shares on: (a) April 1, 2015; (b) April 1, 2016; (c) April 1, 2017; (d) April 1, 2018; and (e) April 1, 2019. | |
On April 20, 2014, the Company appointed Andrew Danielson as its Director of Business Development at an annual salary of $60,000. In addition, Mr. Danielson was issued an option to purchase 5,000 shares of the Company’s common stock at a price of $1.05 per share, the closing price of the Company’s common stock as quoted on the OTCQB on April 17, 2014. The shares may be exercised on a “cashless basis” using the formula contained therein and, subject to Mr. Danielson’s continued service with the Company; the shares vest on April 20, 2015. | |
For the year ended December 31, 2014 directors’ and consulting fees incurred with respect to officers and directors of the Company were $168,175 (2013: $49,097). Legal fees incurred with respect to one of the Company’s directors in the year ended December 31, 2014 were $156,175 (2013: $165,591). Management fees paid or due to our officers were $0 in 2014 (2013: $30,567). Amounts included in accounts payable and accrued expenses, and due to related parties, at December 31, 2014 were $7,255 (2013: $44,219). |
Income_Taxes
Income Taxes | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Notes to Financial Statements | |||||||||
Note 8. Income Taxes | There is no current or deferred tax expense for 2014 and 2013, due to the Company’s loss position. Realization of the future tax benefits related to the deferred tax assets is dependent on many factors, including the Company’s ability to generate taxable income within the net operating loss carryforward period. Management has considered these factors in reaching its conclusion as to the valuation allowance for financial reporting purposes and has recorded a full valuation allowance against the deferred tax asset. The income tax effect, utilizing a 34% income tax rate, of temporary differences comprising the deferred tax assets and deferred tax liabilities is a result of the following at December 31: | ||||||||
2014 | 2013 | ||||||||
Deferred tax assets: | |||||||||
Net operating loss carryforwards | $ | 2,285,000 | $ | 2,027,000 | |||||
Other | 337,000 | 86,000 | |||||||
2,622,000 | 2,113,000 | ||||||||
Valuation allowance | (2,622,000 | ) | (2,113,000 | ) | |||||
Net deferred tax assets | $ | - | $ | - | |||||
The 2014 increase in the valuation allowance was $509,000 (2013: $155,000). | |||||||||
The Company has available net operating loss carryforwards of approximately $6,722,000 for tax purposes to offset future taxable income which expires commencing 2015 through to the year 2034. Pursuant to the Tax Reform Act of 1986, annual utilization of the Company’s net operating loss carryforwards may be limited if a cumulative change in ownership of more than 50% is deemed to occur within any three-year period. The tax years 2011 through 2014 remain open to examination by federal agencies and other jurisdictions in which it operates. | |||||||||
A reconciliation between the statutory federal income tax rate (34%) and the effective rate of income tax expense for the years ended December 31 follows: | |||||||||
2014 | 2013 | ||||||||
Statutory federal income tax rate | 34 | % | 34 | % | |||||
Valuation allowance | (34 | %) | (34 | %) | |||||
0 | % | 0 | % |
Significant_Accounting_Policie1
Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2014 | |
Significant Accounting Policies Policies | |
Basis of Presentation and Principles of Accounting | As the Company is devoting substantially all of its efforts to establishing a new business, and while planned principal operations have commenced, there has been no revenue generated from sales, license fees or royalties, and as such, the Company is considered a development stage company. Accordingly, the Company’s consolidated financial statements are presented in accordance with authoritative accounting guidance related to a development stage enterprise. |
In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements – Going Concern (Topic 915): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, which states that in connection with preparing financial statements for each annual and interim reporting period, an entity’s management should evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued (or within one year after the date that the financial statements are available to be issued when applicable). The adoption of this update did not have a material effect on the Company’s financial statements. | |
