Document and Entity Information
Document and Entity Information | 12 Months Ended |
Dec. 31, 2015 | |
Document And Entity Information | |
Entity Registrant Name | VerifyMe, Inc. |
Entity Central Index Key | 1,104,038 |
Document Type | S1 |
Document Period End Date | Dec. 31, 2015 |
Amendment Flag | false |
Current Fiscal Year End Date | --12-31 |
Entity Filer Category | Smaller Reporting Company |
Document Fiscal Period Focus | FY |
Document Fiscal Year Focus | 2,015 |
Balance Sheets
Balance Sheets - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 4,152 | $ 63,956 |
Inventory | $ 28,687 | 97,360 |
Prepaid expenses | 181,086 | |
TOTAL CURRENT ASSETS | $ 32,839 | 342,402 |
PROPERTY AND EQUIPMENT | ||
Capital equipment, net of accumulated depreciation of $230,621 and $161,205 as of December 31, 2015 and December 31, 2014 | 7,838 | 74,821 |
OTHER ASSETS | ||
Deposits | 37,197 | 37,197 |
Patents and Trademark, net of accumulated amortization of $135,315 and $118,502 as of December 31, 2015 and December 31, 2014 | 259,294 | 107,586 |
TOTAL OTHER ASSETS | 296,491 | 144,783 |
TOTAL ASSETS | 337,168 | 562,006 |
CURRENT LIABILITIES | ||
Accounts payable and accrued expenses | $ 652,973 | 5,217,770 |
Accrued interest - related parties | 43,215 | |
Deferred revenue | 16,667 | |
Senior secured convertible notes payable - related parties | 114,000 | |
Notes payable | $ 50,000 | 812,553 |
TOTAL CURRENT LIABILITIES | 702,973 | 6,204,205 |
LONG-TERM LIABILITIES | ||
Warrant liability | $ 1,802,375 | 6,370,709 |
Accrued interest - related parties | 112,885 | |
TOTAL LONG-TERM LIABILITIES | $ 1,802,375 | 6,483,594 |
TOTAL LIABILITIES | $ 2,505,348 | $ 12,687,799 |
CONTINGENCIES | ||
STOCKHOLDERS' DEFICIT | ||
Common stock, $ .001 par value; 675,000,000 shares authorized; 6,259,727 and 3,969,106 shares issued, and 5,977,030 and 3,618,566 shares outstanding at December 31, 2015 and December 31, 2014 | $ 5,977 | $ 3,618 |
Additional paid in capital | 39,779,414 | 25,047,050 |
Treasury stock, at cost (350,540 shares at December 31, 2015 and December 31, 2014) | (113,389) | $ (113,389) |
Deferred compensation | (1,842,334) | |
Accumulated deficit | (39,998,290) | $ (37,696,405) |
STOCKHOLDERS' DEFICIT | (2,168,180) | (12,125,793) |
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | 337,168 | 562,006 |
Series A Convertible Preferred Stock [Member] | ||
STOCKHOLDERS' DEFICIT | ||
Series A and B Convertible Preferred Stock | $ 442 | $ 633,333 |
Series B Convertible Preferred Stock [Member] | ||
STOCKHOLDERS' DEFICIT | ||
Series A and B Convertible Preferred Stock |
Balance Sheets (Parenthetical)
Balance Sheets (Parenthetical) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Accumulated depreciation on capital equipment | $ 230,621 | $ 161,205 |
Accumulated amortization, patent and trademarks | $ 135,315 | $ 118,502 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 675,000,000 | 675,000,000 |
Common stock, shares issued | 6,259,727 | 3,969,106 |
Common stock, shares outstanding | 5,977,030 | 3,618,566 |
Treasury stock, shares | 350,540 | 350,540 |
Series A Convertible Preferred Stock [Member] | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 37,564,767 | 75,000,000 |
Preferred stock, shares issued | 441,938 | 248,366 |
Preferred stock, shares outstanding | 441,938 | 248,366 |
Series B Convertible Preferred Stock [Member] | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 85 | 0 |
Preferred stock, shares issued | 1 | 0 |
Preferred stock, shares outstanding | 1 | 0 |
Statements of Operations
Statements of Operations - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | ||
NET REVENUES | |||
Sales | $ 200,601 | $ 116,265 | |
Royalties | 16,667 | 8,333 | |
TOTAL NET REVENUE | 217,268 | 124,598 | |
COST OF SALES | 65,723 | 113,024 | |
GROSS PROFIT | 151,545 | 11,574 | |
OPERATING EXPENSES | |||
General and administrative | 449,483 | 811,916 | |
Legal and accounting | 458,801 | 344,903 | |
Payroll expenses | [1] | 1,875,488 | 1,611,376 |
Research and development | [2] | 2,412,833 | 10,590,271 |
Sales and marketing | [3] | 197,430 | 218,443 |
Total operating expenses | 5,394,035 | 13,576,909 | |
LOSS BEFORE OTHER INCOME | (5,242,490) | (13,565,335) | |
OTHER INCOME (EXPENSE) | |||
Interest expense | (61,438) | (199,364) | |
Gain (loss) on extinguishment of debt | 332,523 | (82,000) | |
Change in fair value of warrants | $ 2,669,520 | 5,128,204 | |
Change in fair value of embedded derivative liability | 800,000 | ||
TOTAL OTHER INCOME (EXPENSE) | $ 2,940,605 | 5,646,840 | |
NET LOSS | $ (2,301,885) | $ (7,918,495) | |
LOSS PER SHARE | |||
BASIC | $ (0.47) | $ (2.22) | |
DILUTED | $ (0.47) | $ (2.22) | |
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING | |||
BASIC | 4,848,738 | 3,573,511 | |
DILUTED | 4,848,738 | 3,573,511 | |
[1] | Includes share based compensation of $1,259,670 and $860,235 for the years ended December 31, 2015 and 2014 | ||
[2] | Includes share based compensation of $2,000,000 and $10,236,089 for the years ended December 31, 2015 and 2014 | ||
[3] | includes share based compensation of $88,937 and $0 for the years ended December 31, 2015 and 2014 |
Statements of Operations (Paren
Statements of Operations (Parenthetical) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Payroll Expenses [Member] | ||
Share based compensation | $ 1,259,670 | $ 860,235 |
Research and Development Expense [Member] | ||
Share based compensation | 2,000,000 | $ 10,236,089 |
Sales and Marketing Expense [Member] | ||
Share based compensation | $ 88,937 |
Statement of Changes in Stockho
Statement of Changes in Stockholders' Deficit - USD ($) | Series A Convertible Preferred Stock [Member] | Series B Convertible Preferred Stock [Member] | Common Stock [Member] | Additional Paid-In Capital [Member] | Treasury Stock [Member] | Deferred Compensation [Member] | Accumulated Deficit [Member] | Total |
Balance at Dec. 31, 2013 | $ 633,333 | $ (13,893) | $ 23,272,739 | $ (113,389) | $ (29,777,910) | $ (5,999,121) | ||
Balance, shares at Dec. 31, 2013 | 21,111,111 | 290,066,139 | ||||||
Issuance of stock for services | $ 6,349 | 393,651 | $ 400,000 | |||||
Issuance of stock for services, shares | 6,349,206 | |||||||
Cashless exercise of options | $ 2,714 | (2,714) | ||||||
Cashless exercise of options, shares | 2,714,285 | |||||||
Fair value of employee stock options | 860,235 | $ 860,235 | ||||||
Issuance of shares of common stock for settlement of debt | $ 8,449 | 498,139 | 506,588 | |||||
Issuance of shares of common stock for settlement of debt, shares | 8,448,519 | |||||||
Forgiveness of related party debt | $ 25,000 | 25,000 | ||||||
Net loss | $ (7,918,495) | (7,918,495) | ||||||
Balance at Dec. 31, 2014 | $ 633,333 | $ 3,618 | $ 25,047,050 | $ (113,389) | $ (37,696,405) | $ (12,125,793) | ||
Balance, shares at Dec. 31, 2014 | 248,366 | 3,618,566 | ||||||
Issuance of stock for services | $ 960 | 2,415,690 | $ (2,416,650) | |||||
Issuance of stock for services, shares | 960,000 | |||||||
Fair value of employee stock options | 849,791 | $ 849,791 | ||||||
Conversion of Series A Convertible Preferred Stock into common stock | $ (633,333) | $ 248 | 633,085 | |||||
Conversion of Series A Convertible Preferred Stock into common stock, shares | (248,366) | 248,366 | ||||||
Sale of Convertible Preferred stock | $ 390 | 1,278,111 | $ 1,278,501 | |||||
Sale of Convertible Preferred stock, shares | 389,668 | |||||||
Conversion of stockholder deferred compensation into Series A Convertible Preferred Stock | $ 10 | 34,990 | 35,000 | |||||
Conversion of stockholder deferred compensation into Series A Convertible Preferred Stock, shares | 10,667 | |||||||
Conversion of notes payable and accrued interest into Series A Convertible Preferred Stock | $ 42 | 136,771 | 136,813 | |||||
Conversion of notes payable and accrued interest into Series A Convertible Preferred Stock, shares | 41,603 | |||||||
Conversion of accrued expenses into Series B Convertible Preferred Stock | 8,367,417 | 8,367,417 | ||||||
Conversion of accrued expenses into Series B Convertible Preferred Stock, shares | 1 | |||||||
Sale of stock | $ 305 | 49,695 | 50,000 | |||||
Sale of stock, shares | 304,785 | |||||||
Conversion of warrants | $ 51 | 36,949 | 37,000 | |||||
Conversion of warrants, shares | 51,372 | |||||||
Conversion of stockholder notes payable and accrued interest into common stock | $ 674 | 730,752 | 731,426 | |||||
Conversion of stockholder notes payable and accrued interest into common stock, shares | 673,706 | |||||||
Conversion of accounts payable and accrued expenses into common stock | $ 117 | 99,330 | $ 99,447 | |||||
Conversion of accounts payable and accrued expenses into common stock, shares | 116,997 | |||||||
Cashless exercise of warrants into common stock | $ 2 | (2) | ||||||
Cashless exercise of warrants into common stock, shares | 2,353 | |||||||
Decrease in fair value of restricted stock units | (75,500) | $ 75,500 | ||||||
Forgiveness of stockholder compensation | $ 175,287 | $ 175,287 | ||||||
Amortization of deferred compensation | $ 498,816 | $ 498,816 | ||||||
Rounding of partial shares relative to reverse split | $ 1 | $ (1) | ||||||
Rounding of partial shares relative to reverse split (in shares) | 885 | |||||||
Net loss | $ (2,301,885) | $ (2,301,885) | ||||||
Balance at Dec. 31, 2015 | $ 442 | $ 5,977 | $ 39,779,414 | $ (113,389) | $ (1,842,334) | $ (39,998,290) | $ (2,168,180) | |
Balance, shares at Dec. 31, 2015 | 441,938 | 1 | 5,977,030 |
Statements of Cash Flows
Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net loss | $ (2,301,885) | $ (7,918,495) |
Adjustments to reconcile net loss to net cash used in operating activities | ||
Gain on conversion of debt | (332,523) | |
Fair value of options issued in exchange for services | 849,791 | $ 860,235 |
Accretion of discount on notes payable | 10,447 | 202,377 |
Change in fair value of warrant liability | $ (2,700,917) | (5,128,204) |
Change in fair value of embedded derivative liability | (800,000) | |
Fair value of stock in excess of converted notes payable and accrued interest | 82,000 | |
Amortization and depreciation | $ 94,123 | 82,362 |
Stock and warrants issued in exchange for technology | $ 5,736,089 | |
Amortization of deferred compensation | $ 498,816 | |
Series B Preferred Stock issued for licensing fees | $ 2,000,000 | |
(Increase) decrease in assets | ||
Accounts receivable | $ 3,573 | |
Inventory | $ 68,673 | (63,089) |
Prepaid expenses | 4,770 | 8,388 |
Increase (decrease) in liabilities | ||
Accounts payable and accrued expenses | 330,057 | 4,898,080 |
Deferred revenue | (16,667) | 16,667 |
Net cash used in operating activities | (1,495,315) | $ (2,020,017) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Purchase of equipment | (2,432) | |
Purchase of patents | (100) | |
Net cash used in investing activities | (2,532) | |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Proceeds from issuance of notes payable | 159,542 | $ 798,000 |
Repayment of notes payable | (50,000) | |
Proceeds from sale of Series A Convertible Preferred Stock | 1,278,501 | |
Proceeds from sale of common stock | 50,000 | |
Net cash provided by financing activities | 1,438,043 | $ 798,000 |
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | (59,804) | (1,222,017) |
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD | 63,956 | 1,285,973 |
CASH AND CASH EQUIVALENTS - END OF PERIOD | 4,152 | $ 63,956 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the year for: | ||
Interest | $ 6,646 | |
Income taxes | ||
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES | ||
Fair value of stock issued for conversion of notes payable and accrued interest | $ 1,028,039 | $ 506,588 |
Fair value of warrants issued as debt discount | 211,576 | |
Forgiveness of related party debt | $ 25,000 | |
Cashless exercise of warrants | $ 2 | |
Series A Convertible Preferred Stock converted to common stock | 633,333 | |
Issuance of Series A Convertible Preferred Stock for deferred compensation | 35,000 | |
Issuance of Series A Convertible Preferred Stock for notes payable and accrued interest | 136,813 | |
Issuance of Series B Convertible Preferred Stock for accrued expenses | 4,500,000 | |
Conversion of warrants into Series B Convertible Preferred Stock | 1,867,417 | |
Conversion of warrants to common stock | 37,000 | |
Conversion of accounts payable and accrued expenses into common stock | 99,447 | |
Common stock issued for deferred compensation | 2,416,650 | |
Forgiveness of stockholder compensation | 175,285 | |
Patent costs reclassified from prepaid expenses resulting from purchase of patents | 176,316 | |
Revaluation of restricted stock units between additional paid in capital and deferred compensation | $ 75,500 |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2015 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Nature of the Business On July 14, 2015, LaserLock Technologies, Inc. changed its name to VerifyMe, Inc., effective July 23, 2015. As used in this report, unless the context otherwise indicates, any reference to “VerifyMe,” “our Company,” “the Company,” “us,” “we” and “our” refers to VerifyMe, Inc. a Nevada corporation. The Company was incorporated in the State of Nevada on November 10, 1999. The Company is based in New York, New York and its common stock, par value $0.001 per share (the “Common Stock”), is traded on the over-the-counter market and quoted on the OTC QB, organized by the OTC Markets Group, Inc., and the OTC Bulletin Board under the ticker symbol “VRME.” The Company is a technology pioneer in the anti-counterfeiting industry. This broad market encompasses counterfeiting of physical and material goods and products, as well as counterfeiting of identity in digital transactions. The Company delivers security solutions for identification and authentication of people, products and packaging in a variety of applications in the security field for both digital and physical transactions. The products can be used to manage and issue secure credentials, including national IDs, passports, driver licenses and access control credentials, as well as comprehensive authentication security software to secure physical and logical access to facilities, computer networks, internet sites and mobile applications. The Company’s activities are subject to significant risks and uncertainties, including the need to secure additional funding to operationalize the Company’s current technology. Basis of Presentation The accompanying financial statements are presented in accordance with accounting principles generally accepted in the United States of America. Reverse Stock Split and Changes to Company’s Preferred Stock On May 26, 2015, the board of directors of the Company (the “Board”), acting by written consent in lieu of a special meeting, unanimously approved and adopted: (a) a reverse stock split of all of the Company’s issued and outstanding capital stock based on a minimum 1-for-40 split, up to a maximum 1-for-100 split (the “Reverse Stock Split”), and recommended the same for the Company’s stockholders for approval, and (b) a Second Amended Certificate of Designation for Series A Preferred Stock, which amended the designations, preferences, powers and rights of the shares of the Company’s Series A convertible preferred stock, par value $0.001 per share (the “Series A Preferred Stock”), which were originally set forth in that certain Amended Certificate of Designation for Series A Preferred Stock, dated December 19, 2003. On May 28, 2015, those stockholders of the Company holding a majority of the issued and outstanding shares of Common Stock and Series A Preferred Stock, acting by written consent in lieu of a special meeting, voted to approve the Reverse Stock Split. On June 11, 2015, at a duly authorized special meeting of the Board, the Board (a) finalized, adopted and approved a resolution setting the Reverse Stock Split exchange ratio to a 1-for-85 split and (b) approved and adopted a new Certificate of Designation for Series B Preferred Stock, establishing the designations, preferences, powers and rights of the shares of the Company’s Series B convertible preferred stock, par value $0.001 per share (the “Series B Preferred Stock,” and together with the Series A Preferred Stock, the “Preferred Stock”). On July 23, 2015, the Company completed the 1-for-85 Reverse Stock Split of all of its outstanding Common Stock and Preferred Stock. The total number of authorized capital stock of the Company remained unchanged at its current total of 750,000,000, with 675,000,000 designated as Common Stock and 75,000,000 designated as Preferred Stock. The accompanying financial statements and notes to the financial statements give retroactive effect to the Reverse Stock Split for all periods presented, unless otherwise specified. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Comprehensive Income The Company follows Financial Accounting Standards Board Accounting Standards Codification (“FASB ASC”) 220, “Comprehensive Income,” in reporting comprehensive income. Comprehensive income is a more inclusive financial reporting methodology that includes disclosure of certain financial information that historically has not been recognized in the calculation of net income. Since the Company has no items of other comprehensive income (loss), comprehensive income (loss) is equal to net income (loss). Fair Value of Financial Instruments The Company’s financial instruments consist of accounts receivable, accounts payable and accrued expenses, warrant liability and notes payable. The carrying value of accounts receivable, accounts payable and accrued expenses approximate their fair value because of their short maturities. The Company follows FASB ASC 820, “Fair Value Measurements and Disclosures,” and applies it to all assets and liabilities that are being measured and reported on a fair value basis. The statement requires that assets and liabilities carried at fair value will be classified and disclosed in one of the following three categories: Level 1: Quoted market prices in active markets for identical assets or liabilities Level 2: Observable market based inputs or unobservable inputs that are corroborated by market data Level 3: Unobservable inputs that are not corroborated by market data The level in the fair value within which a fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. Cash and Cash Equivalents For purposes of reporting cash flows, the Company considers all cash accounts, which are not subject to withdrawal restrictions or penalties, and certificates of deposit and commercial paper with original maturities of 90 days or less to be cash or cash equivalents. Concentration of Credit Risk Involving Cash and Cash Equivalents The Company’s cash and cash equivalents are held at one financial institution. At times, the Company’s deposits may exceed Federal Deposit Insurance Corporation (FDIC) coverage limits. The Company has not experienced any losses from maintaining cash accounts in excess of federally insured limits. Inventory Inventory principally consists of penlights and pigments and is stated at the lower of cost (determined by the first-in, first-out method) or market. Property and Equipment Property and equipment is stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, principally five to seven years. Maintenance and repairs of property are charged to operations, and major improvements are capitalized. Upon retirement, sale, or other disposition of property and equipment, the costs and accumulated depreciation are eliminated from the accounts, and any resulting gain or loss is included in operations. Patents and Trademark The current patent portfolio consists of ten granted patents and six applications pending. The Company has also purchased a trademark. Costs associated with the registration and legal defense of the patents have been capitalized and are amortized on a straight-line basis over the estimated lives of the patents which were determined to be 17 to 20 years. Long-Lived Assets The Company evaluates the recoverability of its long-lived assets in accordance with ASC 360 “Property, Plant, and Equipment.” The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of long-lived assets are measured by a comparison of the carrying amount of an asset to future cash flows expected to be generated by the asset, undiscounted and without interest or independent appraisals. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds the fair value of the assets. Deferred Financing Costs Costs incurred in securing long-term debt are deferred and amortized, as a charge to interest expense, over the term of the related debt. In the case of long-term debt modifications, the Company follows the guidance provided by ASC 470-50, “Debt – Modification and Extinguishments.” Convertible Notes Payable Convertible notes payable, for which the embedded conversion feature does not qualify for derivative treatment, are evaluated to determine if the effective or actual rate of conversion per the terms of the convertible note agreement is below market value. In these instances, the Company accounts for the value of the beneficial conversion feature (BCF) as a debt discount, which is then accreted to interest expense over the life of the related debt using the straight-line method which approximates the effective interest method. Derivative Instruments The Company evaluates its convertible debt, Preferred Stock, warrants or other contracts to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for in accordance with FASB ASC 480, “Distinguish by Liabilities from Equity” (FASB ASC 480), and FASB ASC 815, “Derivatives and Hedging” (“FASB ASC 815”). The result of this accounting treatment is that the fair value of the embedded derivative, if required to be bifurcated, is marked-to-market at each balance sheet date and recorded as a liability. The change in fair value is recorded in the Statement of Operations as a component of other income or expense. Upon conversion or exercise of a derivative instrument, the instrument is marked to fair value at the conversion date and then that fair value is reclassified to equity. In circumstances where the embedded conversion option in a convertible instrument is required to be bifurcated and there are also other embedded derivative instruments in the convertible instrument that are required to be bifurcated, the bifurcated derivative instruments are accounted for as a single, compound derivative instrument. