Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2017 | Oct. 24, 2017 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2017 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q3 | |
Trading Symbol | VRME | |
Entity Registrant Name | VerifyMe, Inc. | |
Entity Central Index Key | 1,104,038 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 49,648,497 |
Condensed Balance Sheets
Condensed Balance Sheets - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 759,698 | $ 22,644 |
Prepaid expenses and other current assets | 21,773 | 9,425 |
Inventory | 31,997 | 17,093 |
TOTAL CURRENT ASSETS | 813,468 | 49,162 |
PROPERTY AND EQUIPMENT | ||
Capital equipment, net of accumulated depreciation of $203,223 as of September 30, 2017 and December 31, 2016 | ||
OTHER ASSETS | ||
Patents and Trademarks, net of accumulated amortization of $206,834 and $194,236 as of September 30, 2017 and December 31, 2016 | 219,354 | 231,952 |
TOTAL ASSETS | 1,032,822 | 281,114 |
CURRENT LIABILITIES | ||
Accounts payable and accrued expenses | 892,057 | 867,436 |
Notes payable net of discount of $0 and $60,931, as of September 30, 2017 and December 31, 2016 | 50,000 | 68,069 |
Embedded derivative liability | 228,718 | |
Warrant liability | 59,104 | 394,744 |
TOTAL CURRENT LIABILITIES | 1,001,161 | 1,558,967 |
STOCKHOLDERS' DEFICIT | ||
Common stock of $.001 par value; 675,000,000 authorized; 48,218,497and 8,681,236 issued, 47,867,957 and 8,330,696 shares outstanding as of September 30, 2017 and December 31, 2016 | 47,868 | 8,331 |
Additional paid in capital | 42,939,461 | 40,469,272 |
Treasury stock as cost (350,540 shares at September 30, 2017 and December 31, 2016) | (113,389) | (113,389) |
Accumulated deficit | (42,842,624) | (41,644,545) |
STOCKHOLDERS' EQUITY (DEFICIT) | 31,661 | (1,277,853) |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | 1,032,822 | 281,114 |
Series A Convertible Preferred Stock [Member] | ||
STOCKHOLDERS' DEFICIT | ||
Convertible Preferred Stock | 345 | 398 |
STOCKHOLDERS' EQUITY (DEFICIT) | 345 | 398 |
Series B Convertible Preferred Stock [Member] | ||
STOCKHOLDERS' DEFICIT | ||
Convertible Preferred Stock | ||
STOCKHOLDERS' EQUITY (DEFICIT) | ||
Series C Convertible Preferred Stock [Member] | ||
STOCKHOLDERS' DEFICIT | ||
Convertible Preferred Stock | 1,913 | |
STOCKHOLDERS' EQUITY (DEFICIT) | 1,913 | |
Series D Convertible Preferred Stock [Member] | ||
STOCKHOLDERS' DEFICIT | ||
Convertible Preferred Stock | 167 | |
STOCKHOLDERS' EQUITY (DEFICIT) | $ 167 |
Condensed Balance Sheets (Paren
Condensed Balance Sheets (Parenthetical) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Accumulated depreciation on capital equipment | $ 203,223 | $ 203,223 |
Accumulated amortization, patent and trademarks | 206,834 | 194,236 |
Net of discount on note payable | $ 0 | $ 60,931 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 675,000,000 | 675,000,000 |
Common stock, shares issued | 48,218,497 | 8,681,236 |
Common stock, shares outstanding | 47,867,957 | 8,330,696 |
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 | 37,164,767 | 37,164,767 |
Preferred stock, shares issued | 397,778 | 397,778 |
Preferred stock, shares outstanding | 397,778 | 397,778 |
Series B Convertible Preferred Stock [Member] | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 85 | 85 |
Preferred stock, shares issued | 0.92 | 0.92 |
Preferred stock, shares outstanding | 0.92 | 0.92 |
Series C Convertible Preferred Stock [Member] | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 7,000,000 | 7,000,000 |
Preferred stock, shares issued | 0 | 1,912,500 |
Preferred stock, shares outstanding | 0 | 1,912,500 |
Series D Convertible Preferred Stock [Member] | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 6,500,000 | 6,500,000 |
Preferred stock, shares issued | 0 | 166,750 |
Preferred stock, shares outstanding | 0 | 166,750 |
Condensed Statement of Operatio
Condensed Statement of Operations (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | ||
NET REVENUES | |||||
Sales | $ 392 | $ 392 | $ 11,705 | ||
Royalties | |||||
TOTAL NET REVENUE | 392 | 392 | 11,705 | ||
COST OF SALES | 5,910 | ||||
GROSS PROFIT | 392 | 392 | 5,795 | ||
OPERATING EXPENSES | |||||
General and administrative | [1] | 242,401 | 107,340 | 872,767 | 357,723 |
Legal and accounting | 51,926 | 71,005 | 143,132 | 303,932 | |
Payroll expenses | [1] | 71,898 | 257,712 | 114,960 | 1,569,372 |
Research and development | 15,933 | 33,243 | 211,881 | ||
Sales and marketing | 15,177 | 226,951 | |||
Total operating expenses | 382,158 | 451,234 | 1,164,102 | 2,669,859 | |
LOSS BEFORE OTHER INCOME (EXPENSE) | (381,766) | (451,234) | (1,163,710) | (2,664,064) | |