In June 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements. ASU 2014-10 eliminates the distinction of a development stage entity and certain related disclosure requirements, including the elimination of inception-to-date information on the statements of operations, cash flows and stockholders’ equity. The amendments in ASU 2014-10 will be effective prospectively for annual reporting periods beginning after December 15, 2014, and interim periods within those annual periods, however early adoption is permitted. The Company adopted ASU 2014-10 during the quarter ended June 30, 2014, thereby no longer presenting or disclosing any information required by Topic 915. | |
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes the revenue recognition requirements in Accounting Standards Codification (“ASC”) 605, Revenue Recognition. The new revenue recognition standard requires entities to recognize revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. ASU 2014-09 is effective for interim and annual reporting periods beginning after December 15, 2016 and is to be applied retrospectively. The Company does not currently have any revenue. As such, ASU 2014-09 will not have any effect on the Company’s results of operations and financial position. If the Company begins generating revenue prior to the effective date of ASU 2014-09, it will evaluate the effect that ASU 2014-09 will have on its results of operations and financial position. | |
Principles of Consolidation | These consolidated financial statements have been prepared in accordance with US GAAP and include the accounts of the Company and its wholly owned subsidiary, RenovaCare Sciences. All significant intercompany transactions and balances have been eliminated. RenovaCare Sciences was incorporated under the laws of the State of Nevada on June 12, 2013. |
Applicable Accounting Guidance | Any reference in these notes to applicable accounting guidance is meant to refer to the authoritative non-governmental US GAAP as found in the Financial Accounting Standards Board’s Accounting Standards Codification. |
Accounting Estimates | The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the reported amounts of revenues and expenses during the reporting period. Actual results, as determined by future events, may differ from these estimates. |
Cash and Cash Equivalents | The Company considers all highly liquid instruments purchased with an original maturity of three months or less to be cash equivalents. Cash and cash equivalents may at times exceed federally insured limits. |
Note Receivable from Duke Mountain | The note receivable from Duke Mountain is unsecured, bears interest at 4.0%, and principal and interest are due on December 31, 2015. During 2014 management determined that collection of any portion of the principal outstanding under the promissory note from Duke was no longer probable. As a result, the Company wrote off the balance due under the note amounting to $83,200, including interest receivable of $3,200, during the year ended December 31, 2014. |
Fair Value of Financial Instruments | The carrying amounts for cash and cash equivalents, and payables approximate fair value based on observable quoted prices for active markets – Level 1 inputs. |
Research and Development Costs | The Company intends to outsource its research and development efforts and expense related costs as incurred, including the cost of manufacturing product for testing, licensing fees and costs associated with planning and conducting clinical trials. The value ascribed to patents and other intellectual property acquired will be capitalized as it relates to particular research and development projects that may have alternative future uses. |
Intangible Assets | The intangible asset consists primarily of Cell Deposition Device technology that the Company acquired during 2013 and is recorded at cost. At the time of acquisition, the technology had not reached technological feasibility. The amount capitalized is accounted for as an indefinite-lived intangible asset, subject to impairment testing until completion or abandonment. Upon successful completion, a determination will be made as to the then useful life of the intangible asset, generally determined by the period in which substantially all of the cash flows are expected to be generated, and begin amortization. The Company tests the intangible asset for impairment at least annually or more frequently if impairment indicators exist after performing a qualitative analysis. Management has multiple criteria that it considers when performing the qualitative analysis. The results of this review are then weighed and prioritized. If the totality of the relevant events and circumstances indicate that the intangible asset is not impaired, additional impairment tests are not necessary. |