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period. Equity instruments that are initially classified as equity that become subject to reclassification are reclassified as liabilities at the fair value of the instrument on the reclassification date. Derivative instrument liabilities will be classified in the balance sheet as current or non-current based on whether net-cash settlement of the derivative instrument is expected within 12 months of the balance sheet date. Revenue Recognition In accordance with FASB ASC 605, “Revenue Recognition,” the Company recognizes revenue when (i) persuasive evidence of a customer or distributor arrangement exists, (ii) a retailer, distributor or wholesaler receives the goods and acceptance occurs, (iii) the price is fixed or determinable, and (iv) collectability of the revenue is reasonably assured. Subject to these criteria, the Company recognizes revenue from product sales, consisting mainly of pigments and penlights, upon shipment to the customer. Royalty revenue is recognized upon receipt of notification from a customer that the Company’s product has been used in the customer’s production process. Income Taxes The Company follows FASB ASC 740, “Income Taxes,” when accounting for income taxes, which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed annually for temporary differences between the financial statements and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense is the tax payable or refundable for the period plus or minus the change during the period in deferred tax assets and liabilities. Tax years from 2012 through 2015 remain subject to examination by major tax jurisdictions. Stock-based Payments The Company accounts for stock-based compensation under the provisions of FASB ASC 718, “Compensation—Stock Compensation”, which requires the measurement and recognition of compensation expense for all stock-based awards made to employees and directors based on estimated fair values on the grant date. The Company estimates the fair value of stock-based awards on the date of grant using the Black-Scholes model. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods using the straight-line method. The Company accounts for stock-based compensation awards to non-employees in accordance with FASB ASC 505-50, “Equity-Based Payments to Non-Employees” (“FASB ASC 505-50”). Under FASB ASC 505-50, the Company determines the fair value of the warrants or stock-based compensation awards granted as either the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. All issuances of stock options or other equity instruments to non-employees as consideration for goods or services received by the Company are accounted for based on the fair value of the equity instruments issued. Non-employee equity based payments are recorded as an expense over the service period, as if the Company had paid cash for the services. At the end of each financial reporting period, prior to vesting or prior to the completion of the services, the fair value of the equity based payments will be re-measured and the non-cash expense recognized during the period will be adjusted accordingly. Since the fair value of equity based payments granted to non-employees is subject to change in the future, the amount of the future expense will include fair value re-measurements until the equity based payments are fully vested or the service completed. Advertising Costs Advertising costs are expensed as incurred. Advertising costs were approximately $458 and $62,835 for the years ended December 31, 2015 and 2014 and are included in sales and marketing expenses. Research and Development Costs In accordance with FASB ASC 730, research and development costs are expensed when incurred. Research and development costs for the years ended December 31, 2015 and 2014 were $2,529,833 and $10,590,271. Basic and Diluted Net Income per Share of Common Stock The Company follows FASB ASC 260, “Earnings Per Share,” when reporting Earnings Per Share resulting in the presentation of basic and diluted earnings per share. Because the Company reported a net loss for each of the years presented, common stock equivalents, including preferred stock, stock options and warrants were anti-dilutive; therefore, the amounts reported for basic and diluted loss per share were the same. Segment Information The Company is organized and operates as one operating segment wherein the Company’s patented technologies are utilized to address counterfeiting issues. In accordance with FASB ASC 280, “Segment Reporting” (“FASB ASC 280”), the chief operating decision-maker has been identified as the Chief Executive Officer, who reviews operating results to make decisions about allocating resources and assessing performance for the entire Company. Since the Company operates in one segment and provides one group of similar products, all financial segment and product line information required by FASB ASC 280 can be found in the financial statements. Recently Adopted Accounting Pronouncements As of December 31, 2015 and for the period then ended, there were no recently adopted accounting pronouncements that had a material effect on the Company’s financial statements. Recently Issued Accounting Pronouncements Not Yet Adopted In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements – Going Concern (Subtopic 205-40), Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern In November 2014, the FASB issued ASU No. 2014-16, Derivatives and Hedging (Topic 815), Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share is More Akin to Debt or to Equity For hybrid financial instruments issued in the form of a share, an entity (an issuer or an investor) should determine the nature of the host contract by considering all stated and implied substantive terms and features of the hybrid financial instrument, weighing each term and feature on the basis of relevant facts and circumstances. That is, an entity should determine the nature of the host contract by considering the economic characteristics and risks of the entire hybrid financial instrument, including the embedded derivative feature that is being evaluated for separate accounting from the host contract. The effects of initially adopting the amendments in this Update should be applied on a modified retrospective basis to existing hybrid financial instruments issued in the form of a share as of the beginning of the fiscal year for which the amendments are effective. Retrospective application is permitted to all relevant prior periods. The Company does not anticipate the adoption of this standard to have a material effect on the financial statements. The amendments in this Update are effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Early adoption, including adoption in an interim period, is permitted. If an entity early adopts the amendments in an interim period, any adjustments shall be reflected as of the beginning of the fiscal year that includes that interim period. In November 2015, the FASB issued ASU No. 2015-17, Income Taxes (Topic 740), Balance Sheet Classification of Deferred Taxes |
GOING CONCERN
GOING CONCERN | 12 Months Ended |
Dec. 31, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Going Concern | NOTE 2 – GOING CONCERN The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company has incurred significant losses and experienced negative cash flow from operations. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. In February 2016, the Company raised net proceeds of $1,217,500 If sufficient revenues are not generated to sustain operations or additional funding cannot be obtained in the short term, the Company will need to reduce monthly expenditures to a level that will enable the Company to continue until such funds can be obtained. Successful completion of the Company’s development program, and the attainment of profitable operations are dependent upon future events, including obtaining adequate financing to fulfill its development activities and achieving a level of sales adequate to support the Company’s cost structure. However, there can be no assurances that the Company will be able to secure additional equity investment or achieve an adequate sales level. |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 12 Months Ended |
Dec. 31, 2015 | |
PROPERTY AND EQUIPMENT | |
Property and Equipment | NOTE 3 – PROPERTY AND EQUIPMENT Equipment consists of the following: December 31, December 31, 2015 2014 Furniture and Fixtures $ 219,871 $ 219,871 Equipment 18,588 16,155 238,459 236,026 Less: Accumulated depreciation 230,621 161,205 $ 7,838 $ 74,821 Depreciation of property and equipment was $69,415 and $69,253, respectively, for the years ended December 31, 2015 and 2014. |
PATENTS AND TRADEMARK
PATENTS AND TRADEMARK | 12 Months Ended |
Dec. 31, 2015 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Patents and Trademark | NOTE 4 – PATENTS AND TRADEMARK The current patent portfolio consists of ten granted patents and six applications pending. Accordingly, costs associated with the registration and legal defense of these patents have been capitalized and are amortized on a straight-line basis over the estimated lives of the patents which were determined to be 17 to 20 years. The trademark is also being amortized on a straight-line basis over its estimated useful life of 20 years. During the years ended December 31, 2015 and 2014, the Company capitalized $100 of patent costs and trademarks. Amortization expense for patents and trademarks was $16,813 and $13,109 for the years ended December 31, 2015 and 2014. On March 30, 2015, the Company was advised by the United States Patent and Trademark Office (“USPTO”) that its petition for an unintentional delayed payment for an unpaid maintenance fee to reinstate its patent was granted by the USPTO. The patent, for a counterfeiting ink detection system, was granted on November 2, 2004. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | NOTE 5 – INCOME TAXES The Company follows FASB ASC 740-10-10 whereby an entity recognizes deferred tax assets and liabilities for future tax consequences or events that have been previously recognized in the Company’s financial statements or tax returns. The measurement of deferred tax assets and liabilities is based on provisions of enacted tax law. The effects of future changes in tax laws or rates are not anticipated. At December 31, 2015 the Company has a net operating loss (“NOL”) that approximates $30.0 million. Consequently, the Company may have NOL carryforwards available for federal income tax purposes, which would begin to expire in 2019. Due to changes in ownership, a portion of the NOL carryforward may be subject to certain annual limitations imposed under Section 382 of the Internal Revenue Code. Deferred tax assets would arise from the recognition of anticipated utilization of these net operating losses to offset future taxable income. The income tax benefit (provision) consists of the following: Year Ended Year Ended December 31, December 31, 2015 2014 Current $ (1,653,000 ) $ (5,505,000 ) Deferred (395,000 ) (372,000 ) Change in valuation allowance 2,048,000 5,877,000 $ - $ - The following is a reconciliation of the tax derived by applying the U.S. Federal Statutory Rate of 35% to the earnings before income taxes and comparing that to the recorded tax provisions: 2015 2014 Amount % Amount % U.S federal income tax benefit at federal statutory rate $ (806,000 ) (36 ) $ (2,771,000 ) (35 ) State tax, net of federal tax effect (135,000 ) (6 ) (463,000 ) (6 ) Non-deductible changes in derivative liability and share based transactions (1,107,000 ) (53 ) (2,639,000 ) (33 ) Other - - (4,000 ) - Change in valuation allowance 2,048,000 95 5,877,000 74 $ - - $ - - The primary components of the Company’s December 31, 2015 and 2014 deferred tax assets, liabilities and related valuation allowance are as follows: December 31, December 31, 2015 2014 Deferred tax asset for NOL carryforwards $ 12,303,000 $ 10,649,000 Deferred tax liability for intangibles (165,000 ) (165,000 ) Share based compensation 4,589,000 4,205,000 Non deductible accrued expenses 10,000 - Valuation allowance (16,737,000 ) (14,689,000 ) $ - $ - Management has determined that the realization of the net deferred tax asset is not assured and has created a valuation allowance for the entire amount of such benefits. The Company follows FASB ASC 740-10, which provides guidance for the recognition and measurement of certain tax positions in an enterprise’s financial statements. Recognition involves a determination whether it is more likely than not that a tax position will be sustained upon examination with the presumption that the tax position will be examined by the appropriate taxing authority having full knowledge of all relevant information. The Company’s policy is to record interest and penalties associated with unrecognized tax benefits as additional income taxes in the consolidated statement of operations. As of December 31, 2015 and 2014, the Company had no unrecognized tax benefits. There were no changes in the Company’s unrecognized tax benefits during the years ended December 31, 2015 and 2014. The Company did not recognize any interest or penalties during 2015 and 2014 related to unrecognized tax benefits. |
RECAPITALIZATION TRANSACTION
RECAPITALIZATION TRANSACTION | 12 Months Ended |
Dec. 31, 2015 | |
Restructuring and Related Activities [Abstract] | |
Recapitalization Transaction | NOTE 6 – RECAPITALIZATION TRANSACTION On or about June 12, 2015, the Company entered into definitive agreements to restructure the overall capitalization of the Company (the “Recapitalization Transaction”). To effectuate the Recapitalization Transaction, the Company entered into a Master Acquisition Agreement (the “Master Agreement”) with OPC Partners LLC, a Delaware limited liability company (“OPC”), VerifyMe Inc., a Texas corporation (“VFM”), Zaah Technologies, Inc., a Delaware corporation (“Zaah”), and an additional private investor (the “Private Investor”). Pursuant to the Master Agreement, the Company entered into several other material definitive agreements (collectively, the “Transaction Documents”) required to consummate the Recapitalization Transaction. A brief summary of the Transaction Documents is included below. Each of the Transaction Documents was entered effective as of June 12, 2015, upon the closing of the Recapitalization Transaction. Note Conversion Agreement. Warrant Conversion Agreement. Preferred Stock Conversion Agreement. Patent and Technology License Termination Agreement. Termination of Registration Rights. Termination of Technology and Services Agreement. Termination of Investment Agreement. Patent Purchase Agreement. Termination of Zaah Technology and Services Agreement. Series A Preferred Stock Subscription Agreement. Common Stock Subscription Agreement. Series B Preferred Stock Subscription Agreement. The foregoing description of the Master Agreement and the related Transaction Documents is a summary, and does not purport to be a complete description of the Master Agreement and the related Transaction Documents, and is qualified in its entirety by reference to the Master Agreement and the related Transaction Documents, copies of which are filed as Exhibits 10.1, 10.2 and 10.3 to the Company’s Report on Form 8-K, filed with the SEC on June 18, 2015 |
SENIOR SECURED CONVERTIBLE NOTE
SENIOR SECURED CONVERTIBLE NOTES PAYABLE - RELATED PARTIES | 12 Months Ended |
Dec. 31, 2015 | |
Convertible Notes Payable [Abstract] | |
Senior Secured Convertible Notes Payable -Related Parties | NOTE 7 – SENIOR SECURED CONVERTIBLE NOTES PAYABLE – RELATED PARTIES In February 2006, the Company commenced a private placement of up to $800,000 principal amount of 10% senior secured convertible promissory notes due twelve months from the date of issue to certain Company shareholders and other accredited investors. As of December 31, 2006, the Company completed this private placement by selling all notes payable totaling $800,000. The notes are secured by a first priority lien on all of the tangible and intangible personal property of the Company. In May 2007, the due date of these notes was extended to August 2008 and the interest rate increased to 12% per annum during the extension period. In June 2011, the interest rate on all of the notes was reset to 10% and $596,500 of the notes and accrued interest was extended until September 15, 2015. During the fourth quarter of 2012 the remaining $178,749 of unextended notes and the associated accrued interest were extended to September 30, 2015. In June 2013, $225,000 of these notes payable plus accrued interest of $181,125 were converted into 7.4 million shares of the Company’s common stock, which was valued at $1,628,000. The excess of the fair value of the Company’s common stock over the value of the notes payable and accrued interest was recorded as loss on extinguishment of debt in accordance with FASB ASC 470-50. During the fourth quarter of 2013, $220,000 of senior convertible notes plus accrued interest of $395,000, were converted into 7,900,000 shares of common stock. Since this transaction was with related parties, the conversion was treated as a capital transaction in accordance with FASB ASC 470-50-40-3. During the second quarter of 2014, $216,249 of principal of the Company’s outstanding senior convertible notes held by a significant shareholder of the Company, plus accrued interest of $208,339, were converted into 8,448,519 shares of common stock. The excess of the fair value of the Company’s common stock over the value of the notes payable and accrued interest, $82,000, was recorded as loss on extinguishment of debt in accordance with FASB ASC 470-50. On June 12, 2015, as part of the Recapitalization Transaction (see Note 6), the Company restructured the Senior Secured Convertible Notes Payable – Related Parties. As a result the principal balance of $114,000 and accrued interest of $118,775 was converted into 154,184 shares (13,105,662 shares pre Reverse Stock Split at $0.018 per share) of the Company’s Common Stock. This resulted in a gain of $103,456. Of this amount, $17,967 was related to a stockholder and recorded as additional paid in capital, with the remaining $85,489 being recorded as a gain on extinguishment of debt. |
NOTES PAYABLE
NOTES PAYABLE | 12 Months Ended |
Dec. 31, 2015 | |
Debt Disclosure [Abstract] | |
Notes Payable | NOTE 8 – NOTES PAYABLE Notes payable consists of the following as of December 31: December 31, December 31, 2015 2014 Unsecured notes payable due to related parties; interest at 10% per annum; principal and accrued interest due at maturity in September 2015 - $ 114,000 Series A notes payable; interest at 8% per annum; principal and accrued interest due at maturity in October 2011 (past due) 50,000 50,000 Notes payable; interest at 8% per annum, principal and accrued interest due at December 1, 2014 (past due) - 650,000 Notes payable; interest at 5% and 8% per annum, principal and accrued interest due at April 2015 - 123,000 Less: Debt discount - (10,447 ) 50,000 926,553 Less: Current portion 50,000 926,553 $ - $ - At December 31, 2015 and 2014 accrued interest on notes payable was $23,667 and$155,992. The warrant liabilities in this section were valued using the Black-Scholes option pricing model, with the following assumptions: no dividend yield, expected volatility of 173.7% to 180.7%, risk free interest rate of 1.75% and expected lives of four to five years. On June 10, 2014, the Company issued a note payable for $250,000, which included fully vested warrants to purchase 1,000,000 shares pre Reverse Stock Split of Common Stock at an exercise price of $0.10 per share, expiring in five years. The warrants were valued at $39,650 using Black-Scholes option pricing model to calculate the grant-date fair value of the warrants, with the following assumptions: no dividend yield, expected volatility of 248.2%, risk free interest rate of 1.67% and expected life of five years. The relative fair value of the warrants was $34,222 and was recorded as a discount to the notes payable in accordance with FASB ASC 835-30-25, “Recognition” (“FASB 835-30-25”) and was accreted over the term of the note payable for financial statement purposes. For the year ended December 31, 2014, $34,222 was accreted through interest expense. The note and accrued interest at 8% per annum was originally due on December 11, 2014, but the Company received approval to extend the maturity until December 31, 2014. The warrants are subject to anti-dilutive adjustments and are therefore classified as a liability in accordance with FASB ASC 815. The warrant liability was re-valued at each reporting period with the change in fair value recorded through earnings. As of June 12, 2015, the date of conversion in conjunction with the Recapitalization Transaction (see Note 6), the fair value of the warrant liability was $8,113. As a result of the Recapitalization Transaction, the note’s principal balance of $250,000 and accrued interest of $20,263 was converted into 176,471 shares (15,000,000 shares pre Reverse Stock Split at $0.018) of Common Stock. This resulted in a gain of $120,117, and because this individual is a stockholder was recorded as additional paid in capital. On August 5, 2014, the Company issued notes payable for $100,000, which included fully vested warrants to purchase 600,000 shares (pre Reverse Stock Split) of Common Stock at an exercise price of $0.05 per share, expiring in five years. The warrants were valued at $29,725 using the Black-Scholes option pricing model to calculate the grant-date fair value of the warrants, with the following assumptions: no dividend yield, expected volatility of 233.8%, risk free interest rate of 1.67% and expected life of five years. The relative fair value of the warrants was $22,914 and was recorded as a discount to the notes payable in accordance with FASB ASC 835-30-25, and was accreted over the term of the note payable for financial statement purposes. For the year ended December 31, 2014, $22,914 was accreted through interest expense. The note and accrued interest at 8% per annum were due in full on December 1, 2014. The warrants were subject to anti-dilutive adjustments and were therefore classified as a liability in accordance with FASB ASC 815. The warrant liability was re-valued at each reporting period with the change in fair value recorded through earnings. As of June 12, 2015, the date of conversion in conjunction with the Recapitalization Transaction (see Note 6), the fair value of the warrant liability was $5,151. As a result of the Recapitalization Transaction, the principal balance of $50,000 and accrued interest of $3,414 was converted into 34,898 shares (2,966,210 shares pre Reverse Stock Split at $0.018) of Common Stock. This resulted in a gain of $23,740, which was recorded as a gain on the extinguishment of debt. The remaining $50,000 was paid in full, plus accrued interest in September 2015. The 3,529 warrants (300,000 warrants pre Reverse Stock Split) to purchase shares of Common Stock associated with the $50,000 note payable remain outstanding and must be re-valued at each reporting period with the change in fair value recorded through earnings. As of December 31, 2015, the warrants were valued at $7,902. On August 12, 2014, the Company issued a note payable for $50,000, which included fully vested warrants to purchase 300,000 shares (pre Reverse Stock Split) of Common Stock at an exercise price of $0.05 per share, expiring in five years. The warrants were valued at $26,817 using Black-Scholes option pricing model to calculate the grant-date fair value of the warrants, with the following assumptions: no dividend yield, expected volatility of 233.8%, risk free interest rate of 1.67% and expected life of five years. The relative fair value of the warrants was $17,455 and was recorded as a discount to the note payable in accordance with FASB ASC 835-30-25, and was accreted over the term of the note payable for financial statement purposes. For the year ended December 31, 2014, $17,455 was accreted through interest expense. The note and accrued interest at 8% per annum were due in full on December 1, 2014. The warrants were subject to anti-dilutive adjustments and are therefore classified as a liability in accordance with FASB ASC 815. The warrant liability was re-valued at each reporting period with the change in fair value recorded through earnings. As of June 12, 2015, the date of conversion in conjunction with the Recapitalization Transaction (see Note 6), the fair value of the warrant liability was $2,575. As a result of the Recapitalization Transaction, the principal balance of $50,000 and accrued interest of $3,370 was converted into 34,843 shares (2,961,644 shares pre Reverse Stock Split at $0.018) of Common Stock. This resulted in a gain of $23,720, which was recorded as a gain on the extinguishment of debt. On August 14, 2014, the Company issued a note payable for $100,000, which included fully vested warrants to purchase 600,000 shares pre Reverse Stock Split of Common Stock at an exercise price of $0.05 per share, expiring in five years. The warrants were valued at $47,676 using Black-Scholes option pricing model to calculate the grant-date fair value of the warrants, with the following assumptions: no dividend yield, expected volatility of 233.8%, risk free interest rate of 1.67% and expected life of five years. The relative fair value of the warrants was $32,274 and was recorded as a discount to the note payable in accordance with FASB ASC 835-30-25 and was accreted over the term of the note payable for financial statement purposes. For the year ended December 31, 2014, $32,274 was accreted through interest expense. The note and accrued interest at 8% per annum were due in full on December 1, 2014. The warrants were subject to anti-dilutive adjustments and were therefore classified as a liability in accordance with FASB ASC 815. The warrant liability was re-valued at each reporting period with the change in fair value recorded through earnings. As of June 12, 2015, the date of conversion in conjunction with the Recapitalization Transaction (see Note 6), the fair value of the warrant liability was $5,153. As a result of the Recapitalization Transaction, the principal balance of $100,000 and accrued interest of $6,697 was converted into 69,657 shares (5,920,852 shares pre Reverse Stock Split at $0.018) of Common Stock. This resulted in a gain of $47,421, which was recorded as a gain on the extinguishment of debt. On September 8, 2014, the Company issued notes payable for $150,000, which included fully vested warrants to purchase 900,000 shares (pre Reverse Stock Split) of Common Stock at an exercise price of $0.05 per share, expiring in five years. The warrants were valued at $62,544 using Black-Scholes option pricing model to calculate the grant-date fair value of the warrants, with the following assumptions: no dividend yield, expected volatility of 233.8%, risk free interest rate of 1.67% and expected life of five years. The relative fair value of the warrants was $44,140 and was recorded as a discount to the notes payable in accordance with FASB ASC 835-30-25 and was accreted over the term of the note payable for financial statement purposes. For the year ended December 31, 2014, $44,140 was accreted through interest expense. The note and accrued interest at 8% per annum were due in full on December 1, 2014. The warrants were subject to anti-dilutive adjustments and were therefore classified as a liability in accordance with FASB ASC 815. The warrant liability was re-valued at each reporting period with the change in fair value recorded through earnings. As of June 12, 2015, the date of conversion in conjunction with the Recapitalization Transaction (see Note 6), the fair value of the warrant liability was $7,725. As a result of the Recapitalization Transaction, the principal balance of $150,000 and accrued interest of $9,222 was converted into 103,991 shares (8,839,269 shares pre Reverse Stock Split at $0.018) of Common Stock. This resulted in a gain of $70,766, which was recorded as a gain on the extinguishment of debt. On December 5, 2014, the Company issued a note payable for $23,000 to a stockholder, which bears interest at 5.0% and was due on April 5, 2015. As a result of the Recapitalization Transaction (see Note 6), the principal balance of $23,000 and accrued interest of $609 was converted into 15,418 shares (1,310,510 shares pre Reverse Stock Split at $0.018) of Common Stock. This resulted in a gain of $10,493 and because this entity is a stockholder was recorded as additional paid in capital. On December 31, 2014, the Company issued a note payable for $100,000, which included fully vested warrants to purchase 600,000 shares (pre Reverse Stock Split) of Common Stock at an exercise price of $0.05 per share expiring in five years. The warrants were valued at $11,812 using the Black-Scholes option pricing model to calculate the grant-date fair value of the warrants, with the following assumptions: no dividend yield, expected volatility of 229.0%, risk free interest rate of 1.68% and expected life of five years. The relative fair value of the warrants was $10,563 and was recorded as a discount to the notes payable in accordance with FASB ASC 835-30-25 and was accreted over the term of the note payable for financial statement purposes. For the three months ended March 31, 2015, the final $10,447 was accreted through interest expense. The note and accrued interest at 8% per annum were due in full on April 1, 2015. The warrants were subject to anti-dilution adjustments and were therefore classified as a liability in accordance with FASB ASC 815. The warrant liability was revalued at each reporting period with the change in fair value recorded through earnings. As of June 12, 2015, the date of conversion in conjunction with the Recapitalization Transaction (see Note 6), the fair value of the warrant liability was $5,226. As a result of the Recapitalization Transaction, the principal balance of $100,000 and accrued interest of $3,689 was converted into 67,637 shares (5,749,163 shares pre Reverse Stock Split at $0.018) of Common Stock. This resulted in a gain of $46,084, which was recorded as a gain on the extinguishment of debt. On February 10, 2015, the Company issued a note payable for $25,000, bearing interest at 5.0% to an accredited investor and director of the Company. As a result of the recapitalization transaction (see Note 6), the principal balance of $25,000 and accrued interest of $417 was converted into 16,608 shares (1,411,720 shares pre Reverse Stock Split at $0.018) of Common Stock. This resulted in a gain of $11,296 and because this entity is a stockholder was recorded as additional paid in capital. The conversion of the notes above on June 12, 2015 was treated as an extinguishment of debt. In accordance with FASB ASC 470-50, the difference between the cash acquisition price of the debt and its net carrying amount shall be recognized currently in income in the period of extinguishment as losses or gains. Similar transactions between stockholders was recognized as additional paid in capital. On March 27, 2015, the Company issued a note payable for $111,102, bearing interest at 8.0% to an accredited investor. On April 30, 2015, the Company issued a note payable for $4,887, bearing interest at 8.0% to an accredited investor. On May 15, 2015, the Company issued a note payable for $4,480, bearing interest at 8.0% to an accredited investor. On May 21, 2015, the Company issued a note payable for $14,074, bearing interest at 8.0% to an accredited investor. As a result of the Recapitalization Transaction (see Note 6), the principal balance of the above four notes of $134,542 and accrued interest of $2,271 was converted into 41,603 shares (3,536,254 shares pre Reverse Stock Split at $0.0386) of the Company’s Series A Preferred stock as part of the $1,450,000 cash investment. On June 12, 2015, the conversion of the four notes issued from March 27, 2015 to May 21, 2015, was treated as a troubled debt restructuring in accordance with FASB ASC 470-60-15, “Debt – Troubled Debt Restructurings by Debtors.” A debtor that issues or otherwise grants an equity interest to a creditor to settle fully a payable, shall account for the equity interest at its fair value. The difference between the fair value of the equity interest granted and the carrying amount of the payable settled was recognized as a gain on restructuring payables. |
WARRANT LIABILITY
WARRANT LIABILITY | 12 Months Ended |
Dec. 31, 2015 | |
Warrants and Rights Note Disclosure [Abstract] | |
Warrant Liability | NOTE 9 – WARRANT LIABILITY On December 31, 2012, the Company entered into an Investment Agreement, a Technology and Service Agreement, a Patent and Technology License Agreement and an Asset Purchase Agreement with VFM and on the same date entered into a Technology and Service Agreement with Zaah (collectively with the VFM agreements, the “Agreements”). Contemplated by those Agreements were warrant issuances by the Company for the purchase of Common Stock. Warrants exercisable for 627,451 shares (53,333,333 shares pre Reverse Stock Split) of Common Stock associated with these Agreements are subject to anti-dilution adjustments outlined in the Agreements. In accordance with FASB ASC 815, the warrants were classified as a liability in the total amount of $2.4 million at December 31, 2012. In addition, the warrants must be valued every reporting period and adjusted to market with the increase or decrease being adjusted through earnings. As of December 31, 2015 and 2014, the fair value of the warrant liability was $1,020,632 and $787,544. On January 1, 2014, the Company issued warrants to purchase 74,697 shares (6,349,245 pre Reverse Stock Split) of Common Stock as consideration for technology received from VFM under to the Patent and Technology License Agreement dated December 31, 2012. The warrants are exercisable at $0.10 per share. The warrants are subject to anti-dilution adjustments outlined in the Agreement. In accordance with FASB ASC 815, the warrants were classified as a liability with an initial fair value of $444,000, which was immediately expensed as research and development costs. In addition, the warrants must be valued every reporting period and adjusted to market with the increase or decrease being adjusted through earnings. As of December 31, 2015 and 2014, the fair value of the warrant liability was $147,524 and $149,090. The Company made the payment of warrants to VFM on a good faith basis, based on the assumption that the technology conveyed to the Company would be patentable and licensable. The Company had not reached a conclusion at that time that the technology would be patentable and licensable. As of June 12, 2015, the Company concluded that the technology received from VFM is patentable and licensable, and that the Company was required to make, on January 1, 2015, an additional payment pursuant to Patent and Technology Agreement in the amount of $4,500,000, to be paid by issuing (i) a number of shares of Common Stock equal to (x) $4,500,000 divided by (y) a price which equals a 10% discount to the market price at the time of issuance and (ii) warrants to purchase an equal number of shares of Common Stock exercisable at a price of $0.10 per share. Based upon the share price of $0.04 per share, this would result in the issuance of approximately an additional 125 million shares of Common Stock and warrants to purchase an additional 125 million shares. The $4,500,000 was accrued at December 31, 2014. The number of warrants to be issued based on a stock price of $0.02 at December 31, 2014 was 250 million warrants. The warrants were valued at $4,892,089 using the Black-Scholes pricing model to calculate the grant-date fair value of the warrants with the following assumptions: no dividend yield, expected volatility of 229.1%, risk free interest rate of 1.65% and expected life of five years. In conjunction with the Recapitalization Transaction (see Note 6), the Company agreed that an additional $2,000,000 in exclusivity licensing fees was required to be paid and converted the $6,500,000 into shares of Series B Preferred Stock. In addition, the fair value of the associated warrants was $1,867,417 as of June 12, 2015 and was recorded as additional paid in capital on conversion. The warrants associated with the notes payable (see Note 6) were revalued at June 12, 2015, based on the cashless conversion modification. The total fair value of those warrants was $37,000 and was recorded as additional paid in capital on conversion. |
CONVERTIBLE PREFERRED STOCK
CONVERTIBLE PREFERRED STOCK | 12 Months Ended |
Dec. 31, 2015 | |
Preferred Stock, Number of Shares, Par Value and Other Disclosures [Abstract] | |
Convertible Preferred Stock | NOTE 10 – CONVERTIBLE PREFERRED STOCK Subscription Agreement The Company entered into a Subscription Agreement with VerifyMe on January 31, 2013 (the “Subscription Agreement”). Under the terms of the Subscription Agreement, VerifyMe subscribed to purchase 33,333,333 shares of the Company’s Series A preferred stock (the “Preferred Stock”) and a warrant to purchase 33,333,333 shares of the Company’s common stock at an exercise price of $0.12 per share, for $1 million. At any time before January 31, 2015, VerifyMe has the right, but not the obligation, to require the Company to repurchase all, but not less than all, of the capital stock of the Company and warrants exercisable for capital stock of the Company held by VerifyMe in exchange for the price originally paid by VerifyMe therefor upon the occurrence of any of the following events:(i) the consummation of any bona fide business acquisition, (ii) the incurrence of any indebtedness by the Company in an amount in excess of $2 million, (iii) the issuance or sale of any security having a preference on liquidation senior to common stock, or (iv) the sale by the Company of capital stock or warrants exercisable for its capital stock at a price below $0.03 per share. This right has not been exercised. In accordance with FASB ASC 480 and 815, the Preferred Stock has been classified as permanent equity and was valued at $1 million at January 31, 2013. The conversion feature of the Preferred Stock is an embedded derivative, which is classified as a liability in accordance with FASB ASC 815 and was valued in accordance with FASB ASC 470 as a beneficial conversion feature at a fair value of $0 at June 12, 2015 and $800,000 at December 31, 2014. This was classified as an embedded derivative liability and a discount to Preferred Stock. Because the Preferred Stock can be converted at any time, the full amount of the original fair value was accreted and classified as a reduction to the discount on Preferred Stock and a deemed dividend distribution in the full amount of $1 million, in 2013. On August 5, 2013, 12,222,222 shares (pre Reverse Stock Split) of Series A Preferred Stock were converted into 12,222,222 shares (pre Reverse Stock Split) of Common Stock. The Company has determined that the Series A Preferred Stock issuance in the Recapitalization Transaction does not meet the requirements of FASB ASC 480-10 for liability treatment and therefore has been classified as permanent equity. Additionally, it was determined that the economic characteristics of the beneficial conversion feature are clearly and closely related to the host, and are based on a fixed conversion rate into shares of Common Stock and therefore do not require bifurcation. The Series A Preferred Stock was converted into 248,366 (21,111,111 pre Reverse Stock Split) shares of Common Stock on June 12, 2015 in conjunction with the Recapitalization Transaction (see Note 6). The 392,157 warrants (33,333,333 warrants pre Reverse Stock Split) associated with the Series A Preferred Stock were also classified as a liability since they are subject to anti-dilutive adjustments outlined in the warrant agreement and valued at a fair market value of $2,995,791 at January 31, 2013. In addition, the warrants must be valued every reporting period and adjusted to market with the increase or decrease being adjusted through earnings. As of December 31, 2015 and 2014, the fair value of the warrants was $626,317 and $631,678. On May 26, 2015, the Company amended its Amended Certificate of Designation, dated February 1, 2013, with respect to its Series A Preferred Stock, to amend the designations, preferences, powers and rights of the Series A Preferred Stock, and authorizing the issuance of up to 37,564,767 shares of Series A Preferred Stock. The Series A Preferred Stock are currently convertible at 20:1. 37,564,767 (pre-Reverse Stock Split) shares of Series A Preferred Stock were issued as part of the Recapitalization Transaction (see Note 6). Additionally, on May 26, 2015, the Company amended its Amended and Restated Articles of Incorporation, dated December 19, 2003, to establish the Series B Preferred Stock, authorizing the issuance of up to 85 shares of Series B Preferred Stock. The Series B Preferred Stock are convertible currently at 8,496,732:1. 85 shares (pre Reverse Stock Split) of Series B Preferred Stock were issued to settle the $6.5 million of licensing fees due and the associated warrants as part of the Recapitalization Transaction (see Note 6). The foregoing description of the Certificate of Designation is a summary, and does not purport to be a complete description of the Certificate of Designation, and is qualified in its entirety by reference to the Certificate of Designation, a copy of which is filed as Exhibit 3.3 to the Company’s Report on Form 8-K, filed with the SEC on June 18, 2015. On June 12, 2015, the Company issued 389,668 shares (33,121,777 pre Reverse Stock Split) of Series A Preferred shares to an investor for $1,278,501 as part of the total $1,450,813 transaction with the investor. Further, an officer of the Company and a stockholder are partial owners in the investor and therefore the investor received an additional 10,667 shares (906,736 pre Reverse Stock Split) of Series A Preferred Stock for the forgiveness of previously accrued but unpaid compensation valued at $35,000 and notes payable and accrued interest were converted into 41,603 shares (3,536,254 pre Reverse Stock Split) of Series A Preferred Stock also as part of the $1,450,813 transaction. Each of the Series A Preferred Stock and the Series B Preferred Stock have a preference in liquidation that the holders of the Series A Preferred Stock and the Series B Preferred Stock are to be paid out of assets available for distribution prior to holders of Common Stock. The holders Series A Preferred Stock and the Series B Preferred Stock may cast the number of votes equal to the number of whole shares of Common Stock into which the shares of Series A Preferred Stock and the Series B Preferred Stock can be converted, with certain limitations. In addition, the holders of Series A Preferred Stock and the Series B Preferred Stock are to be paid dividends, based on the number of shares of Series A Preferred Stock and the Series B Preferred Stock, as the case may be, as if the shares had been converted to Common Stock, prior to the holders of Common Stock receiving a dividend. |
FAIR VALUE OF FINANCIAL INSTRUM
FAIR VALUE OF FINANCIAL INSTRUMENTS | 12 Months Ended |
Dec. 31, 2015 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments | NOTE 11 – FAIR VALUE OF FINANCIAL INSTRUMENTS Derivative Liabilities For purposes of determining whether certain instruments are derivatives for accounting treatment, the Company follows the accounting standard that provides guidance for determining whether an equity-linked financial instrument, or embedded feature, is indexed to an entity’s own stock. The standard applies to any freestanding financial instruments or embedded features that have the characteristics of a derivative, and to any freestanding financial instruments that are potentially settled in an entity’s own common stock. Liabilities measured at fair value on a recurring basis are summarized as follows: Level 1 Level 2 Level 3 Total Derivative liability related to fair value of warrants $ - $ - $ 1,802,375 $ 1,802,375 Total $ - $ - $ 1,802,375 $ 1,802,375 The following table details the approximate fair value measurements within the fair value hierarchy of the Company’s derivative liabilities using Level 3 inputs: Balance at January 1, 2015 $ 6,370,709 Conversion of notes payable, net of interest expense (31,397 ) Conversion of warrants related to licensing fees (1,867,417 ) Change in fair value of derivative liabilities (2,669,520 ) Balance at December 31, 2015 $ 1,802,375 The Company has no assets that are measured at fair value on a recurring basis. There were no assets or liabilities measured at fair value on a non-recurring basis during the year ended December 31, 2015. As of December 31, 2015, the Company’s outstanding warrants were treated as derivative liabilities and changes in the fair value were recognized in earnings. These Common Stock purchase warrants did not trade in an active securities market, and as such, the Company estimated the fair value of these warrants using Black-Scholes and the following assumptions: December 31, 2015 Annual Dividend Yield 0.0 % Expected Life (Years) 2.0 - 3.0 Risk-Free Interest Rate 1.06% - 1.31 % Expected Volatility 178.5% - 179.3 % Expected volatility was based primarily on historical volatility. Historical volatility was computed using daily pricing observations for recent periods. The Company believes this method produced an estimate that was representative of the Company’s expectations of future volatility over the expected term of these warrants. The Company had no reason to believe future volatility over the expected remaining life of these warrants was likely to differ materially from historical volatility. The expected life was based on the remaining contractual term of the warrants. The risk-free rate was based on the U.S. Treasury rate that corresponded to the expected term of the warrants. |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 12 Months Ended |