The Company assessed the following qualitative factors that could affect any change in the fair value of the intangible asset: analysis of the technology’s current phase, additional testing necessary to bring the technology to market, development of competing products, changes in projections caused by delays, changes in regulations, changes in the market for the technology and changes in cost projections to bring the technology to market. Based on a qualitative assessment, management concluded that a positive assertion can be made from the qualitative assessment that it is more likely than not that the intangible asset is not impaired. | |
Stock Options | The Company measures all stock-based compensation awards using a fair value method on the date of grant and recognizes such expense in its consolidated financial statements over the requisite service period. The Company uses the Black-Scholes pricing model to determine the fair value of stock-based compensation awards on the date of grant. The Black-Scholes pricing model requires management to make assumptions regarding option lives, expected volatility, and risk free interest rates. |
Income Taxes | The Company recognizes income taxes on an accrual basis based on tax positions taken, or expected to be taken, in tax returns. A tax position is defined as a position in a previously filed tax return or a position expected to be taken in future tax filing that is reflected in measuring current or deferred income tax assets and liabilities. Tax positions are recognized only when it is more likely than not (i.e., likelihood of greater than 50%), based on technical merits, that the position would be sustained upon examination by taxing authorities. Tax positions that meet the more likely than not threshold are measured using a probability-weighted approach as the largest amount of tax benefit that is greater than 50% likely of being realized upon settlement. Income taxes are accounted for using an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in our financial statements or tax returns. A valuation allowance is established to reduce deferred tax assets if all, or some portion, of such assets will more than likely not be realized. No provision for income taxes was recorded during the periods presented because the Company had a net taxable loss. Should they occur, our policy is to classify interest and penalties related to tax positions as interest expense. Since our inception, no such interest or penalties have been incurred. |
Discontinued Operations | The assets and financial results of the Company’s oil and gas and mineral assets are being reported as discontinued operations as a result of the sale of the oil and gas properties in February 2013 and the sale of the Company’s subsidiary which controlled various mineral leases and claims in December 2013. Certain amounts reported in the prior periods presented have been reclassified to conform to the current period financial statement presentation. These reclassifications have no effect on previously reported net income (loss). See “Note 3. Discontinued Operations” for a summary of the amounts reclassified for the periods presented herein. |
Earnings (Loss) Per Share | The Company presents both basic and diluted earnings per share (“EPS”) amounts. Basic EPS is calculated by dividing net income (loss) by the weighted average number of common shares outstanding during the period presented. Diluted EPS amounts are based upon the weighted average number of common and common equivalent shares outstanding during the period presented. Potentially dilutive shares of common stock consisted of warrants to purchase shares of common stock (8,200,000 shares for 2014 and 2013) and options to purchase shares of common stock (185,000 shares for 2014 and 80,000 shares for 2013). During the periods presented, potentially dilutive shares of common stock were not included in the computation of dilutive loss per share as to do so would be anti-dilutive. |
Comprehensive Income (Loss) | Comprehensive loss is comprised of net loss, and a reclassification on disposal of subsidiary for the periods presented. |
Related Party Transactions | A related party is generally defined as (i) any person who holds 10% or more of the Company’s securities and their immediate families; (ii) the Company’s management; (iii) someone who directly or indirectly controls, is controlled by or is under common control with the Company; or (iv) anyone who can significantly influence the financial and operating decisions of the Company. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties. See “Note 7. Related Party Transactions,” for further discussion. |
Intangible_Assets_Intellectual1
Intangible Assets - Intellectual Propert (Tables) | 12 Months Ended | ||||
Dec. 31, 2014 | |||||
Intangible Assets - Intellectual Propert Tables | |||||
Assumptions required for the Black-Scholes model | Assumptions required for the Black-Scholes model are as follows: | ||||
2014 | |||||