Dec. 31, 2015 | |
Equity [Abstract] | |
Stockholders' Equity | NOTE 12 – STOCKHOLDERS’ EQUITY On January 1, 2014, under the terms of the Patent and Technology License Agreement, the Company issued 6,349,206 shares (pre Reverse Stock Split) of Common Stock to VFM, in addition to the warrants described in Note 9 above. The shares were issued in payment for the technology received. Under the agreement, $400,000 worth of Common Stock was to be paid by the Company to VFM at a 10% discount to the market at time of payment. The closing price was $0.07 per share discounted 10% to $0.063. The $400,000 payment divided by the $0.063 per share resulted in 6,349,206 shares (pre Reverse Stock Split) to be issued. The entire $400,000 payment was expensed to research and development. On June 2, 2015, the Company issued 68,236 shares (post Reverse Stock Split) of Common Stock to two vendors to settle outstanding payable balances of $58,000. On June 12, 2015, the Company issued 304,785 shares (25,906,735 pre Reverse Stock Split) of Common Stock and raised $50,000. During the three months ended June 30, 2015, one stockholder received 2,353 shares (post Reverse Stock Split) of Common Stock in a cashless exercise. On June 11, 2015, the Company issued 525,000 Restricted Stock Units (“RSUs”) (44,625,000 pre Reverse Stock Split) to two officers of the Company. The RSUs were valued at the closing stock price of $0.01 on June 11, 2015, at $446,250, fair value. These RSUs are being expensed over the vesting terms. For the year ended December 31, 2015, the Company expensed $80,573 related to the RSUs. On June 30, 2015, the Company issued 48,761 shares (post Reverse Stock Split) of Common Stock to a vendor to settle an outstanding payable balance of $41,447, net of gain on conversion of $35,153. On July 9, 2015, the Company hired a Chief Operating Officer (“COO”). The COO will receive 225,000 RSUs (19,125,000 pre Reverse Stock Split), vesting over a three-year period, with one-third vesting the first year and one-twelfth vesting ratably on a quarterly basis thereafter. The RSUs were valued at fair value of $918,000 based on the closing stock price of $4.08 on July 9, 2015. For the year ended December 31, 2015, the Company expensed $153,000 related to the RSUs. On July 23, 2015, the Company completed the Reverse Stock Split of its outstanding Common Stock and Preferred Stock, as further described in Note 1 and Note 6 above. On August 10, 2015, the Company agreed to issue the Chief Financial Officer (“CFO”) 20,000 RSUs vesting over six months and 100,000 RSUs vesting annually over three years. The RSUs were valued at a fair value of $692,400 based on the closing stock price of $5.77 per share on August 10, 2015. For the year ended December 31, 2015, the Company expensed $176,306 related to the RSUs. On October 1, 2015, the Company agreed to issue 100,000 RSUs to a consultant for services. Of the 100,000 RSUs, 60,000 were issued upon execution of the agreement, 20,000 shares are to be issued on January 1, 2016 and 20,000 shares are to be issued on April 1, 2016. The RSUs were originally valued at $195,000. The Company expensed $54,250 for the year ended December 31, 2015 relative to these RSUs. On October 7, 2015, the Company agreed to pay $15,000 to a consultant/stockholder as well as an additional $35,000 based on certain milestones being met. Additionally, as of August 1, 2015 the Company agreed to issue the individual 30,000 RSUs originally valued at $165,000 in quarterly installments on November 1, 2015, February 1, 2016, May 1, 2016 and August 1, 2016, which began vesting on August 1, 2015. The Company expensed $34,687 for the year ended December 31, 2015 relative to these RSUs. Further the individual will receive a 2% to 5% commission on company sales while this agreement is in effect, however no commissions were earned during 2015. In accordance with FASB ASC 505-50, “Equity – Equity-Based Payments to Non-Employees,” restricted stock with performance conditions should be revalued based on the modification accounting methodology described in FASB ASC 718-20, “Compensation—Stock Compensation—Awards Classified as Equity.” As such the Company has revalued certain restricted stock with consultants and determined that there was an aggregate decrease in fair value of $75,500. |
STOCK OPTIONS
STOCK OPTIONS | 12 Months Ended |
Dec. 31, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock Options | NOTE 13 – STOCK OPTIONS During 1999, the Board of Directors (“Board”) of the Company adopted, with the approval of the stockholders, a Stock Option Plan. In 2000, the Board superseded that plan and created a new Stock Option Plan, pursuant to which it is authorized to grant options to purchase up to 1.5 million shares of common stock. On December 17, 2003, the Board, with approval of the stockholders, superseded the 2000 plan and created the 2003 Stock Option Plan (the “2003 Plan”). Under the 2003 Plan the Company is authorized to grant options to purchase up to 18,000,000 shares of common stock to the Company’s employees, officers, directors, consultants, and other agents and advisors. The Plan is intended to permit stock options granted to employees under the Plan to qualify as incentive stock options under Section 422 of the Internal Revenue Code of 1986, as amended (“Incentive Stock Options”). All options granted under the 2003 Plan, which are not intended to qualify as Incentive Stock Options, are deemed to be non-qualified options (“Non-Statutory Stock Options”). As of December 31, 2015, options to purchase 298,530 shares of common stock have been issued and are unexercised, and 4,067,631 shares are available for grants under the 2008 Plan. During 2013, our Board adopted a new omnibus incentive compensation plan that was ratified by the shareholders at the 2013 annual meeting, (the “2013 Plan”) which will serve as the successor incentive compensation plan to the 2003 Plan. Under the 2013 Plan, the Company is authorized to grant awards of stock options, restricted stock, restricted stock units and other stock-based awards of up to an aggregate of 20,000,000 shares of common stock. The 2013 Plan is intended to permit stock options granted to employees under the 2013 Plan to qualify as Incentive Stock Options. All options granted under the 2013 Plan, which are not intended to qualify as Incentive Stock Options are deemed to be Non-Statutory Stock Options. As of December 31, 2015, under the 2013 Plan grants of restricted stock and options to purchase 292,500 shares of common stock have been issued and are unvested or unexercised, and 19,700,000 shares of common stock remain available for grants under the 2013 Plan. The 2013 Plan is administered by a committee of the Board (“Compensation Committee”) which determines the persons to whom awards will be granted, the number of awards to be granted and the specific terms of each grant, including the vesting thereof, subject to the provisions of the plan. In connection with Incentive Stock Options, the exercise price of each option may not be less than 100% of the fair market value of the common stock on the date of the grant (or 110% of the fair market value in the case of a grantee holding more than 10% of the outstanding stock of the Company). The aggregate fair market value (determined at the time of the grant) of stock for which an employee may exercise Incentive Stock Options under all plans of the company shall not exceed $1,000,000 per calendar year. If any employee shall have the right to exercise any options in excess of $100,000 during any calendar year, the options in excess of $100,000 shall be deemed to be Non-Statutory Stock Options, including prices, duration, transferability and limitations on exercise. The Company issued Non-Statutory Stock Options pursuant to contractual agreements with non-employees. Options granted under the agreements are expensed when the related service or product is provided. Determining the appropriate fair value of stock-based awards requires the input of subjective assumptions. The Company uses the Black-Scholes option pricing model to value its stock option awards. The assumptions used in calculating the fair value represent management’s best estimates and involve inherent uncertainties and judgments. On March 28, 2014, the Company issued options to purchase an aggregate of 6,000,000 shares of the Company’s common stock at an exercise price of $0.05 per share, with a term of ten years, to a member of the Board of Directors. The fair value of options issued was $599,893 of which all was expensed immediately. These options were valued using the Black-Scholes option pricing model to calculate the grant-date fair value of the options, with the following assumptions: no dividend yield, expected volatility of 229%, risk-free interest rate of 2.73% and expected option life of ten years. On March 28, 2014 at the urging of the Company’s previous Chairman, Michael Sonnenreich, and after discussion by the Board and suggestions by Board Observers attending the meeting, the Board unanimously voted to extend the exercise period of all existing 10 year options, for a full ten years (as opposed to six months) regardless of their status with the Company. This charge was memorialized and sent in writing to previous Directors by then general counsel Morgan, Lewis & Bockius. On June 11, 2015, the Company issued options to purchase an aggregate of 1,225,000 shares (104,125,000 pre Reverse Stock Split) of the Common Stock at an exercise price of $0.85 per share, with a term of five years, to three employees and two members of the Board. The fair value of options issued was $993,083. These options were valued using the Black-Scholes option pricing model to calculate the grant-date fair value of the options, with the following assumptions: no dividend yield, expected volatility of 176.6%, risk-free interest rate of 1.74% to 1.75% and expected option life of five years. The options are being expensed over the vesting terms for the employees and over the Board members’ remaining service terms as that is shorter than the vesting terms. On July 9, 2015, the Company hired a COO who received 375,000 options (31,875,000 pre Reverse Stock Split) to purchase shares of Common Stock of the Company, with an exercise price of $0.85 ($0.01 pre reverse split) and valued at $1,502,219. The options vest quarterly over three years. The fair value of the options was valued using the Black-Scholes option pricing model with the following assumptions: no dividend yield, expected volatility of 180.1%, risk free interest rate of 1.58% and expected life of five years. The options are being expensed over the vesting terms. On August 10, 2015, the Company hired a CFO who received 200,000 options (17,000,000 pre Reverse Stock Split) to purchase shares of Common Stock vesting annually over three years. The options were valued at fair value of $1,107,857, using the Black-Scholes option pricing model with the following assumptions: no dividend yield, expected volatility of 182.2%, risk free rate interest rate of 1.62% and expected life of five years. The options are being expensed over the vesting terms. On September 25, 2015, the Company issued options to purchase an aggregate of 75,000 shares (6,375,000 pre Reverse Stock Split) of Common Stock at an exercise price of $2.15 per share, with a term of five years to a member of the Board. The fair value of options issued was $155,003. These options were valued using the Black-Scholes option pricing model to calculate the grant-date fair value of the options, with the following assumptions: no dividend yield, expected volatility of 183.5%, risk-free interest rate of 1.48% and expected option life of five years. The options are being expensed over the service term as that is shorter than the vesting terms. For the years ended December 31, 2015 and 2014, the Company expensed $849,791 and $860,235 with respect to the options. The following table presents the weighted-average assumptions used to estimate the fair values of the stock options granted during the years ended December 31, 2015 and 2014: 2015 2014 Risk Free Interest Rate 1.69 % 2.73 % Expected Volatility 176.6 % 229.0 % Expected Life (in years) 5.0 10.0 Dividend Yield 0 % 0 % Weighted average estimated fair value of options during the period $ 2.00 $ 1.00 The following table summarizes the activities for our stock options for the year ended December 31, 2015and 2014: Options Outstanding Number of Shares Weighted- Average Exercise Price Weighted- Average Remaining Contractual Term (in years) Aggregate Intrinsic Value (in 000’s) (1) Balance as of December 31, 2013 739,608 $ 4.25 Exercised (141,176) $ 1.70 Balance as of December 31, 2014 598,431 $ 4.25 Granted 1,875,000 $ 0.85 Exercised (7,843) 0.05 Forfeited/canceled (308,235) $ 0.06 Balance as of December 31, 2015 2,157,353 $ 1.80 5.0 $ 226,631 Exercisable as of December 31, 2015 626,103 $ 2.57 6.2 Exercisable as of December 31, 2015 and expected to 2,157,353 $ 1.80 5.0 $ 226,631 (1) The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the closing stock price of $2.50 for our common stock on December 31, 2015. During the year ended December 31, 2015 and 2014, the weighted average fair value of stock options granted during the period was $3,758,162 and $599,893. The fair value of stock options is expensed over the vesting term in accordance with the terms of the related stock option agreements. During the year ended December 31, 2015 and 2014, the intrinsic value of stock options exercised during the period was $0. For the years ended December 31, 2015 and 2014, the Company expensed $849,792 and $860,233, relative to the fair value of stock options granted. As of December 31, 2015, there was $2,853,537 of unrecognized compensation cost related to outstanding stock options. This amount is expected to be recognized over a weighted-average period of 2.5 years. To the extent the actual forfeiture rate is different from what the Company has estimated, stock-based compensation related to these awards will be different from the Company’s expectations. The difference between the stock options exercisable at December 31, 2015 and the stock options exercisable and expected to vest relates to management’s estimate of options expected to vest in the future. The following table summarizes the activities of our unvested stock options for the year ended December 31, 2015 and 2014: Number of Awards Weighted Average Exercise Price Weighted Average Remaining Amortization Period (Years) Unvested stock options at December 31, 2013 55,882 $ 6.52 Vested (38,235) (6.86) Unvested stock options at December 31, 2014 17,647 $ 9.49 Granted 1,875,000 $ 1.43 Cancelled/Forfeited (11,765 ) $ (12.75) Vested (349,632 ) $ (1.31) Unvested stock options at December 31, 2015 1,531,250 $ 1.48 4.49 The following table summarizes the activities for our warrants for the year ended December 31, 2015: Warrants Outstanding Number of Shares Weighted- Average Exercise Price Weighted- Average Remaining Contractual Term (in years) Aggregate Intrinsic Value (in 000’s) (1) Balance as of December 31, 2013 1,405,686 $ 8.80 Granted 121,755 6.86 Expired (66,666 ) (12.75 ) Balance as of December 31, 2014 1,460,775 $ 1.01 Exercised (2,353 ) $ 0.85 Cancelled/Forfeited (43,529 ) $ (4.15 ) Balance as of December 31, 2015 1,414,893 $ 9.67 4.8 $ 413 Exercisable as of December 31, 2015 1,414,893 $ 9.67 4.8 Exercisable as of December 31, 2015 and expected to 1,414,893 $ 9.67 4.8 $ 413 (1) The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying warrants and the closing stock price of $2.50 for our common stock on December 31, 2015. All warrants were vested on the date of grant. |
OPERATING LEASES
OPERATING LEASES | 12 Months Ended |
Dec. 31, 2015 | |
Leases [Abstract] | |
Operating Leases | NOTE 14 – OPERATING LEASES For the year ended December 31, 2014 and 2013, total rent expense under leases amounted to $55,153 and $65,950. At December 31, 2015, the Company was not obligated under any non-cancelable operating leases. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2015 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | NOTE 15 – RELATED PARTY TRANSACTIONS At June 12, 2015, three stockholders of the Company held $317,000 of the senior secured convertible notes payable and were owed accrued interest of $42,713. The notes and accrued interest were converted into 234,735 shares (19,952,489 pre Reverse Stock Split) of Common Stock as further described in Note 7 and 8. |
MAJOR CUSTOMERS_VENDORS
MAJOR CUSTOMERS/VENDORS | 12 Months Ended |
Dec. 31, 2015 | |
Risks and Uncertainties [Abstract] | |
Major Customers/Vendors | NOTE 16 – MAJOR CUSTOMERS/VENDORS During the years ended December 31, 2015 and 2014, three customers accounted for 100.0% of total sales. Generally, a substantial percentage of the Company's sales has been made to a small number of customers and is typically on an open account basis. During the years ended December 31, 2015 and 2014, we purchased 100.0% of our pigment from one vendor. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2015 | |
Subsequent Events [Abstract] | |
Subsequent Events | NOTE 17 – SUBSEQUENT EVENTS As of the date of this filing, the 10,667 shares (906,736 pre Reverse Stock Split) of Series A Preferred Stock have not been distributed to the officer of the Company and the stockholder, as further discussed in Note 10. On February 9, 2016, the Company issued 2,587,500 shares of 0% Series C Convertible Preferred Stock, par value $0.001 per share (“Series C Preferred Stock”) at a purchase price of $0.40 per share with gross proceeds to the Company of $1,035,000. In connection with the sale of the Series C Preferred Stock, the Company issued to the purchasers warrants to purchase in the aggregate 2,587,500 shares of the Company’s common stock at an exercise price of $0.40 per share. Further, as a part of the same offering, on February 29, 2016, the Company issued 500,000 shares of Series C Preferred Stock, at a purchase price of $0.40 per share with gross proceeds to the Company of $200,000. In connection with the sale of the Series C Preferred Stock, the Company issued to the purchasers warrants to purchase in the aggregate 500,000 shares of the Company’s common stock at an exercise price of $0.40per share. Each share of Series C Preferred Stock is convertible into one share of common stock. The Series C Preferred Stock provides for certain adjustments that may be made to the exercise price and the number of shares issuable upon exercise due to future corporate events or otherwise, including, for a proscribed period of time, upon the issuance of securities at a price that is less than the exercise price of the Series C Preferred Stock. The Company entered into a Registration Rights Agreement with each of the Investors (the “Registration Rights Agreement”), pursuant to which the Company has agreed to file a registration statement with the Securities and Exchange Commission (“SEC”) covering the resale of the Conversion Shares, as well as the shares of Common Stock that are issuable upon exercise of the Warrants (the “Warrant Shares”). The following is a brief summary of the Purchase Agreement, the Registration Rights Agreement, the Series C Preferred Stock and the Warrants, which are qualified in their entirety by reference to the full text of such documents. Purchase Agreement The Purchase Agreement contains representations and warranties by the Company and the Investors and covenants of the Company and the Investors (including indemnification from the Company in the event of breaches of its representations and warranties), which the Company believes are customary for transactions of this type. The Purchase Agreement provides for certain restrictive covenants, including the restriction on the Company to issue any securities for a period of sixty days from the date of the Purchase Agreement. Additionally, pursuant to the Purchase Agreement, during the Protection Period (as such term is defined in the Purchase Agreement), the Company is prohibited from entering into any variable rate transaction. Additionally, provided the Protection Period has not expired, for the period beginning on the date that the Company’s securities are listed on a national securities exchange and until the expiration of the Protection Period, the Company is prohibited from issuing any securities or incurring any financing debt, subject to certain exceptions. Registration Rights Agreement Pursuant to the Registration Rights Agreement, the Company is required to prepare and file a registration statement (the “Registration Statement”) with the SEC under the Securities Act of 1933, as amended, covering the resale of the Conversion Shares and the Warrant Shares (collectively, the “Registrable Securities”). The Company will be required to file such Registration Statement within 45 calendar days following the closing date of the Offering (the “Filing Deadline”). The Company will be required to use its best efforts to have the Registration Statement declared effective as soon as practicable, but in no event later than 60 days from the closing of the Offering (or, in the event of a “full review” by the SEC, 120 days) (the “Effectiveness Deadline”). Pursuant to the Registration Rights Agreement, the Company will incur certain liquidated damages upon the occurrence of certain events, including if: (i) the Registration Statement is not filed with the SEC on or prior to the Filing Deadline; (ii) the Company fails to file with the SEC a request for acceleration of a Registration Statement in accordance with Rule 461 promulgated by the SEC pursuant to the Securities Act of 1933 (the “Securities Act”), within five trading days of the date that the Company is notified (orally or in writing, whichever is earlier) by the SEC that such Registration Statement will not be “reviewed” or will not be subject to further review; (iii) prior to the effective date of the Registration Statement, the Company fails to file a pre-effective amendment and otherwise respond in writing to comments made by the SEC in respect of such Registration Statement within eighteen (18) calendar days after the receipt of comments by or notice from the SEC that such amendment is required in order for such Registration Statement to be declared effective, (iv) the Registration Statement is not declared effective by the SEC on or prior to the Effectiveness Deadline, and (v) after the effective date of the Registration Statement and prior to the expiration of the Effectiveness Period, such Registration Statement ceases for any reason to remain continuously effective as to all Registrable Securities included in such Registration Statement, or the holders of the Registrable Securities are otherwise not permitted to utilize the prospectus therein to resell such Registrable Securities, for more than ten (10) consecutive trading days or more than an aggregate of twenty (20) trading days (which need not be consecutive trading days) during any 12-month period (each such failure is referred to herein as an “Event”). On each date that an Event occurs and on each monthly anniversary of such date, the Company shall pay to each holder of Registrable Securities an amount in cash equal to 1.0% multiplied by the aggregate subscription amount paid by such holder of Registrable Securities, up to a maximum of 6.0%. If the Company fails to pay such amount when due, the Company will pay interest thereon at a rate of 18% per annum. The Registration Rights Agreement also contains mutual indemnifications by the Company and each Investor, which the Company believes are customary for transactions of this type. Series C Preferred Stock The Series C Preferred Stock was created pursuant to a Certificate of Designation. Warrants The Warrants are exercisable, in full or in part, at any time prior to the third anniversary of their issuance, at an exercise price of $0.40 per share. The Warrants provide for certain adjustments that may be made to the exercise price and the number of shares issuable upon exercise due to future corporate events or otherwise, including, for a proscribed period of time, upon the issuance of securities at a price per share that is less than the exercise price of the Warrants then in effect. In the case of certain fundamental transactions affecting the Company, the holders of Warrants, upon exercise of such Warrants after such fundamental transaction, will have the right to receive, in lieu of shares of the Common Stock, the same amount and kind of securities, cash or property that such holder would have been entitled to receive upon the occurrence of the fundamental transaction, had the Warrants been exercised immediately prior to such fundamental transaction. The Warrants contain a “cashless exercise” feature that allows the holders to exercise the warrants without a cash payment to the Company upon the terms set forth in the Warrants. Due to the adjustment features of the exercise price, the fair value of the warrants will be recorded as a liability and not equity. On February 29, 2016, the Company appointed a new Chairman of the Board. In connection with this appointment, the Chairman was granted a stock option to purchase 100,000 shares of Common Stock at an exercise price of $0.60 per share under the Company’s 2013 Comprehensive Incentive Compensation Plan. |
SUMMARY OF SIGNIFICANT ACCOUN25
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2015 | |
Accounting Policies [Abstract] | |
Nature of the Business | Nature of the Business On July 14, 2015, LaserLock Technologies, Inc. changed its name to VerifyMe, Inc., effective July 23, 2015. As used in this report, unless the context otherwise indicates, any reference to “VerifyMe,” “our Company,” “the Company,” “us,” “we” and “our” refers to VerifyMe, Inc. a Nevada corporation. The Company was incorporated in the State of Nevada on November 10, 1999. The Company is based in New York, New York and its common stock, par value $0.001 per share (the “Common Stock”), is traded on the over-the-counter market and quoted on the OTC QB, organized by the OTC Markets Group, Inc., and the OTC Bulletin Board under the ticker symbol “VRME.” The Company is a technology pioneer in the anti-counterfeiting industry. This broad market encompasses counterfeiting of physical and material goods and products, as well as counterfeiting of identity in digital transactions. The Company delivers security solutions for identification and authentication of people, products and packaging in a variety of applications in the security field for both digital and physical transactions. The products can be used to manage and issue secure credentials, including national IDs, passports, driver licenses and access control credentials, as well as comprehensive authentication security software to secure physical and logical access to facilities, computer networks, internet sites and mobile applications. The Company’s activities are subject to significant risks and uncertainties, including the need to secure additional funding to operationalize the Company’s current technology. |
Basis of Presentation | Basis of Presentation The accompanying financial statements are presented in accordance with accounting principles generally accepted in the United States of America. |
Reverse Stock Split and Changes to Company's Preferred Stock | Reverse Stock Split and Changes to Company’s Preferred Stock On May 26, 2015, the board of directors of the Company (the “Board”), acting by written consent in lieu of a special meeting, unanimously approved and adopted: (a) a reverse stock split of all of the Company’s issued and outstanding capital stock based on a minimum 1-for-40 split, up to a maximum 1-for-100 split (the “Reverse Stock Split”), and recommended the same for the Company’s stockholders for approval, and (b) a Second Amended Certificate of Designation for Series A Preferred Stock, which amended the designations, preferences, powers and rights of the shares of the Company’s Series A convertible preferred stock, par value $0.001 per share (the “Series A Preferred Stock”), which were originally set forth in that certain Amended Certificate of Designation for Series A Preferred Stock, dated December 19, 2003. On May 28, 2015, those stockholders of the Company holding a majority of the issued and outstanding shares of Common Stock and Series A Preferred Stock, acting by written consent in lieu of a special meeting, voted to approve the Reverse Stock Split. On June 11, 2015, at a duly authorized special meeting of the Board, the Board (a) finalized, adopted and approved a resolution setting the Reverse Stock Split exchange ratio to a 1-for-85 split and (b) approved and adopted a new Certificate of Designation for Series B Preferred Stock, establishing the designations, preferences, powers and rights of the shares of the Company’s Series B convertible preferred stock, par value $0.001 per share (the “Series B Preferred Stock,” and together with the Series A Preferred Stock, the “Preferred Stock”). On July 23, 2015, the Company completed the 1-for-85 Reverse Stock Split of all of its outstanding Common Stock and Preferred Stock. The total number of authorized capital stock of the Company remained unchanged at its current total of 750,000,000, with 675,000,000 designated as Common Stock and 75,000,000 designated as Preferred Stock. The accompanying financial statements and notes to the financial statements give retroactive effect to the Reverse Stock Split for all periods presented, unless otherwise specified. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. |
Comprehensive Income | Comprehensive Income The Company follows Financial Accounting Standards Board Accounting Standards Codification (“FASB ASC”) 220, “Comprehensive Income,” in reporting comprehensive income. Comprehensive income is a more inclusive financial reporting methodology that includes disclosure of certain financial information that historically has not been recognized in the calculation of net income. Since the Company has no items of other comprehensive income (loss), comprehensive income (loss) is equal to net income (loss). |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company’s financial instruments consist of accounts receivable, accounts payable and accrued expenses, warrant liability and notes payable. The carrying value of accounts receivable, accounts payable and accrued expenses approximate their fair value because of their short maturities. The Company follows FASB ASC 820, “Fair Value Measurements and Disclosures,” and applies it to all assets and liabilities that are being measured and reported on a fair value basis. The statement requires that assets and liabilities carried at fair value will be classified and disclosed in one of the following three categories: Level 1: Quoted market prices in active markets for identical assets or liabilities Level 2: Observable market based inputs or unobservable inputs that are corroborated by market data Level 3: Unobservable inputs that are not corroborated by market data The level in the fair value within which a fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. |
Cash and Cash Equivalents | Cash and Cash Equivalents For purposes of reporting cash flows, the Company considers all cash accounts, which are not subject to withdrawal restrictions or penalties, and certificates of deposit and commercial paper with original maturities of 90 days or less to be cash or cash equivalents. |
Concentration of Credit Risk Involving Cash and Cash Equivalents | Concentration of Credit Risk Involving Cash and Cash Equivalents The Company’s cash and cash equivalents are held at one financial institution. At times, the Company’s deposits may exceed Federal Deposit Insurance Corporation (FDIC) coverage limits. The Company has not experienced any losses from maintaining cash accounts in excess of federally insured limits. |
Inventory | Inventory Inventory principally consists of penlights and pigments and is stated at the lower of cost (determined by the first-in, first-out method) or market. |
Property and Equipment | Property and Equipment Property and equipment is stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, principally five to seven years. Maintenance and repairs of property are charged to operations, and major improvements are capitalized. Upon retirement, sale, or other disposition of property and equipment, the costs and accumulated depreciation are eliminated from the accounts, and any resulting gain or loss is included in operations. |
Patents and Trademark | Patents and Trademark The current patent portfolio consists of ten granted patents and six applications pending. The Company has also purchased a trademark. Costs associated with the registration and legal defense of the patents have been capitalized and are amortized on a straight-line basis over the estimated lives of the patents which were determined to be 17 to 20 years. |
Long-Lived Assets | Long-Lived Assets The Company evaluates the recoverability of its long-lived assets in accordance with ASC 360 “Property, Plant, and Equipment.” The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of long-lived assets are measured by a comparison of the carrying amount of an asset to future cash flows expected to be generated by the asset, undiscounted and without interest or independent appraisals. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds the fair value of the assets. |
Deferred Financing Costs | Deferred Financing Costs Costs incurred in securing long-term debt are deferred and amortized, as a charge to interest expense, over the term of the related debt. In the case of long-term debt modifications, the Company follows the guidance provided by ASC 470-50, “Debt – Modification and Extinguishments.” |
Convertible Notes Payable | Convertible Notes Payable Convertible notes payable, for which the embedded conversion feature does not qualify for derivative treatment, are evaluated to determine if the effective or actual rate of conversion per the terms of the convertible note agreement is below market value. In these instances, the Company accounts for the value of the beneficial conversion feature (BCF) as a debt discount, which is then accreted to interest expense over the life of the related debt using the straight-line method which approximates the effective interest method. |
Derivative Instruments | Derivative Instruments The Company evaluates its convertible debt, Preferred Stock, warrants or other contracts to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for in accordance with FASB ASC 480, “Distinguish by Liabilities from Equity” (FASB ASC 480), and FASB ASC 815, “Derivatives and Hedging” (“FASB ASC 815”). The result of this accounting treatment is that the fair value of the embedded derivative, if required to be bifurcated, is marked-to-market at each balance sheet date and recorded as a liability. The change in fair value is recorded in the Statement of Operations as a component of other income or expense. Upon conversion or exercise of a derivative instrument, the instrument is marked to fair value at the conversion date and then that fair value is reclassified to equity. In circumstances where the embedded conversion option in a convertible instrument is required to be bifurcated and there are also other embedded derivative instruments in the convertible instrument that are required to be bifurcated, the bifurcated derivative instruments are accounted for as a single, compound derivative instrument. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period. Equity instruments that are initially classified as equity that become subject to reclassification are reclassified as liabilities at the fair value of the instrument on the reclassification date. Derivative instrument liabilities will be classified in the balance sheet as current or non-current based on whether net-cash settlement of the derivative instrument is expected within 12 months of the balance sheet date. |
Revenue Recognition | Revenue Recognition In accordance with FASB ASC 605, “Revenue Recognition,” the Company recognizes revenue when (i) persuasive evidence of a customer or distributor arrangement exists, (ii) a retailer, distributor or wholesaler receives the goods and acceptance occurs, (iii) the price is fixed or determinable, and (iv) collectability of the revenue is reasonably assured. Subject to these criteria, the Company recognizes revenue from product sales, consisting mainly of pigments and penlights, upon shipment to the customer. Royalty revenue is recognized upon receipt of notification from a customer that the Company’s product has been used in the customer’s production process. |
Income Taxes | Income Taxes The Company follows FASB ASC 740, “Income Taxes,” when accounting for income taxes, which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed annually for temporary differences between the financial statements and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense is the tax payable or refundable for the period plus or minus the change during the period in deferred tax assets and liabilities. Tax years from 2012 through 2015 remain subject to examination by major tax jurisdictions. |
Stock-based Payments | Stock-based Payments The Company accounts for stock-based compensation under the provisions of FASB ASC 718, “Compensation—Stock Compensation”, which requires the measurement and recognition of compensation expense for all stock-based awards made to employees and directors based on estimated fair values on the grant date. The Company estimates the fair value of stock-based awards on the date of grant using the Black-Scholes model. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods using the straight-line method. The Company accounts for stock-based compensation awards to non-employees in accordance with FASB ASC 505-50, “Equity-Based Payments to Non-Employees” (“FASB ASC 505-50”). Under FASB ASC 505-50, the Company determines the fair value of the warrants or stock-based compensation awards granted as either the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. All issuances of stock options or other equity instruments to non-employees as consideration for goods or services received by the Company are accounted for based on the fair value of the equity instruments issued. Non-employee equity based payments are recorded as an expense over the service period, as if the Company had paid cash for the services. At the end of each financial reporting period, prior to vesting or prior to the completion of the services, the fair value of the equity based payments will be re-measured and the non-cash expense recognized during the period will be adjusted accordingly. Since the fair value of equity based payments granted to non-employees is subject to change in the future, the amount of the future expense will include fair value re-measurements until the equity based payments are fully vested or the service completed. |
Advertising Costs | Advertising Costs Advertising costs are expensed as incurred. Advertising costs were approximately $458 and $62,835 for the years ended December 31, 2015 and 2014 and are included in sales and marketing expenses. |
Research and Development Costs | Research and Development Costs In accordance with FASB ASC 730, research and development costs are expensed when incurred. Research and development costs for the years ended December 31, 2015 and 2014 were $2,529,833 and $10,590,271. |
Basic and Diluted Net Income per Share of Common Stock | Basic and Diluted Net Income per Share of Common Stock The Company follows FASB ASC 260, “Earnings Per Share,” when reporting Earnings Per Share resulting in the presentation of basic and diluted earnings per share. Because the Company reported a net loss for each of the years presented, common stock equivalents, including preferred stock, stock options and warrants were anti-dilutive; therefore, the amounts reported for basic and diluted loss per share were the same. |
Segment Information | Segment Information The Company is organized and operates as one operating segment wherein the Company’s patented technologies are utilized to address counterfeiting issues. In accordance with FASB ASC 280, “Segment Reporting” (“FASB ASC 280”), the chief operating decision-maker has been identified as the Chief Executive Officer, who reviews operating results to make decisions about allocating resources and assessing performance for the entire Company. Since the Company operates in one segment and provides one group of similar products, all financial segment and product line information required by FASB ASC 280 can be found in the financial statements. |
Recently Adopted Accounting Pronouncements | Recently Adopted Accounting Pronouncements As of December 31, 2015 and for the period then ended, there were no recently adopted accounting pronouncements that had a material effect on the Company’s financial statements. |
Recently Issued Accounting Pronouncements Not Yet Adopted | Recently Issued Accounting Pronouncements Not Yet Adopted In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements – Going Concern (Subtopic 205-40), Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern In November 2014, the FASB issued ASU No. 2014-16, Derivatives and Hedging (Topic 815), Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share is More Akin to Debt or to Equity For hybrid financial instruments issued in the form of a share, an entity (an issuer or an investor) should determine the nature of the host contract by considering all stated and implied substantive terms and features of the hybrid financial instrument, weighing each term and feature on the basis of relevant facts and circumstances. That is, an entity should determine the nature of the host contract by considering the economic characteristics and risks of the entire hybrid financial instrument, including the embedded derivative feature that is being evaluated for separate accounting from the host contract. The effects of initially adopting the amendments in this Update should be applied on a modified retrospective basis to existing hybrid financial instruments issued in the form of a share as of the beginning of the fiscal year for which the amendments are effective. Retrospective application is permitted to all relevant prior periods. The Company does not anticipate the adoption of this standard to have a material effect on the financial statements. The amendments in this Update are effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Early adoption, including adoption in an interim period, is permitted. If an entity early adopts the amendments in an interim period, any adjustments shall be reflected as of the beginning of the fiscal year that includes that interim period. In November 2015, the FASB issued ASU No. 2015-17, Income Taxes (Topic 740), Balance Sheet Classification of Deferred Taxes |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
PROPERTY AND EQUIPMENT | |
Schedule of Property and Equipment | Equipment consists of the following: December 31, December 31, 2015 2014 Furniture and Fixtures $ 219,871 $ 219,871 Equipment 18,588 16,155 238,459 236,026 Less: Accumulated depreciation 230,621 161,205 $ 7,838 $ 74,821 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |
Schedule of Income Tax Benefit (Provision) | The income tax benefit (provision) consists of the following: Year Ended Year Ended December 31, December 31, 2015 2014 Current $ (1,653,000 ) $ (5,505,000 ) Deferred (395,000 ) (372,000 ) Change in valuation allowance 2,048,000 5,877,000 $ - $ - |
Reconciliation of Federal Statutory Tax Rate | The following is a reconciliation of the tax derived by applying the U.S. Federal Statutory Rate of 35% to the earnings before income taxes and comparing that to the recorded tax provisions: 2015 2014 Amount % Amount % U.S federal income tax benefit at federal statutory rate $ (806,000 ) (36 ) $ (2,771,000 ) (35 ) State tax, net of federal tax effect (135,000 ) (6 ) (463,000 ) (6 ) Non-deductible changes in derivative liability and share based transactions (1,107,000 ) (53 ) (2,639,000 ) (33 ) Other - - (4,000 ) - Change in valuation allowance 2,048,000 95 5,877,000 74 $ - - $ - - |