Risk-free interest rate | 1.72 | % | |||
Expected life in years | 4.75 | ||||
Expected Volatility | 93.8 | % | |||
Expected dividend yield | 0 | % |
Common_Stock_Options_Tables
Common Stock Options (Tables) | 12 Months Ended | ||||||||||||||||||||||||||||
Dec. 31, 2014 | Dec. 31, 2013 | ||||||||||||||||||||||||||||
Stock Option Activity | Weighted Average Remaining Contractual Life (Years) | ||||||||||||||||||||||||||||
Weighted Average Exercise Price | Aggregate Intrinsic Value | ||||||||||||||||||||||||||||
Options Outstanding | |||||||||||||||||||||||||||||
Balance January 1, 2014 | 80,000 | $ | 0.7 | 8.75 | $ | 24,800 | |||||||||||||||||||||||
Options granted | 105,000 | $ | 0.93 | 9.41 | $ | 1,500 | |||||||||||||||||||||||
Balance December 31, 2014 | 185,000 | $ | 0.83 | 9.12 | $ | 9,300 | |||||||||||||||||||||||
Exercisable at December 31, 2014 | 85,000 | $ | 0.72 | 8.97 | $ | 7,850 | |||||||||||||||||||||||
Assumptions required for the Black-Scholes model | Assumptions required for the Black-Scholes model are as follows: | ||||||||||||||||||||||||||||
2014 | |||||||||||||||||||||||||||||
Risk-free interest rate | 1.72 | % | |||||||||||||||||||||||||||
Expected life in years | 4.75 | ||||||||||||||||||||||||||||
Expected Volatility | 93.8 | % | |||||||||||||||||||||||||||
Expected dividend yield | 0 | % | |||||||||||||||||||||||||||
stock options outstanding | Number Outstanding | Weighted Average Remaining Contractual Life (Years) | Weighted Average Exercise Price | Number Exercisable | Weighted Average Remaining Contractual Life (Years) | Weighted Average Exercise Price | |||||||||||||||||||||||
$0.50 to $1.00 | 130,000 | 9.07 | $ | 0.74 | 85,000 | 8.96 | $ | 0.72 | |||||||||||||||||||||
$1.01 to $1.50 | 55,000 | 9.25 | 1.05 | 0 | - | - | |||||||||||||||||||||||
185,000 | 9.12 | 0.83 | 85,000 | 8.96 | 0.72 | ||||||||||||||||||||||||
Equity Option [Member] | |||||||||||||||||||||||||||||
Assumptions required for the Black-Scholes model | 2014 | 2013 | |||||||||||||||||||||||||||
Risk-free interest rate | 1.58 – 1.62% | 1.43 – 1.49% | |||||||||||||||||||||||||||
Expected life in years | 5.5 | 5.5 | |||||||||||||||||||||||||||
Weighted Avg Expected Volatility | 94.4% - 105.3% | 99.5 – 103.4% | |||||||||||||||||||||||||||
Expected dividend yield | 0% | 0% |
Income_Taxes_Tables
Income Taxes (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Income Taxes Tables | |||||||||
Schedule of deferred tax assets and liabilities | 2014 | 2013 | |||||||
Deferred tax assets: | |||||||||
Net operating loss carryforwards | $ | 2,285,000 | $ | 2,027,000 | |||||
Other | 337,000 | 86,000 | |||||||
2,622,000 | 2,113,000 | ||||||||
Valuation allowance | (2,622,000 | ) | (2,113,000 | ) | |||||
Net deferred tax assets | $ | - | $ | - | |||||
Reconciliation of the statutory federal income tax expense (benefit) | A reconciliation between the statutory federal income tax rate (34%) and the effective rate of income tax expense for the years ended December 31 follows: | ||||||||
2014 | 2013 | ||||||||
Statutory federal income tax rate | 34 | % | 34 | % | |||||
Valuation allowance | (34 | %) | (34 | %) | |||||
0 | % | 0 | % |
Organization_Nature_and_Contin1
Organization Nature and Continuance of Operations (Details Narrative) (USD $) | 12 Months Ended |
Dec. 31, 2014 | |
Organization Nature And Continuance Of Operations Details Narrative | |
Principal under due amounting portion note | $83,200 |
Interest Receivable | 3,200 |
Accumulated deficit | $7,700,000 |
Significant_Accounting_Policie2
Significant Accounting Policies (Details Narrative) (USD $) | 12 Months Ended |
Dec. 31, 2014 | |
Significant Accounting Policies Details Narrative | |
Principal under due amounting portion note | $83,200 |
Interest Receivable | $3,200 |
Discontinued_Operations_Detail
Discontinued Operations (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Discontinued Operations Details Narrative | ||
Carrying amount of the oil and gas properties | $24,127 | |
Asset retirement obligation | 57,532 | |
Asset retirement obligation, liabilities assumed | 12,932 | |
Cash received | 3,000 | |
Recognized gain | 49,338 | |
Net loss reported | $0 | ($404,243) |
Intangible_Assets_Intellectual2
Intangible Assets - Intellectual Propert (Details) (USD $) | 12 Months Ended |
Dec. 31, 2014 | |
Intangible Assets - Intellectual Propert Details | |
Weighted average risk-free interest rate | 1.72% |
Expected life in years | 4 years 9 months |
Weighted Avg Expected Volatility | 93.80% |
Expected dividend yield | $0 |
Intangible_Assets_Intellectual3
Intangible Assets - Intellectual Property (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Intangible Assets - Intellectual Property Details Narrative | ||
Intangible assets | $162,854 | $162,854 |