Schedule of Deferred Tax Assets and Liabilities | The primary components of the Company’s December 31, 2015 and 2014 deferred tax assets, liabilities and related valuation allowance are as follows: December 31, December 31, 2015 2014 Deferred tax asset for NOL carryforwards $ 12,303,000 $ 10,649,000 Deferred tax liability for intangibles (165,000 ) (165,000 ) Share based compensation 4,589,000 4,205,000 Non deductible accrued expenses 10,000 - Valuation allowance (16,737,000 ) (14,689,000 ) $ - $ - |
NOTES PAYABLE (Tables)
NOTES PAYABLE (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Debt Disclosure [Abstract] | |
Schedule of Notes Payable | Notes payable consists of the following as of December 31: December 31, December 31, 2015 2014 Unsecured notes payable due to related parties; interest at 10% per annum; principal and accrued interest due at maturity in September 2015 - $ 114,000 Series A notes payable; interest at 8% per annum; principal and accrued interest due at maturity in October 2011 (past due) 50,000 50,000 Notes payable; interest at 8% per annum, principal and accrued interest due at December 1, 2014 (past due) - 650,000 Notes payable; interest at 5% and 8% per annum, principal and accrued interest due at April 2015 - 123,000 Less: Debt discount - (10,447 ) 50,000 926,553 Less: Current portion 50,000 926,553 $ - $ - |
FAIR VALUE OF FINANCIAL INSTR29
FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Fair Value Disclosures [Abstract] | |
Schedule of Liabilities Measured at Fair Value on a Recurring Basis | Liabilities measured at fair value on a recurring basis are summarized as follows: Level 1 Level 2 Level 3 Total Derivative liability related to fair value of warrants $ - $ - $ 1,802,375 $ 1,802,375 Total $ - $ - $ 1,802,375 $ 1,802,375 |
Fair Value Measurements within Fair Value Hierarchy of Derivative Liabilities Using Level 3 Inputs | The following table details the approximate fair value measurements within the fair value hierarchy of the Company’s derivative liabilities using Level 3 inputs: Balance at January 1, 2015 $ 6,370,709 Conversion of notes payable, net of interest expense (31,397 ) Conversion of warrants related to licensing fees (1,867,417 ) Change in fair value of derivative liabilities (2,669,520 ) Balance at December 31, 2015 $ 1,802,375 |
Schedule of Common Stock Purchase Warrants Valuation Assumptions | As of December 31, 2015, the Company’s outstanding warrants were treated as derivative liabilities and changes in the fair value were recognized in earnings. These Common Stock purchase warrants did not trade in an active securities market, and as such, the Company estimated the fair value of these warrants using Black-Scholes and the following assumptions: December 31, 2015 Annual Dividend Yield 0.0 % Expected Life (Years) 2.0 - 3.0 Risk-Free Interest Rate 1.06% - 1.31 % Expected Volatility 178.5% - 179.3 % |
STOCK OPTIONS (Tables)
STOCK OPTIONS (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of Weighted-average Assumptions Used to Estimate the Fair Values of Stock Options Granted | The following table presents the weighted-average assumptions used to estimate the fair values of the stock options granted during the years ended December 31, 2015 and 2014: 2015 2014 Risk Free Interest Rate 1.69 % 2.73 % Expected Volatility 176.6 % 229.0 % Expected Life (in years) 5.0 10.0 Dividend Yield 0 % 0 % Weighted average estimated fair value of options during the period $ 2.00 $ 1.00 |
Schedule of Stock Option Activity | The following table summarizes the activities for our stock options for the year ended December 31, 2015and 2014: Options Outstanding Number of Shares Weighted- Average Exercise Price Weighted- Average Remaining Contractual Term (in years) Aggregate Intrinsic Value (in 000’s) (1) Balance as of December 31, 2013 739,608 $ 4.25 Exercised (141,176) $ 1.70 Balance as of December 31, 2014 598,431 $ 4.25 Granted 1,875,000 $ 0.85 Exercised (7,843) 0.05 Forfeited/canceled (308,235) $ 0.06 Balance as of December 31, 2015 2,157,353 $ 1.80 5.0 $ 226,631 Exercisable as of December 31, 2015 626,103 $ 2.57 6.2 Exercisable as of December 31, 2015 and expected to 2,157,353 $ 1.80 5.0 $ 226,631 (1) The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the closing stock price of $2.50 for our common stock on December 31, 2015. |
Summary of the Activities of Unvested Stock Options | The following table summarizes the activities of our unvested stock options for the year ended December 31, 2015 and 2014: Number of Awards Weighted Average Exercise Price Weighted Average Remaining Amortization Period (Years) Unvested stock options at December 31, 2013 55,882 $ 6.52 Vested (38,235) (6.86) Unvested stock options at December 31, 2014 17,647 $ 9.49 Granted 1,875,000 $ 1.43 Cancelled/Forfeited (11,765 ) $ (12.75) Vested (349,632 ) $ (1.31) Unvested stock options at December 31, 2015 1,531,250 $ 1.48 4.49 |
Schedule of Warrant Activity | The following table summarizes the activities for our warrants for the year ended December 31, 2015: Warrants Outstanding Number of Shares Weighted- Average Exercise Price Weighted- Average Remaining Contractual Term (in years) Aggregate Intrinsic Value (in 000’s) (1) Balance as of December 31, 2013 1,405,686 $ 8.80 Granted 121,755 6.86 Expired (66,666 ) (12.75 ) Balance as of December 31, 2014 1,460,775 $ 1.01 Exercised (2,353 ) $ 0.85 Cancelled/Forfeited (43,529 ) $ (4.15 ) Balance as of December 31, 2015 1,414,893 $ 9.67 4.8 $ 413 Exercisable as of December 31, 2015 1,414,893 $ 9.67 4.8 Exercisable as of December 31, 2015 and expected to 1,414,893 $ 9.67 4.8 $ 413 (1) The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying warrants and the closing stock price of $2.50 for our common stock on December 31, 2015. |
SUMMARY OF SIGNIFICANT ACCOUN31
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Reverse Stock Split and Changes to Company's Preferred Stock ) (Details) | Dec. 31, 2015$ / sharesshares | Jul. 23, 2015shares | Jun. 11, 2015$ / shares | May. 26, 2015 | Dec. 31, 2014$ / sharesshares |
Restructuring Cost and Reserve [Line Items] | |||||
Common stock, par value | $ / shares | $ 0.001 | $ 0.001 | $ 0.001 | ||
Reverse stock split ratio | 85 | ||||
Common stock, shares authorized | 675,000,000 | 675,000,000 | 675,000,000 | ||
Preferred stock, shares authorized | 75,000,000 | ||||
Capital stock, shares authorized | 750,000,000 | ||||
Minimum [Member] | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Reverse stock split ratio | 40 | ||||
Maximum [Member] | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Reverse stock split ratio | 100 |
SUMMARY OF SIGNIFICANT ACCOUN32
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Property and Equipment) (Details) | 12 Months Ended |
Dec. 31, 2015 | |
Property, Plant and Equipment [Line Items] | |
Depreciation method of property and equipment | Straight-line method |
Minimum [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives of property and equipment | 5 years |
Maximum [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives of property and equipment | 7 years |
SUMMARY OF SIGNIFICANT ACCOUN33
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Patents and Trademark) (Details) - Patents [Member] | 12 Months Ended |
Dec. 31, 2015Patents | |
Finite-Lived Intangible Assets [Line Items] | |
Number of patents granted | 10 |
Number of provisional patent applications pending | 6 |
Amortization method of patents | Straight-line basis |
Minimum [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Estimated lives of patents | 17 years |
Maximum [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Estimated lives of patents | 20 years |
SUMMARY OF SIGNIFICANT ACCOUN34
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Other) (Details) | 12 Months Ended | ||
Dec. 31, 2015USD ($)Segments | Dec. 31, 2014USD ($) | ||
Accounting Policies [Abstract] | |||
Advertising expense | $ 458 | $ 62,835 | |
Research and development costs | [1] | $ 2,412,833 | $ 10,590,271 |
Number of operating segment | Segments | 1 | ||
[1] | Includes share based compensation of $2,000,000 and $10,236,089 for the years ended December 31, 2015 and 2014 |
GOING CONCERN (Details)
GOING CONCERN (Details) - USD ($) | 1 Months Ended | 12 Months Ended | |
Feb. 29, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Subsequent Event [Line Items] | |||
Net proceeds from issuance of convertible preferred stock | $ 1,278,501 | ||
Subsequent Event [Member] | 0% Series C Convertible Preferred Stock [Member] | |||
Subsequent Event [Line Items] | |||
Net proceeds from issuance of convertible preferred stock | $ 1,217,500 |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Property, Plant and Equipment, Net [Abstract] | ||
Furniture and Fixtures | $ 219,871 | $ 219,871 |
Equipment | 18,588 | 16,155 |
Property, Plant and Equipment, Gross, Total | 238,459 | 236,026 |
Less: Accumulated depreciation | 230,621 | 161,205 |
Property, Plant and Equipment, Net, Total | 7,838 | 74,821 |
Depreciation of property and equipment | $ 69,415 | $ 69,253 |
PATENTS AND TRADEMARK (Details)
PATENTS AND TRADEMARK (Details) | 12 Months Ended | |
Dec. 31, 2015USD ($)Patents | Dec. 31, 2014USD ($) | |
Patents [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Number of patents granted | Patents | 10 | |
Number of pending applications for patents | Patents | 6 | |
Amortization method | Straight-line basis | |
Patents [Member] | Minimum [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Estimated lives of intangible assets | 17 years | |
Patents [Member] | Maximum [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Estimated lives of intangible assets | 20 years | |
Trademarks [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Estimated lives of intangible assets | 20 years | |
Amortization method | Straight-line basis | |
Patents And Trademark [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Capitalized patent costs and trademarks | $ | $ 100 | $ 100 |
Amortization expense | $ | $ 16,813 | $ 13,109 |
INCOME TAX (Narrative) (Detail)
INCOME TAX (Narrative) (Detail) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Operating Loss Carryforwards [Line Items] | ||
Net operating loss ("NOL") | $ 30 | |
Federal Statutory Rate | 36.00% | 35.00% |
Unrecognized tax benefits | ||
Change in unrecognized tax benefits | ||
Interest or penalties related to unrecognized tax benefits | ||
Minimum [Member] | ||
Operating Loss Carryforwards [Line Items] | ||
Operating loss carryforward, expiration date | Dec. 31, 2019 |
INCOME TAXES (Schedule of Incom
INCOME TAXES (Schedule of Income Tax Benefit (Provision)) (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Income Tax Disclosure [Abstract] | ||
Current | $ (1,653,000) | $ (5,505,000) |
Deferred | (395,000) | (372,000) |
Change in valuation allowance | $ 2,048,000 | $ 5,877,000 |
Income tax benefit (provision) |
INCOME TAXES (Reconciliation of
INCOME TAXES (Reconciliation of Federal Statutory Tax Rate) (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Income Tax Disclosure [Abstract] | ||
U.S federal income tax benefit at federal statutory rate | $ (806,000) | $ (2,771,000) |
State tax, net of federal tax effect | (135,000) | (463,000) |
Non-deductible changes in derivative liability and share based transactions | $ (1,107,000) | (2,639,000) |
Other | (4,000) | |
Change in valuation allowance | $ 2,048,000 | $ 5,877,000 |
Income tax benefit (provision) | ||
U.S federal income tax benefit at federal statutory rate | (36.00%) | (35.00%) |
State tax, net of federal tax effect | (6.00%) | (6.00%) |
Non-deductible changes in derviative liability and share based transactions | (53.00%) | (33.00%) |
Other | ||
Change in valuation allowance | 95.00% | 74.00% |
Effective Income Tax Rate Reconciliation, Percent, Total |
INCOME TAXES (Schedule of Defer
INCOME TAXES (Schedule of Deferred Tax Assets and Liabilities) (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Income Tax Disclosure [Abstract] | ||
Deferred tax asset for NOL carryforwards | $ 12,303,000 | $ 10,649,000 |
Deferred tax liability for intangibles | (165,000) | (165,000) |
Share based compensation | 4,589,000 | $ 4,205,000 |
Non deductible accrued expenses | 10,000 | |
Valuation allowance | $ (16,737,000) | $ (14,689,000) |
Deferred Tax Assets, Net, Total |
RECAPITALIZATION TRANSACTION (D
RECAPITALIZATION TRANSACTION (Details) - USD ($) | 1 Months Ended | 12 Months Ended | ||||
Jun. 30, 2015 | Dec. 31, 2015 | Dec. 31, 2014 | Jul. 23, 2015 | Jun. 12, 2015 | Aug. 31, 2013 | |
Restructuring Cost and Reserve [Line Items] | ||||||
Preferred stock, shares authorized | 75,000,000 | |||||
Cash investment of OPC | $ 1,278,501 | |||||
Conversion of deferred compensation, notes payable and accrued interest into Series A Convertible Preferred Stock | $ 136,813 | |||||
Common stock, shares issued | 6,259,727 | 3,969,106 | 304,785 | |||
Cash investment of private investor | $ 50,000 | $ 50,000 | ||||
Patent costs reclassified from prepaid expenses resulting from purchase of patents | 176,316 | |||||
Amortization expense recognized on amount of patent costs reclassified from prepaid expenses | 23,684 | |||||
OPC Partners LLC [Member] | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Cash investment of OPC | $ 1,450,000 | |||||
Private Investor [Member] | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Cash investment of private investor | $ 50,000 | |||||
Series B Convertible Preferred Stock [Member] | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Preferred stock, shares authorized | 85 | 0 | ||||
Preferred stock, shares issued | 1 | 0 | ||||
Series A Convertible Preferred Stock [Member] | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Preferred stock, shares authorized | 37,564,767 | 75,000,000 | ||||
Preferred stock, shares issued | 441,938 | 248,366 | ||||
Series A Convertible Preferred Stock [Member] | OPC Partners LLC [Member] | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Cash investment of OPC | $ 1,278,501 | |||||
Conversion of deferred compensation, notes payable and accrued interest into Series A Convertible Preferred Stock | 171,813 | |||||
Patent Technology And License Termination Agreement [Member] | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Additional payment for patent and technology | 4,500,000 | |||||
Payments under license | $ 2,000,000 | |||||
Patent Technology And License Termination Agreement [Member] | Series B Convertible Preferred Stock [Member] | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Preferred stock, shares authorized | 85 | |||||
Pre Reverse Stock Split [Member] | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Outstanding common stock warrant | 3,700,000 | |||||
Common stock shares issued on conversion of warrant | 3,700,000 | |||||
Shares of common stock shares issued on conversion | 21,111,111 | 21,111,111 | 12,222,222 | |||
Common stock, shares issued | 25,906,735 | |||||
Pre Reverse Stock Split [Member] | Private Investor [Member] | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Common stock, shares issued | 25,906,736 | |||||
Pre Reverse Stock Split [Member] | Series A Convertible Preferred Stock [Member] | OPC Partners LLC [Member] | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Preferred stock, shares authorized | 37,564,767 | |||||
Pre Reverse Stock Split [Member] | Convertible Notes Payable [Member] | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Amount of outstanding notes converted in to common stock shares | $ 731,426 | |||||
Common stock shares issued on conversion of debt (in shares) | 57,265,030 | |||||
Net gain on conversion of notes | $ 297,370 | |||||
Pre reverse split share price | $ 0.018 |
SENIOR SECURED CONVERTIBLE NO43
SENIOR SECURED CONVERTIBLE NOTES PAYABLE - RELATED PARTIES (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||||||||
Jun. 30, 2015 | Jun. 30, 2013 | Jun. 30, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2006 | Jun. 30, 2011 | May. 31, 2007 | Feb. 28, 2006 | |
Debt Instrument [Line Items] | |||||||||||
Gain (loss) on extinguishment of debt | $ 332,523 | $ (82,000) | |||||||||
Senior Secured Convertible Notes Payable [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Debt instrument principal amount | $ 225,000 | $ 220,000 | $ 596,500 | $ 800,000 | |||||||
Interest rate | 10.00% | 12.00% | 10.00% | ||||||||
Sale price of notes payable | $ 800,000 | ||||||||||
Remaining debt and accrued interest was extended until September 15, 2015 | $ 178,749 | ||||||||||
Accrued interest | $ 118,775 | $ 181,125 | $ 395,000 | ||||||||
Common stock shares issued on conversion of debt (in shares) | 154,184 | 7,400,000 | 8,448,519 | 7,900,000 | |||||||
Amount of notes converted in to common stock shares | $ 1,628,000 | $ 216,249 | |||||||||
Accrued interest of notes converted into common stock shares | 208,339 | ||||||||||
Gain (loss) on extinguishment of debt | $ 85,489 | $ (82,000) | |||||||||
Outstanding principal balance on notes | $ 114,000 | ||||||||||
Pre reverse split shares issued on conversion of debt (in shares) | 13,105,662 | ||||||||||
Pre reverse stock split common stock share price | $ 0.018 | ||||||||||
Total gain on conversion of notes | $ 103,456 | ||||||||||
Gain on conversion of notes recorded as additional paid in capital | $ 17,967 |
NOTES PAYABLE (Narrative) (Deta
NOTES PAYABLE (Narrative) (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||||||||||||||||
Jun. 30, 2015 | May. 31, 2015 | Apr. 30, 2015 | Mar. 31, 2015 | Mar. 30, 2015 | Feb. 28, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Aug. 31, 2014 | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2015 | Dec. 31, 2015 | Dec. 31, 2014 | Jun. 12, 2015 | Dec. 05, 2014 | Jun. 30, 2011 | May. 31, 2007 | Feb. 28, 2006 | |
Debt Instrument [Line Items] | ||||||||||||||||||||||
Proceeds from issuance of notes payable | $ 159,542 | $ 798,000 | ||||||||||||||||||||
Accumulated discount, notes payable (in dollars) | $ 10,447 | 10,447 | ||||||||||||||||||||
Interest expense | 61,438 | 199,364 | ||||||||||||||||||||
Note payable balance | 812,553 | 50,000 | 812,553 | |||||||||||||||||||
Accrued interest | $ 42,713 | |||||||||||||||||||||
Gain (loss) on extinguishment of debt | 332,523 | $ (82,000) | ||||||||||||||||||||
Repayment of notes payable | 50,000 | |||||||||||||||||||||
Net proceeds from issuance of convertible preferred stock | $ 1,278,501 | |||||||||||||||||||||
OPC Partners LLC [Member] | ||||||||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||||||||
Net proceeds from issuance of convertible preferred stock | $ 1,450,000 | |||||||||||||||||||||
Senior Secured Convertible Notes Payable [Member] | ||||||||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||||||||
Interest rate, notes payable | 10.00% | 12.00% | 10.00% | |||||||||||||||||||
Accrued interest | $ 118,775 | |||||||||||||||||||||
Shares issued on conversion of debt (in shares) | 154,184 | 7,400,000 | 8,448,519 | 7,900,000 | ||||||||||||||||||
Pre reverse split shares issued on conversion of debt (in shares) | 13,105,662 | |||||||||||||||||||||
Pre reverse stock split share price | $ 0.018 | |||||||||||||||||||||
Gain recorded in additional paid in capital | $ 103,456 | |||||||||||||||||||||
Gain (loss) on extinguishment of debt | 85,489 | $ (82,000) | ||||||||||||||||||||
Notes Payable [Member] | ||||||||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||||||||
Note payable balance | 134,542 | |||||||||||||||||||||
Accrued interest | $ 2,271 | |||||||||||||||||||||
Shares issued on conversion of debt (in shares) | 41,603 | |||||||||||||||||||||
Pre reverse split shares issued on conversion of debt (in shares) | 3,536,254 | |||||||||||||||||||||
Pre reverse stock split share price | $ 0.0386 | |||||||||||||||||||||
Notes Payable [Member] | Stockholder [Member] | ||||||||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||||||||
Proceeds from issuance of notes payable | $ 23,000 | |||||||||||||||||||||
Interest rate, notes payable | 5.00% | |||||||||||||||||||||
Note payable balance | $ 23,000 | |||||||||||||||||||||
Accrued interest | $ 609 | |||||||||||||||||||||
Shares issued on conversion of debt (in shares) | 15,418 | |||||||||||||||||||||
Pre reverse split shares issued on conversion of debt (in shares) | 1,310,510 | |||||||||||||||||||||
Pre reverse stock split share price | $ 0.018 | |||||||||||||||||||||
Gain recorded in additional paid in capital | $ 10,493 | |||||||||||||||||||||
Note due date | Apr. 5, 2015 | |||||||||||||||||||||
Notes Payable [Member] | Director [Member] | ||||||||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||||||||
Proceeds from issuance of notes payable | $ 14,074 | $ 4,887 | $ 111,102 | $ 4,480 | $ 25,000 | |||||||||||||||||
Interest rate, notes payable | 8.00% | 8.00% | 8.00% | 8.00% | 5.00% | |||||||||||||||||
Note payable balance | 25,000 | |||||||||||||||||||||
Accrued interest | $ 417 | |||||||||||||||||||||
Shares issued on conversion of debt (in shares) | 16,608 | |||||||||||||||||||||
Pre reverse split shares issued on conversion of debt (in shares) | 1,411,720 | |||||||||||||||||||||
Pre reverse stock split share price | $ 0.018 | |||||||||||||||||||||
Gain recorded in additional paid in capital | $ 11,296 | |||||||||||||||||||||
Notes Payable [Member] | June 10, 2014 [Member] | ||||||||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||||||||
Interest expense | $ 34,222 | |||||||||||||||||||||
Interest rate, notes payable | 8.00% | 8.00% | ||||||||||||||||||||
Note payable balance | 250,000 | |||||||||||||||||||||
Accrued interest | $ 20,263 | |||||||||||||||||||||
Shares issued on conversion of debt (in shares) | 176,471 | |||||||||||||||||||||
Pre reverse split shares issued on conversion of debt (in shares) | 15,000,000 | |||||||||||||||||||||
Pre reverse stock split share price | $ 0.018 | |||||||||||||||||||||
Gain recorded in additional paid in capital | $ 120,117 | |||||||||||||||||||||
Notes Payable [Member] | August 12, 2014 [Member] | ||||||||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||||||||
Interest expense | $ 17,455 | |||||||||||||||||||||
Interest rate, notes payable | 8.00% | 8.00% | ||||||||||||||||||||
Note payable balance | 50,000 | |||||||||||||||||||||
Accrued interest | $ 3,370 | |||||||||||||||||||||
Shares issued on conversion of debt (in shares) | 34,843 | |||||||||||||||||||||
Pre reverse split shares issued on conversion of debt (in shares) | 2,961,644 | |||||||||||||||||||||
Pre reverse stock split share price | $ 0.018 | |||||||||||||||||||||
Gain (loss) on extinguishment of debt | $ 23,720 | |||||||||||||||||||||
Notes Payable [Member] | August 5, 2014 [Member] | ||||||||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||||||||
Fair value of warrant liability | 7,899 | |||||||||||||||||||||
Interest expense | $ 22,914 | |||||||||||||||||||||
Interest rate, notes payable | 8.00% | 8.00% | ||||||||||||||||||||
Note payable balance | 50,000 | |||||||||||||||||||||
Accrued interest | $ 3,414 | |||||||||||||||||||||
Shares issued on conversion of debt (in shares) | 34,898 | |||||||||||||||||||||
Pre reverse split shares issued on conversion of debt (in shares) | 2,966,210 | |||||||||||||||||||||
Pre reverse stock split share price | $ 0.018 | |||||||||||||||||||||
Gain (loss) on extinguishment of debt | $ 23,740 | |||||||||||||||||||||
Repayment of notes payable | $ 50,000 | |||||||||||||||||||||
Number of common stock called by warrants | 3,529 | |||||||||||||||||||||
Notes Payable [Member] | August 14, 2014 [Member] | ||||||||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||||||||
Interest expense | $ 32,274 | |||||||||||||||||||||
Interest rate, notes payable | 8.00% | 8.00% | ||||||||||||||||||||
Note payable balance | $ 100,000 | |||||||||||||||||||||
Accrued interest | $ 6,697 | |||||||||||||||||||||
Shares issued on conversion of debt (in shares) | 69,657 | |||||||||||||||||||||
Pre reverse split shares issued on conversion of debt (in shares) | 5,920,852 | |||||||||||||||||||||
Pre reverse stock split share price | $ 0.018 | |||||||||||||||||||||
Gain (loss) on extinguishment of debt | $ 47,421 | |||||||||||||||||||||
Notes Payable [Member] | September 8, 2014 [Member] | ||||||||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||||||||
Interest expense | $ 44,140 | |||||||||||||||||||||
Interest rate, notes payable | 8.00% | 8.00% | ||||||||||||||||||||
Note payable balance | 150,000 | |||||||||||||||||||||
Accrued interest | $ 9,222 | |||||||||||||||||||||
Shares issued on conversion of debt (in shares) | 103,991 | |||||||||||||||||||||
Pre reverse split shares issued on conversion of debt (in shares) | 8,839,269 | |||||||||||||||||||||
Pre reverse stock split share price | $ 0.018 | |||||||||||||||||||||
Gain (loss) on extinguishment of debt | $ 70,766 | |||||||||||||||||||||
Notes Payable [Member] | Debt Instrument Date December 2014 [Member] | ||||||||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||||||||
Interest expense | $ 10,447 | |||||||||||||||||||||
Interest rate, notes payable | 8.00% | |||||||||||||||||||||
Note payable balance | 100,000 | |||||||||||||||||||||
Accrued interest | $ 3,689 | |||||||||||||||||||||
Shares issued on conversion of debt (in shares) | 67,637 | |||||||||||||||||||||
Pre reverse split shares issued on conversion of debt (in shares) | 5,749,163 | |||||||||||||||||||||
Pre reverse stock split share price | $ 0.018 | |||||||||||||||||||||
Gain (loss) on extinguishment of debt | $ 46,084 | |||||||||||||||||||||
Notes Payable Due April 2015 [Member] | ||||||||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||||||||
Interest rate, notes payable | 8.00% | 5.00% | 8.00% | |||||||||||||||||||
Unsecured Notes Payable Due At Maturity In September 2015 [Member] | ||||||||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||||||||
Interest rate, notes payable | 10.00% | 10.00% | 10.00% | |||||||||||||||||||
Notes Payable Due At December 1, 2014 (Past Due) [Member] | ||||||||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||||||||
Interest rate, notes payable | 8.00% | 8.00% | 8.00% | |||||||||||||||||||
Series A Notes Payable Due At Maturity In October 2011 (Past Due) [Member] | ||||||||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||||||||
Interest rate, notes payable | 8.00% | 8.00% | 8.00% | |||||||||||||||||||
Notes Payable Due At June 25, 2015 [Member] | ||||||||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||||||||
Interest rate, notes payable | 8.00% | |||||||||||||||||||||
Pre Reverse Stock Split [Member] | ||||||||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||||||||
Number of common stock called by warrants (in shares) | 3,700,000 | |||||||||||||||||||||
Pre Reverse Stock Split [Member] | Notes Payable [Member] | August 5, 2014 [Member] | ||||||||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||||||||
Number of common stock called by warrants | 300,000 | |||||||||||||||||||||
Warrant [Member] | June 10, 2014 [Member] | ||||||||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||||||||
Fair value of warrant liability | $ 8,113 | |||||||||||||||||||||
Warrant [Member] | August 12, 2014 [Member] | ||||||||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||||||||
Fair value of warrant liability | 2,575 | |||||||||||||||||||||
Warrant [Member] | August 5, 2014 [Member] | ||||||||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||||||||
Fair value of warrant liability | 5,151 | |||||||||||||||||||||
Warrant [Member] | August 14, 2014 [Member] | ||||||||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||||||||
Fair value of warrant liability | 5,153 | |||||||||||||||||||||
Warrant [Member] | September 8, 2014 [Member] | ||||||||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||||||||
Fair value of warrant liability | 7,725 | |||||||||||||||||||||
Warrant [Member] | Debt Instrument Date December 2014 [Member] | ||||||||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||||||||
Fair value of warrant liability | $ 5,226 | |||||||||||||||||||||
Warrant [Member] | Notes Payable [Member] | Minimum [Member] | ||||||||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||||||||
Expected volatility | 173.70% | |||||||||||||||||||||
Risk-free interest rate | 1.75% | |||||||||||||||||||||
Expected warrant term | 4 years | |||||||||||||||||||||
Warrant [Member] | Notes Payable [Member] | Maximum [Member] | ||||||||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||||||||
Expected volatility | 180.70% | |||||||||||||||||||||
Expected warrant term | 5 years | |||||||||||||||||||||
Warrant [Member] | Notes Payable [Member] | June 10, 2014 [Member] | ||||||||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||||||||
Expected volatility | 248.20% | |||||||||||||||||||||
Risk-free interest rate | 1.67% | |||||||||||||||||||||
Expected warrant term | 5 years | |||||||||||||||||||||
Proceeds from issuance of notes payable | $ 250,000 | |||||||||||||||||||||
Fair value of warrant liability | 39,650 | 39,650 | ||||||||||||||||||||
Accumulated discount, notes payable (in dollars) | $ 34,222 | $ 34,222 | ||||||||||||||||||||
Warrant [Member] | Notes Payable [Member] | August 12, 2014 [Member] | ||||||||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||||||||
Expected volatility | 233.80% | |||||||||||||||||||||
Risk-free interest rate | 1.67% | |||||||||||||||||||||
Expected warrant term | 5 years | |||||||||||||||||||||
Proceeds from issuance of notes payable | $ 50,000 | |||||||||||||||||||||
Fair value of warrant liability | 26,817 | |||||||||||||||||||||
Accumulated discount, notes payable (in dollars) | $ 17,455 | |||||||||||||||||||||
Warrant [Member] | Notes Payable [Member] | August 5, 2014 [Member] | ||||||||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||||||||
Expected volatility | 233.80% | |||||||||||||||||||||
Risk-free interest rate | 1.67% | |||||||||||||||||||||
Expected warrant term | 5 years | |||||||||||||||||||||
Proceeds from issuance of notes payable | $ 100,000 | |||||||||||||||||||||
Fair value of warrant liability | 29,725 | |||||||||||||||||||||
Accumulated discount, notes payable (in dollars) | $ 22,914 | |||||||||||||||||||||
Warrant [Member] | Notes Payable [Member] | August 14, 2014 [Member] | ||||||||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||||||||
Expected volatility | 233.80% | |||||||||||||||||||||
Risk-free interest rate | 1.67% | |||||||||||||||||||||
Expected warrant term | 5 years | |||||||||||||||||||||
Proceeds from issuance of notes payable | $ 100,000 | |||||||||||||||||||||
Fair value of warrant liability | 47,676 | |||||||||||||||||||||
Accumulated discount, notes payable (in dollars) | $ 32,274 | |||||||||||||||||||||
Warrant [Member] | Notes Payable [Member] | September 8, 2014 [Member] | ||||||||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||||||||
Expected volatility | 233.80% | |||||||||||||||||||||
Risk-free interest rate | 1.67% | |||||||||||||||||||||
Expected warrant term | 5 years | |||||||||||||||||||||
Proceeds from issuance of notes payable | $ 150,000 | |||||||||||||||||||||
Fair value of warrant liability | 62,544 | |||||||||||||||||||||
Accumulated discount, notes payable (in dollars) | $ 44,140 | |||||||||||||||||||||
Warrant [Member] | Notes Payable [Member] | Debt Instrument Date December 2014 [Member] | ||||||||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||||||||
Expected volatility | 229.00% | |||||||||||||||||||||
Risk-free interest rate | 1.68% | |||||||||||||||||||||
Expected warrant term | 5 years | |||||||||||||||||||||
Proceeds from issuance of notes payable | $ 100,000 | |||||||||||||||||||||
Fair value of warrant liability | 11,812 | |||||||||||||||||||||
Accumulated discount, notes payable (in dollars) | 10,447 | |||||||||||||||||||||
Warrant [Member] | Issuances Of Debt [Member] | Notes Payable [Member] | Debt Instrument Date December 2014 [Member] | ||||||||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||||||||
Accumulated discount, notes payable (in dollars) | $ 10,563 | |||||||||||||||||||||
Warrant [Member] | Pre Reverse Stock Split [Member] | Notes Payable [Member] | June 10, 2014 [Member] | ||||||||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||||||||
Number of common stock called by warrants (in shares) | 1,000,000 | 1,000,000 | ||||||||||||||||||||
Exercise price (in dollars per share) | $ 0.10 | $ 0.10 | ||||||||||||||||||||
Warrant [Member] | Pre Reverse Stock Split [Member] | Notes Payable [Member] | August 12, 2014 [Member] | ||||||||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||||||||
Number of common stock called by warrants (in shares) | 300,000 | |||||||||||||||||||||
Exercise price (in dollars per share) | $ 0.05 | |||||||||||||||||||||
Warrant [Member] | Pre Reverse Stock Split [Member] | Notes Payable [Member] | August 5, 2014 [Member] | ||||||||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||||||||
Number of common stock called by warrants (in shares) | 600,000 | |||||||||||||||||||||
Exercise price (in dollars per share) | $ 0.05 | |||||||||||||||||||||
Warrant [Member] | Pre Reverse Stock Split [Member] | Notes Payable [Member] | August 14, 2014 [Member] | ||||||||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||||||||
Number of common stock called by warrants (in shares) | 600,000 | |||||||||||||||||||||
Exercise price (in dollars per share) | $ 0.05 | |||||||||||||||||||||
Warrant [Member] | Pre Reverse Stock Split [Member] | Notes Payable [Member] | September 8, 2014 [Member] | ||||||||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||||||||
Number of common stock called by warrants (in shares) | 900,000 | |||||||||||||||||||||
Exercise price (in dollars per share) | $ 0.05 | |||||||||||||||||||||
Warrant [Member] | Pre Reverse Stock Split [Member] | Notes Payable [Member] | Debt Instrument Date December 2014 [Member] | ||||||||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||||||||
Number of common stock called by warrants (in shares) | 600,000 | |||||||||||||||||||||
Exercise price (in dollars per share) | $ 0.05 |
NOTES PAYABLE (Schedule of Note
NOTES PAYABLE (Schedule of Notes Payable) (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Debt Instrument [Line Items] | ||
Less: Debt discount | $ (10,447) | |
Notes payable | $ 50,000 | 926,553 |
Less: Current portion | $ 50,000 | $ 812,553 |
Long-term portion | ||
Adjustment [Member] | ||
Debt Instrument [Line Items] | ||
Less: Current portion | $ 50,000 | $ 926,553 |
Series A Notes Payable Due At Maturity In October 2011 (Past Due) [Member] | ||
Debt Instrument [Line Items] | ||
Notes payable | $ 50,000 | 50,000 |
Notes Payable Due At December 1, 2014 (Past Due) [Member] | ||
Debt Instrument [Line Items] | ||
Notes payable | 650,000 | |
Unsecured Notes Payable Due At Maturity In September 2015 [Member] | ||
Debt Instrument [Line Items] | ||
Notes payable | 114,000 | |
Notes Payable Due April Two Thousand Fifteen [Member] | ||
Debt Instrument [Line Items] | ||
Notes payable | $ 123,000 |
NOTES PAYABLE (Schedule of No46
NOTES PAYABLE (Schedule of Notes Payable) (Parenthetical)) (Details) | Dec. 31, 2015 | Dec. 31, 2014 |
Notes Payable Due At December 1, 2014 (Past Due) [Member] | ||
Debt Instrument [Line Items] | ||
Interest rate | 8.00% | 8.00% |
Unsecured Notes Payable Due At Maturity In September 2015 [Member] | ||
Debt Instrument [Line Items] | ||
Interest rate | 10.00% | 10.00% |
Notes Payable Due April 2015 [Member] | ||
Debt Instrument [Line Items] | ||
Interest rate | 5.00% | 8.00% |
Series A Notes Payable Due At Maturity In October 2011 (Past Due) [Member] | ||
Debt Instrument [Line Items] | ||
Interest rate | 8.00% | 8.00% |
WARRANT LIABILITY (Details)
WARRANT LIABILITY (Details) | 1 Months Ended | 12 Months Ended | ||||
Jan. 31, 2015USD ($)$ / sharesshares | Jan. 31, 2014USD ($)Warrant$ / sharesshares | Dec. 31, 2015USD ($)$ / sharesshares | Dec. 31, 2014USD ($)$ / sharesshares | Jun. 12, 2015USD ($) | Dec. 31, 2012USD ($) | |
Major Agreements [Line Items] | ||||||
Warrant liability | $ 1,802,375 | $ 6,370,709 | ||||
Current share price (in dollars per share) | $ / shares | $ 2.50 | |||||
Licensing fees payable | $ 2,000,000 | |||||
Conversion of stock amount | 633,333 | |||||
Fair value of warrants | $ 1,867,417 | |||||
Series B Convertible Preferred Stock [Member] | ||||||
Major Agreements [Line Items] | ||||||
Conversion of stock amount | $ 6,500,000 | |||||
Convertible Notes Payable [Member] | ||||||
Major Agreements [Line Items] | ||||||
Fair value of warrants | $ 37,000 | |||||
Pre Reverse Stock Split [Member] | ||||||
Major Agreements [Line Items] | ||||||
Number of common stock shares purchased under warrants (in shares) | shares | 3,700,000 | |||||
Patent And Technology Agreement [Member] | ||||||
Major Agreements [Line Items] | ||||||
Number of common stock shares purchased under warrants (in shares) | shares | 125,000,000 | |||||
Exercise price | $ / shares | $ 0.10 | |||||
Additional payment for patent and technology | $ 4,500,000 | |||||
Discount to market price at time of issuance | 10.00% | |||||
Current share price (in dollars per share) | $ / shares | $ 0.04 | |||||
Additional shares issued for patent and technology agreement (in shares) | shares | 125,000,000 | |||||
Patent And Technology Agreement [Member] | Stock Options And Warrants [Member] | ||||||
Major Agreements [Line Items] | ||||||
Number of warrants to be issued(in shares) | shares | 250,000,000 | |||||
Exercise price of warrant to be issued(in dollars per share) | $ / shares | $ 0.02 | |||||
Warrant to be issued value | $ 4,892,089 | |||||
Patent And Technology Agreement [Member] | Warrant [Member] | Stock Options And Warrants [Member] | ||||||
Major Agreements [Line Items] | ||||||
Dividend yield | 0.00% | |||||
Expected volatility | 229.10% | |||||
Risk free interest | 1.65% | |||||
Expected warrant term | 5 years | |||||
Zaah Technologies [Member] | Agreements [Member] | ||||||
Major Agreements [Line Items] | ||||||
Warrant liability | $ 2,400,000 | |||||
Fair value of warrant liability | $ 1,020,632 | $ 787,544 | ||||
Number of common stock shares purchased under warrants (in shares) | shares | 627,451 | |||||
Zaah Technologies [Member] | Agreements [Member] | Pre Reverse Stock Split [Member] | ||||||
Major Agreements [Line Items] | ||||||
Number of common stock shares purchased under warrants (in shares) | shares | 53,333,333 | |||||
Verify Me [Member] | Warrants Issued On January 1, 2014 [Member] | ||||||
Major Agreements [Line Items] | ||||||
Fair value of warrant liability | $ 147,524 | $ 149,090 | ||||
Number of warrants issued | shares | 74,697 | |||||
Exercise price | $ / shares | $ 0.10 | |||||
Verify Me [Member] | Pre Reverse Stock Split [Member] | Warrants Issued On January 1, 2014 [Member] | ||||||
Major Agreements [Line Items] | ||||||
Number of warrants | Warrant | 6,349,245 | |||||
Verify Me [Member] | Agreements [Member] | Research and Development Expense [Member] | ||||||
Major Agreements [Line Items] | ||||||
Initial fair value of warrant expensed as research and development cost | $ 444,000 | |||||
Verify Me [Member] | Patent And Technology Agreement [Member] | Pre Reverse Stock Split [Member] | ||||||
Major Agreements [Line Items] | ||||||
Additional shares issued for patent and technology agreement (in shares) | shares | 6,349,206 |
CONVERTIBLE PREFERRED STOCK (De
CONVERTIBLE PREFERRED STOCK (Details) | 1 Months Ended | 12 Months Ended | |||||
Jun. 30, 2015USD ($)shares | May. 31, 2015USD ($)shares | Aug. 31, 2013shares | Jan. 31, 2013USD ($)$ / sharesshares | Dec. 31, 2015USD ($)Warrant$ / sharesshares | Dec. 31, 2014USD ($)shares | Jul. 23, 2015shares | |
Class of Stock [Line Items] | |||||||
Fair value of warrants | $ | $ 626,317 | $ 631,678 | |||||
Preferred stock, shares authorized | 75,000,000 | ||||||
Licensing fees | $ | 2,000,000 | ||||||
Series A- Convertible Preferred Stock [Member] | |||||||
Class of Stock [Line Items] | |||||||
Preferred stock value | $ | $ 1,278,501 | ||||||
Preferred stock, shares issued | 389,668 | ||||||
Preferred stock convertible ratio | 20 | ||||||
Preferred stock subscribed by an officer and shareholder | 10,667 | ||||||
Unpaid compensation value | $ | $ 35,000 | ||||||
Notes payable and accrued interest converted into Series A Preferred Stock | 41,603 | ||||||
Series A- Convertible Preferred Stock [Member] | Maximum [Member] | |||||||
Class of Stock [Line Items] | |||||||
Preferred stock, shares authorized | 37,564,767 | ||||||
Series A Convertible Preferred Stock [Member] | |||||||
Class of Stock [Line Items] | |||||||
Preferred stock value | $ | $ 442 | $ 633,333 | |||||
Number of warrants | Warrant | 392,157 | ||||||
Preferred stock, shares authorized | 37,564,767 | 75,000,000 | |||||
Preferred stock, shares issued | 441,938 | 248,366 | |||||
Preferred stock subscribed by an officer and shareholder | 10,667 | ||||||
Series A Convertible Preferred Stock [Member] | Convertible Preferred Stock Subject to Mandatory Redemption [Member] | |||||||
Class of Stock [Line Items] | |||||||
Preferred stock value | $ | $ 1,000,000 | ||||||
Series B Convertible Preferred Stock [Member] | |||||||
Class of Stock [Line Items] | |||||||
Preferred stock convertible ratio | 84,967,321 | ||||||
Licensing fees | $ | $ 6,500,000 | ||||||
Series B Convertible Preferred Stock [Member] | Maximum [Member] | |||||||
Class of Stock [Line Items] | |||||||
Preferred stock, shares authorized | 85 | ||||||
Common Stock [Member] | |||||||
Class of Stock [Line Items] | |||||||
Number of preferred stock purchased | 304,785 | ||||||
Conversion of shares of preferred stock to common stock, shares | 248,366 | 248,366 | |||||
Notes payable and accrued interest converted into Series A Preferred Stock | 234,735 | ||||||
Pre Reverse Stock Split [Member] | |||||||
Class of Stock [Line Items] | |||||||
Number of common stock called by warrants (in shares) | 3,700,000 | ||||||
Conversion of preferred stock, shares | 21,111,111 | 12,222,222 | 21,111,111 | ||||
Pre Reverse Stock Split [Member] | Series A- Convertible Preferred Stock [Member] | |||||||
Class of Stock [Line Items] | |||||||
Preferred stock value | $ | $ 1,450,813 | ||||||
Preferred stock, shares issued | 33,121,777 | 37,564,767 | |||||
Preferred stock subscribed by an officer and shareholder | 906,736 | ||||||
Notes payable and accrued interest converted into Series A Preferred Stock | 3,536,254 | ||||||
Pre Reverse Stock Split [Member] | Series B Convertible Preferred Stock [Member] | |||||||
Class of Stock [Line Items] | |||||||
Preferred stock, shares issued | 85 | ||||||
Pre Reverse Stock Split [Member] | Common Stock [Member] | |||||||
Class of Stock [Line Items] | |||||||
Preferred stock converted in to common stock | 12,222,222 | ||||||
Notes payable and accrued interest converted into Series A Preferred Stock | 19,952,489 | ||||||
Subscription Agreement [Member] | |||||||
Class of Stock [Line Items] | |||||||
Convertible preferred stock description | At any time before January 31, 2015, VerifyMe had the right, but not the obligation, to require the Company to repurchase all, but not less than all, of the capital stock of the Company and warrants exercisable for capital stock of the Company held by VerifyMe in exchange for the price originally paid by VerifyMe therefore upon the occurrence of any of the following events: (i) the consummation of any bona fide business acquisition, (ii) the incurrence of any indebtedness by the Company in an amount in excess of $2 million, (iii) the issuance or sale of any security having a preference on liquidation senior to Common Stock, or (iv) the sale by the Company of capital stock or warrants exercisable for its capital stock at a price below $0.03 per share. | ||||||
Excess amount for incurring indebtedness | $ | $ 2,000,000 | ||||||
Exercise price of capital stock or warrant | $ / shares | $ 0.03 | ||||||
Fair value of warrants | $ | 2,995,791 | ||||||
Verify Me [Member] | Subscription Agreement [Member] | Series A Convertible Preferred Stock [Member] | |||||||
Class of Stock [Line Items] | |||||||
Beneficial conversion feature at fair market value | $ | $ 0 | $ 800,000 | |||||
Deemed dividend distribution | $ | 1,000,000 | ||||||
Verify Me [Member] | Subscription Agreement [Member] | Common Stock [Member] | |||||||
Class of Stock [Line Items] | |||||||
Value of shares issued | $ | $ 1,000,000 | ||||||
Exercise price | $ / shares | $ 0.12 | ||||||
Verify Me [Member] | Subscription Agreement [Member] | Pre Reverse Stock Split [Member] | Convertible Preferred Stock [Member] | |||||||
Class of Stock [Line Items] | |||||||
Number of preferred stock purchased | 33,333,333 | ||||||
Verify Me [Member] | Subscription Agreement [Member] | Pre Reverse Stock Split [Member] | Common Stock [Member] | |||||||
Class of Stock [Line Items] | |||||||
Number of common stock called by warrants (in shares) | 33,333,333 |
FAIR VALUE OF FINANCIAL INSTR49
FAIR VALUE OF FINANCIAL INSTRUMENTS (Narrative) (Details) | Dec. 31, 2015USD ($) |
Fair Value Disclosures [Abstract] | |
Assets measured at fair value on recurring basis | |
Assets or liabilities measured at fair value on non-recurring basis |
FAIR VALUE OF FINANCIAL INSTR50
FAIR VALUE OF FINANCIAL INSTRUMENTS - (Schedule of Liabilities Measured at Fair Value on a Recurring Basis) (Details) - Fair Value, Measurements, Recurring [Member] | Dec. 31, 2015USD ($) |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Derivative liability related to fair value of warrants | $ 1,802,375 |