Consulting expense associated with the Series A Warrant amounted | 311,173 | 237,971 |
Research and development costs associated with the Series A Warrant amounted | 537,215 | 0 |
Common_Stock_Options_Details
Common Stock Options (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Weighted average exercise price | ||
Options exercisable | $0.83 | |
Warrant | ||
Options Outstanding | ||
Options outstanding - beginning balance | 80,000 | |
Options granted | 105,000 | |
Options oustanding - ending balance | 185,000 | |
Warrants exercisable | 85,000 | |
Weighted average exercise price | ||
Options outstanding - beginning balance | $0.70 | |
Options granted | $0.93 | |
Options outstanding - ending balance | $0.83 | |
Options exercisable | $0.72 | |
Weighted average remaining contracted term | ||
Warrants outstanding - beginning baiance | 8 years 9 months | |
Options granted | 9 years 4 months 28 days | |
Warrants outstanding - ending balance | 9 years 1 month 13 days | |
Warrants exercisable | 8 years 11 months 19 days | |
Aggregate intrinsic value | ||
Options outstanding - beginning balance | $24,800 | |
Options granted | $1,500 | |
Options outstanding - ending balance | $9,300 | |
Options exercisable | $7,850 |
Common_Stock_Options_Details_1
Common Stock Options (Details 1) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Weighted average risk-free interest rate | 1.72% | |
Expected life in years | 4 years 9 months | |
Weighted Avg Expected Volatility | 93.80% | |
Expected dividend yield | $0 | |
Equity Option [Member] | ||
Expected life in years | 5 years 6 months | 5 years 6 months |
Expected dividend yield | $0 | $0 |
Equity Option [Member] | Minimum | ||
Weighted average risk-free interest rate | 1.58% | 1.43% |
Weighted Avg Expected Volatility | 94.40% | 99.50% |
Equity Option [Member] | Maximum | ||
Weighted average risk-free interest rate | 1.62% | 1.49% |
Weighted Avg Expected Volatility | 105.30% | 103.40% |
Common_Stock_Options_Details_2
Common Stock Options (Details 2) (USD $) | 12 Months Ended |
Dec. 31, 2014 | |
Number Outstanding | 185,000 |
Weighted Average Remaining Contractual Life (Years) | 9 years 1 month 13 days |
Weighted Average Exercise Price | $0.83 |
Number Exercisable | 85,000 |
Weighted Average Remaining Contractual Life (Years) | 8 years 11 months 16 days |
Weighted Average Exercise Price | 0.72 |
$0.50 to $1.00 [Member] | |
Number Outstanding | 130,000 |
Weighted Average Remaining Contractual Life (Years) | 9 years 26 days |
Weighted Average Exercise Price | $0.74 |
Number Exercisable | 85,000 |
Weighted Average Remaining Contractual Life (Years) | 8 years 11 months 16 days |
Weighted Average Exercise Price | 0.72 |
$1.01 to $1.50 [Member] | |
Number Outstanding | 55,000 |
Weighted Average Remaining Contractual Life (Years) | 9 years 3 months |
Weighted Average Exercise Price | $1.05 |
Number Exercisable | 0 |
Weighted Average Exercise Price |
Common_Stock_Options_Details_N
Common Stock Options (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Common Stock Options Details Narrative | ||
Shares available for grant | 19,815,000 | |
Stock-based compensation administrative expense | $59,860 | $15,440 |
Stock options vested | 85,000 | |
Stock options unvested | 100,000 | |
Unrecognized compensation cost | $42,959 |
Commitments_Details_Narrative
Commitments (Details Narrative) (USD $) | 12 Months Ended |
Dec. 31, 2014 | |
Commitments Details Narrative | |
Incurred expenses | $137,508 |
Other current liabilities | 37,500 |
Other long term liabilities | $28,125 |
Related_Party_Transactions_Det
Related Party Transactions (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Accounts payable - related parties | $7,255 | $44,219 |
Officers and Directors [Member] | Consulting fees [Member] | ||
Fees paid or due to related party | 168,175 | 49,097 |
Directors [Member] | Legal Fee [Member] | ||
Fees paid or due to related party | 156,175 | 165,591 |
Officer [Member] | Management Fee [Member] | ||
Fees paid or due to related party | $0 | $30,567 |
Income_Taxes_Details
Income Taxes (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Deferred tax assets: | ||
Net operating loss carryforwards | $2,285,000 | $2,027,000 |
Other | 337,000 | 86,000 |
Deferred tax assets gross | 2,622,000 | 2,113,000 |
Valuation allowance | -2,622,000 | -2,113,000 |
Deferred tax asset |
Income_Taxes_Details_1
Income Taxes (Details 1) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Income Taxes Details 1 | ||
Statutory federal income tax rate | 34.00% | 34.00% |
Change in valuation allowance | -34.00% | -34.00% |
Income tax provision (benefit) | 0.00% | 0.00% |
Income_Taxes_Details_Narrative
Income Taxes (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Income Taxes Details Narrative | ||
Increase in the valuation allowance | $509,000 | $155,000 |