Total | $ 1,802,375 |
Level 1 [Member] | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Derivative liability related to fair value of warrants | |
Total | |
Level 2 [Member] | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Derivative liability related to fair value of warrants | |
Total | |
Level 3 [Member] | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Derivative liability related to fair value of warrants | $ 1,802,375 |
Total | $ 1,802,375 |
FAIR VALUE OF FINANCIAL INSTR51
FAIR VALUE OF FINANCIAL INSTRUMENTS - (Fair Value Measurements within Fair Value Hierarchy Using Level 3 Inputs) (Details) | 12 Months Ended |
Dec. 31, 2015USD ($) | |
Fair Value Disclosures [Abstract] | |
Beginning balance | $ 6,370,709 |
Conversion of notes payable, net of interest expense | (31,397) |
Conversion of warrants related to licensing fees | (1,867,417) |
Change in fair value of derivative liabilities | (2,669,520) |
Ending balance | $ 1,802,375 |
FAIR VALUE OF FINANCIAL INSTR52
FAIR VALUE OF FINANCIAL INSTRUMENTS (Schedule of Common Stock Purchase Warrants Valuation Assumptions) (Details) - Warrant [Member] | 12 Months Ended |
Dec. 31, 2015 | |
Fair Value, Option, Quantitative Disclosures [Line Items] | |
Annual Dividend Yield | 0.00% |
Minimum [Member] | |
Fair Value, Option, Quantitative Disclosures [Line Items] | |
Expected Life (Years) | 2 years |
Risk-free interest rate | 1.06% |
Expected volatility | 178.50% |
Maximum [Member] | |
Fair Value, Option, Quantitative Disclosures [Line Items] | |
Expected Life (Years) | 3 years |
Risk-free interest rate | 1.31% |
Expected volatility | 179.30% |
STOCKHOLDERS' EQUITY (Details)
STOCKHOLDERS' EQUITY (Details) - USD ($) | Jul. 09, 2015 | Jun. 30, 2015 | Jun. 11, 2015 | Apr. 30, 2016 | Jan. 31, 2016 | Oct. 31, 2015 | Aug. 31, 2015 | Jul. 31, 2015 | Jun. 30, 2015 | Jan. 31, 2015 | Jan. 31, 2014 | Jun. 30, 2015 | Dec. 31, 2015 | Dec. 31, 2014 | Jun. 12, 2015 | Jun. 02, 2015 | |
Stockholders Equity Note [Line Items] | |||||||||||||||||
Worth of common stock to be paid | $ 400,000 | ||||||||||||||||
Research and development | [1] | $ 2,412,833 | $ 10,590,271 | ||||||||||||||
Common stock, shares issued | 6,259,727 | 3,969,106 | 304,785 | ||||||||||||||
Common stock, proceeds from sales | $ 50,000 | $ 50,000 | |||||||||||||||
Number of shares exercised | 2,353 | ||||||||||||||||
Restricted stock units issued | 525,000 | ||||||||||||||||
Restricted stock units fair value | [2] | $ 413,000 | |||||||||||||||
Closing stock price per share | $ 2.50 | ||||||||||||||||
Restricted stock units, Expense | $ 80,573 | ||||||||||||||||
Award, compensation payment | $ 15,000 | ||||||||||||||||
Award, additional compensation payment | $ 35,000 | ||||||||||||||||
Decrease in fair value | $ 75,500 | ||||||||||||||||
Minimum [Member] | |||||||||||||||||
Stockholders Equity Note [Line Items] | |||||||||||||||||
Commission on sales, percentage | 2.00% | ||||||||||||||||
Maximum [Member] | |||||||||||||||||
Stockholders Equity Note [Line Items] | |||||||||||||||||
Commission on sales, percentage | 5.00% | ||||||||||||||||
Pre Reverse Stock Split [Member] | |||||||||||||||||
Stockholders Equity Note [Line Items] | |||||||||||||||||
Common stock, shares issued | 25,906,735 | 25,906,735 | 25,906,735 | ||||||||||||||
Restricted stock units issued | 44,625,000 | ||||||||||||||||
Post Reverse Stock Split [Member] | |||||||||||||||||
Stockholders Equity Note [Line Items] | |||||||||||||||||
Common stock, shares issued | 48,761 | 48,761 | 48,761 | 68,236 | |||||||||||||
Amount to settle outstanding payable balance | $ 41,447 | $ 58,000 | |||||||||||||||
Gain on settlement of conversion | $ 35,153 | ||||||||||||||||
Patent And Technology Agreement [Member] | |||||||||||||||||
Stockholders Equity Note [Line Items] | |||||||||||||||||
Issuance of shares for services (in shares) | 125,000,000 | ||||||||||||||||
Closing stock price per share | $ 0.04 | ||||||||||||||||
Verify Me [Member] | Patent And Technology Agreement [Member] | |||||||||||||||||
Stockholders Equity Note [Line Items] | |||||||||||||||||
Worth of common stock to be paid | $ 400,000 | ||||||||||||||||
Percentage of discount | 10.00% | ||||||||||||||||
Closing price of share | $ 0.07 | ||||||||||||||||
Closing price of share after discount | $ 0.063 | ||||||||||||||||
Research and development | $ 400,000 | ||||||||||||||||
Verify Me [Member] | Patent And Technology Agreement [Member] | Pre Reverse Stock Split [Member] | |||||||||||||||||
Stockholders Equity Note [Line Items] | |||||||||||||||||
Issuance of shares for services (in shares) | 6,349,206 | ||||||||||||||||
Chief Operating Officer [Member] | |||||||||||||||||
Stockholders Equity Note [Line Items] | |||||||||||||||||
Number of options issued | 375,000 | ||||||||||||||||
Chief Operating Officer [Member] | Pre Reverse Stock Split [Member] | |||||||||||||||||
Stockholders Equity Note [Line Items] | |||||||||||||||||
Number of options issued | 31,875,000 | ||||||||||||||||
Restricted Stock [Member] | |||||||||||||||||
Stockholders Equity Note [Line Items] | |||||||||||||||||
Restricted stock units fair value | $ 446,250 | ||||||||||||||||
Closing stock price per share | $ 0.01 | ||||||||||||||||
Restricted Stock [Member] | Consultant [Member] | |||||||||||||||||
Stockholders Equity Note [Line Items] | |||||||||||||||||
Restricted stock units issued | 100,000 | ||||||||||||||||
Restricted stock units fair value | $ 195,000 | ||||||||||||||||
Restricted stock units, Expense | $ 54,250 | ||||||||||||||||
Restricted Stock [Member] | Consultant [Member] | Share-based Compensation Award, Tranche One [Member] | |||||||||||||||||
Stockholders Equity Note [Line Items] | |||||||||||||||||
Restricted stock units issued | 60,000 | ||||||||||||||||
Restricted Stock [Member] | Consultant [Member] | Share-based Compensation Award, Tranche Two [Member] | Scenario Forecast [Member] | |||||||||||||||||
Stockholders Equity Note [Line Items] | |||||||||||||||||
Restricted stock units issued | 20,000 | ||||||||||||||||
Restricted Stock [Member] | Consultant [Member] | Share-based Compensation Award, Tranche Three [Member] | Scenario Forecast [Member] | |||||||||||||||||
Stockholders Equity Note [Line Items] | |||||||||||||||||
Restricted stock units issued | 20,000 | ||||||||||||||||
Restricted Stock [Member] | Chief Operating Officer [Member] | |||||||||||||||||
Stockholders Equity Note [Line Items] | |||||||||||||||||
Restricted stock units fair value | $ 918,000 | ||||||||||||||||
Closing stock price per share | $ 4.08 | ||||||||||||||||
Restricted stock units, Expense | 153,000 | ||||||||||||||||
Number of options issued | 225,000 | ||||||||||||||||
Vesting period | 3 years | ||||||||||||||||
Restricted Stock [Member] | Chief Operating Officer [Member] | Pre Reverse Stock Split [Member] | |||||||||||||||||
Stockholders Equity Note [Line Items] | |||||||||||||||||
Number of options issued | 19,125,000 | ||||||||||||||||
Restricted Stock [Member] | Chief Financial Officer [Member] | |||||||||||||||||
Stockholders Equity Note [Line Items] | |||||||||||||||||
Restricted stock units fair value | $ 692,400 | ||||||||||||||||
Closing stock price per share | $ 5.77 | ||||||||||||||||
Restricted stock units, Expense | 176,306 | ||||||||||||||||
Restricted Stock [Member] | Chief Financial Officer [Member] | Share-based Compensation Award, Tranche One [Member] | |||||||||||||||||
Stockholders Equity Note [Line Items] | |||||||||||||||||
Vesting period | 6 months | ||||||||||||||||
Number of restricted stock issued | 20,000 | ||||||||||||||||
Restricted Stock [Member] | Chief Financial Officer [Member] | Share-based Compensation Award, Tranche Two [Member] | |||||||||||||||||
Stockholders Equity Note [Line Items] | |||||||||||||||||
Vesting period | 3 years | ||||||||||||||||
Number of restricted stock issued | 100,000 | ||||||||||||||||
Restricted Stock Units (RSUs) [Member] | |||||||||||||||||
Stockholders Equity Note [Line Items] | |||||||||||||||||
Restricted stock units issued | 30,000 | ||||||||||||||||
Restricted stock units, Expense | $ 34,687 | ||||||||||||||||
Restricted stock units issued, value | $ 165,000 | ||||||||||||||||
[1] | Includes share based compensation of $2,000,000 and $10,236,089 for the years ended December 31, 2015 and 2014 | ||||||||||||||||
[2] | The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying warrants and the closing stock price of $2.50 for our common stock on December 31, 2015. |
STOCK OPTIONS (Narrative) (Deta
STOCK OPTIONS (Narrative) (Details) | 1 Months Ended | 12 Months Ended | ||||||||
Sep. 30, 2015USD ($)$ / sharesshares | Aug. 31, 2015USD ($)shares | Jul. 31, 2015USD ($)$ / sharesshares | Jun. 30, 2015USD ($)Director$ / sharesshares | Mar. 31, 2014USD ($)$ / sharesshares | Dec. 31, 2015USD ($)$ / sharesshares | Dec. 31, 2014USD ($) | Dec. 17, 2003shares | Dec. 31, 2000shares | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Dividend yield | 0.00% | 0.00% | ||||||||
Risk free interest rate | 1.69% | 2.73% | ||||||||
Expected Life (Years) | 5 years | 10 years | ||||||||
Option, expense | $ | $ 849,791 | $ 860,235 | ||||||||
Weighted average fair value of stock options granted | $ | $ 3,758,162 | $ 599,893 | ||||||||
Intrinsic value of stock options exercised | $ | ||||||||||
Unrecognized compensation cost related to outstanding stock options | $ | $ 2,853,537 | |||||||||
Unrecognized compensation cost related to stock options, period of recognition | 2 years 6 months | |||||||||
Chief Operating Officer [Member] | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Number of options issued | 375,000 | |||||||||
Exercisable common stock share price | $ / shares | $ 0.85 | |||||||||
Dividend yield | 0.00% | |||||||||
Risk free interest rate | 1.58% | |||||||||
Expected volatility | 180.10% | |||||||||
Expected Life (Years) | 5 years | |||||||||
Stock grant value | $ | $ 1,502,219 | |||||||||
Pre Reverse Stock Split [Member] | Chief Operating Officer [Member] | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Number of options issued | 31,875,000 | |||||||||
Exercisable common stock share price | $ / shares | $ 0.01 | |||||||||
Stock Options [Member] | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Number of options issued | 1,875,000 | |||||||||
Exercise price, description | In connection with Incentive Stock Options, the exercise price of each option may not be less than 100% of the fair market value of the common stock on the date of the grant (or 110% of the fair market value in the case of a grantee holding more than 10% of the outstanding stock of the Company). The aggregate fair market value (determined at the time of the grant) of stock for which an employee may exercise Incentive Stock Options under all plans of the company shall not exceed $1,000,000 per calendar year. If any employee shall have the right to exercise any options in excess of $100,000 during any calendar year, the options in excess of $100,000 shall be deemed to be Non-Statutory Stock Options, including prices, duration, transferability and limitations on exercise. | |||||||||
Exercisable common stock share price | $ / shares | $ 0.85 | |||||||||
Option fair value | $ | [1] | $ 226,631,000 | ||||||||
Stock Options [Member] | Chief Financial Officer [Member] | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Number of options issued | 200,000 | |||||||||
Dividend yield | 0.00% | |||||||||
Risk free interest rate | 1.62% | |||||||||
Expected volatility | 182.20% | |||||||||
Expected Life (Years) | 5 years | |||||||||
Vesting period | 3 years | |||||||||
Option fair value | $ | $ 1,107,857 | |||||||||
Stock Options [Member] | Pre Reverse Stock Split [Member] | Chief Financial Officer [Member] | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Number of options issued | 17,000,000 | |||||||||
Stock Options [Member] | Director [Member] | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Number of options issued | 75,000 | 1,225,000 | 6,000,000 | |||||||
Exercisable common stock share price | $ / shares | $ 2.15 | $ 0.85 | $ 0.05 | |||||||
Number of employees and directors receiving unit grants | Director | 2 | |||||||||
Expected option life (in years) | 5 years | 10 years | ||||||||
Fair value of option issued expensed immediately | $ | $ 993,083 | $ 599,893 | ||||||||
Dividend yield | 0.00% | 0.00% | ||||||||
Risk free interest rate | 1.48% | 2.73% | ||||||||
Expected volatility | 18350.00% | 176.60% | 229.00% | |||||||
Expected Life (Years) | 5 years | 5 years | 10 years | |||||||
Vesting period | 5 years | |||||||||
Option fair value | $ | $ 155,003 | |||||||||
Stock Options [Member] | Director [Member] | Pre Reverse Stock Split [Member] | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Number of options issued | 6,375,000 | 104,125,000 | ||||||||
Stock Options [Member] | Director [Member] | Minimum [Member] | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Risk free interest rate | 1.74% | |||||||||
Stock Options [Member] | Director [Member] | Maximum [Member] | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Risk free interest rate | 1.75% | |||||||||
Stock Options [Member] | Stock Option 2003 Plan [Member] | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Number of shares authorized to be granted under plan | 18,000,000 | |||||||||
Number of options available to be issued | 4,067,631 | |||||||||
Number of common shares that can be purchased through equity awards that have been issued, unvested or unexercised | 298,530 | |||||||||
Stock Options [Member] | Stock Option 2000 Plan [Member] | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Number of shares authorized to be granted under plan | 1,500,000 | |||||||||
Stock Options, Restricted Stock and Units, and Other Stock-based Awards [Member] | Stock Option 2013 Plan [Member] | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Number of shares authorized to be granted under plan | 20,000,000 | |||||||||
Number of options available to be issued | 19,700,000 | |||||||||
Number of common shares that can be purchased through equity awards that have been issued, unvested or unexercised | 292,500 | |||||||||
[1] | The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the closing stock price of $2.50 for our common stock on December 31, 2015. |
STOCK OPTIONS (Schedule of Fair
STOCK OPTIONS (Schedule of Fair Value Assumptions Used to Value Stock Options) (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||
Risk Free Interest Rate | 1.69% | 2.73% |
Expected Volatility | 176.60% | 229.00% |
Expected Life (in years) | 5 years | 10 years |
Dividend Yield | 0.00% | 0.00% |
Weighted average estimated fair value of options during the period | $ 2 | $ 1 |
STOCK OPTIONS (Schedule of Stoc
STOCK OPTIONS (Schedule of Stock Option Activity) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Jun. 30, 2015 | Dec. 31, 2015 | Dec. 31, 2014 | ||
Number of Shares: | ||||
Exercised | (2,353) | |||
Aggregate Intrinsic Value: | ||||
Closing stock price | $ 2.50 | |||
Stock Options [Member] | ||||
Number of Shares: | ||||
Balance, beginning | 598,431 | 739,608 | ||
Granted | 1,875,000 | |||
Exercised | (7,843) | (141,176) | ||
Forfeited/canceled | (308,235) | |||
Balance, ending | 2,157,353 | 598,431 | ||
Exercisable | 626,103 | |||
Exercisable as of December 31, 2015 and expected to vest thereafter | 2,157,353 | |||
Weighted Average Exercise Price: | ||||
Balance, beginning | $ 4.25 | $ 4.25 | ||
Granted | 0.85 | |||
Exercised | 0.05 | 1.70 | ||
Forfeited/canceled | 0.06 | |||
Balance, ending | 1.80 | $ 4.25 | ||
Exercisable | 2.57 | |||
Exercisable as of December 31, 2015 and expected to vest thereafter | $ 1.80 | |||
Weighted Average Remaining Contractual Term: | ||||
Balance as of December 31, 2015 | 5 years | |||
Exercisable as of December 31, 2015 | 6 years 2 months 12 days | |||
Exercisable as of December 31, 2015 and expected to vest thereafter | 5 years | |||
Aggregate Intrinsic Value: | ||||
Balance as of December 31, 2015 | [1] | $ 226,631 | ||
Exercisable as of December 31, 2015 | [1] | |||
Exercisable as of December 31, 2015 and expected to vest thereafter | [1] | $ 226,631 | ||
Closing stock price | $ 2.50 | |||
[1] | The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the closing stock price of $2.50 for our common stock on December 31, 2015. |
STOCK OPTIONS (Summary of Activ
STOCK OPTIONS (Summary of Activities of Unvested Stock Options) (Details) - Nonvested Stock Options [Member] - $ / shares | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Number of Awards | ||
Unvested stock options, beginning | 17,647 | 55,882 |
Granted | 1,875,000 | |
Cancelled/Forfeited | (11,765) | |
Vested | (349,632) | (38,235) |
Unvested stock options, ending | 1,531,250 | 17,647 |
Weighted Average Exercise Price | ||
Unvested stock options, beginning | $ 9.49 | $ 6.52 |
Granted | 1.43 | |
Cancelled/Forfeited | (12.75) | |
Vested | (1.31) | (6.86) |
Unvested stock options, ending | $ 1.48 | $ 9.49 |
Weighted Average Remaining Amortization Period (Years) | ||
Unvested stock options at December 31, 2015 | 4 years 5 months 27 days |
STOCK OPTIONS (Schedule of Warr
STOCK OPTIONS (Schedule of Warrant Activity) (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | ||
Number of Shares: | |||
Balance, beginning | 1,460,775 | 1,405,686 | |
Granted | 121,755 | ||
Exercised | (2,353) | ||
Cancelled/Forfeited | (43,529) | ||
Expired | (66,666) | ||
Balance, ending | 1,414,893 | 1,460,775 | |
Exercisable as of December 31, 2015 | 1,414,893 | ||
Exercisable as of December 31, 2015 and expected to vest thereafter | 1,414,893 | ||
Weighted Average Exercise Price: | |||
Balance, beginning | $ 1.01 | $ 8.80 | |
Granted | 6.86 | ||
Exercised | 0.85 | ||
Forfeited/canceled | (4.15) | ||
Expired | (12.75) | ||
Outstanding, ending | 9.67 | $ 1.01 | |
Exercisable as of December 31, 2015 | 9.67 | ||
Exercisable as of December 31, 2015 and expected to vest thereafter | $ 9.67 | ||
Weighted- Average Remaining Contractual Term: | |||
Balance as of December 31, 2015 | 4 years 9 months 18 days | ||
Exercisable as of December 31, 2015 | 4 years 9 months 18 days | ||
Exercisable as of December 31, 2015 and expected to vest thereafter | 4 years 9 months 18 days | ||
Aggregate Intrinsic Value: | |||
Balance as of December 31, 2015 | [1] | $ 413 | |
Exercisable as of December 31, 2015 | [1] | ||
Exercisable as of December 31, 2015 and expected to vest thereafter | [1] | $ 413 | |
Closing stock price | $ 2.50 | ||
[1] | The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying warrants and the closing stock price of $2.50 for our common stock on December 31, 2015. |
OPERATING LEASES (Details)
OPERATING LEASES (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Leases [Abstract] | ||
Total rent expense under leases | $ 55,153 | $ 65,950 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) | 1 Months Ended | |||
Jun. 30, 2015shares | Dec. 31, 2015USD ($) | Jun. 12, 2015USD ($)Shareholders | Dec. 31, 2014USD ($) | |
Schedule of Other Related Party Transactions [Line Items] | ||||
Number of shareholders | Shareholders | 3 | |||
Convertible notes payable | $ | $ 317,000 | $ 114,000 | ||
Amount of accrued interest owed by shareholders | $ | $ 42,713 | |||
Common Stock [Member] | ||||
Schedule of Other Related Party Transactions [Line Items] | ||||
Common stock shares issued on conversion of debt (in shares) | shares | 234,735 | |||
Pre Reverse Stock Split [Member] | Common Stock [Member] | ||||
Schedule of Other Related Party Transactions [Line Items] | ||||
Common stock shares issued on conversion of debt (in shares) | shares | 19,952,489 |
MAJOR CUSTOMERS_VENDORS (Detail
MAJOR CUSTOMERS/VENDORS (Details) | 12 Months Ended | |
Dec. 31, 2015CustomersVendors | Dec. 31, 2014CustomersVendors | |
Risks and Uncertainties [Abstract] | ||
Number of major customers accounting for 100% of annual sales | Customers | 3 | 3 |
Number of major vendors accounting for 100% of pigment purchases | Vendors | 1 | 1 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - USD ($) | 1 Months Ended | 12 Months Ended | |||
Feb. 29, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Feb. 28, 2016 | Jun. 11, 2015 | |
Subsequent Event [Line Items] | |||||
Net proceeds from issuance of convertible preferred stock | $ 1,278,501 | ||||
Common stock, par value | $ 0.001 | $ 0.001 | $ 0.001 | ||
Series A Convertible Preferred Stock [Member] | |||||
Subsequent Event [Line Items] | |||||
Preferred stock, par value | $ 0.001 | $ 0.001 | |||
Preferred stock subscribed by an officer and shareholder | 10,667 | ||||
Subsequent Event [Member] | Equity Issuance One [Member] | Warrant [Member] | |||||
Subsequent Event [Line Items] | |||||
Number of common shares that can be purchased through warrants | 2,587,500 | ||||
Warrant exercise price | $ .40 | ||||
Subsequent Event [Member] | Equity Issuance Two [Member] | Warrant [Member] | |||||
Subsequent Event [Line Items] | |||||
Number of common shares that can be purchased through warrants | 500,000 | ||||
Warrant exercise price | $ 0.40 | ||||
Subsequent Event [Member] | Series A Convertible Preferred Stock [Member] | |||||
Subsequent Event [Line Items] | |||||
Preferred stock subscribed by an officer and shareholder | 10,667 | ||||
Subsequent Event [Member] | 0% Series C Convertible Preferred Stock [Member] | |||||
Subsequent Event [Line Items] | |||||
Net proceeds from issuance of convertible preferred stock | $ 1,217,500 | ||||
Subsequent Event [Member] | 0% Series C Convertible Preferred Stock [Member] | Equity Issuance One [Member] | |||||
Subsequent Event [Line Items] | |||||
Stock issued, shares | 2,587,500 | ||||
Net proceeds from issuance of convertible preferred stock | $ 1,035,000 | ||||
Equity issuance, price per share | $ .40 | ||||
Preferred stock, par value | $ .001 | ||||
Subsequent Event [Member] | 0% Series C Convertible Preferred Stock [Member] | Equity Issuance Two [Member] | |||||
Subsequent Event [Line Items] | |||||
Stock issued, shares | 500,000 | ||||
Net proceeds from issuance of convertible preferred stock | $ 200,000 | ||||
Equity issuance, price per share | $ 0.40 | ||||
Subsequent Event [Member] | Common Stock [Member] | Chairman of the Board [Member] | |||||
Subsequent Event [Line Items] | |||||
Number of common stock granted through stock options | 100,000 | ||||
Exercise price of options granted | $ 0.60 | ||||
Pre Reverse Stock Split [Member] | Subsequent Event [Member] | Series A Convertible Preferred Stock [Member] | |||||
Subsequent Event [Line Items] | |||||
Preferred stock subscribed by an officer and shareholder | 906,736 |