OTHER INCOME (EXPENSE) | |||||
Interest expenses | (5,000) | (1,000) | (217,316) | (3,000) | |
Change in fair value of warrants | 1,783 | (820,667) | 103,527 | 2,499,790 | |
Change in fair value of embedded derivative liability | (500,000) | 79,420 | 239,000 | ||
Fair value of warrants in excess of consideration for convertible preferred stock | (1,767,575) | ||||
TOTAL OTHER INCOME (EXPENSE) | (3,217) | (1,321,667) | (34,369) | 968,215 | |
NET LOSS | $ (384,983) | $ (1,772,901) | $ (1,198,079) | $ (1,695,849) | |
INCOME (LOSS) PER SHARE | |||||
BASIC | $ (0.01) | $ (0.24) | $ (0.06) | $ (0.26) | |
DILUTED | $ (0.01) | $ (0.24) | $ (0.06) | $ (0.26) | |
WEIGHTED AVERAGE COMMON SHARE OUTSTANDING | |||||
BASIC | 42,642,914 | 7,420,112 | 21,355,120 | 6,415,649 | |
DILUTED | 42,642,914 | 7,420,112 | 21,355,120 | 6,415,649 | |
Share based compensation | $ 101,229 | $ 134,127 | $ 452,949 | $ 894,177 | |
[1] | Includes shared based compensation of $101,229 and $452,949 for the three and nine months ended September 30, 2017 and $134,127 and $894,177 for the three and nine months ended September 30, 2016. |
Condensed Statement of Changes
Condensed Statement of Changes in Stockholders' Deficit (Unaudited) - 9 months ended Sep. 30, 2017 - USD ($) | Common Stock [Member]Series A Convertible Preferred Stock [Member] | Common Stock [Member]Series C Convertible Preferred Stock [Member] | Common Stock [Member] | Additional Paid-in Capital [Member]Series A Convertible Preferred Stock [Member] | Additional Paid-in Capital [Member]Series C Convertible Preferred Stock [Member] | Additional Paid-in Capital [Member]Series D Convertible Preferred Stock [Member] | Additional Paid-in Capital [Member] | Treasury Stock [Member] | Accumulated Deficit [Member] | Series A Convertible Preferred Stock [Member] | Series B Convertible Preferred Stock [Member] | Series C Convertible Preferred Stock [Member] | Series D Convertible Preferred Stock [Member] | Total |
Balance at Dec. 31, 2016 | $ 8,331 | $ 40,469,272 | $ (113,389) | $ (41,644,545) | $ 398 | $ 1,913 | $ 167 | $ (1,277,853) | ||||||
Balance (in shares) at Dec. 31, 2016 | 8,330,696 | 397,778 | 0.92 | 1,912,500 | 166,750 | |||||||||
Conversion of Convertible Preferred Stock | $ 1,060 | $ 12,014 | $ 1,810 | $ (1,007) | $ (10,101) | $ (1,643) | $ (53) | $ (1,913) | $ (167) | |||||
Conversion of Convertible Preferred Stock (in shares) | 1,060,000 | 12,014,286 | 1,810,429 | (53,000) | (1,912,500) | (166,750) | ||||||||
Effect of Convertible Preferred Stock conversion on embedded derivative liability | 137,625 | 11,673 | $ 137,625 | |||||||||||
Effect of Convertible Preferred Stock conversion on warrant liability | $ 189,008 | 189,008 | ||||||||||||
Deemed dividend upon issuance of warrants with conversion of Series D Convertible Preferred Stock | $ 43,105 | 43,105 | ||||||||||||
Sale of common stock | $ 15,734 | 1,084,516 | 1,100,250 | |||||||||||
Sale of common stock, shares | 15,733,575 | |||||||||||||
Stock issuance costs | (17,453) | (17,453) | ||||||||||||
Conversion of accounts payable into common stock | $ 1,155 | 79,595 | 80,750 | |||||||||||
Conversion of accounts payable into common stock, shares | 1,154,725 | |||||||||||||
Converson of notes payable and accrued interest into common stock | $ 5,664 | 390,437 | 396,101 | |||||||||||
Converson of notes payable and accrued interest into common stock, shares | 5,664,246 | |||||||||||||
Warrants issued in conjunction with notes payable | 113,585 | 113,585 | ||||||||||||
Fair value of stock options and warrants | 440,664 | 440,664 | ||||||||||||
Restricted Stock awards | $ 2,100 | 10,185 | 12,285 | |||||||||||
Restricted Stock awards, shares | 2,100,000 | |||||||||||||
Net income | (1,198,079) | (1,198,079) | ||||||||||||
Balance at Sep. 30, 2017 | $ 47,868 | $ 42,939,461 | $ (113,389) | $ (42,842,624) | $ 345 | $ 31,661 | ||||||||
Balance (in shares) at Sep. 30, 2017 | 47,867,957 | 344,778 | 0.92 |
Condensed Statements of Cash Fl
Condensed Statements of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net loss | $ (1,198,079) | $ (1,695,849) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Fair value of options and warrants issued in exchange for services | 440,664 | 1,034,062 |
Common stock issued for services | 12,285 | 20,775 |
Accretion of discount on notes payable | 204,516 | |
Change in fair value of warrant liability | (103,527) | (732,214) |
Change in fair value of embedded derivative liability | (79,420) | (239,000) |
Amortization and depreciation | 12,598 | 22,852 |
Reversal of expense from forfeiture of restricted stock | (280,500) | |
Amortization of deferred compensation | 563,942 | |
(Increase) decrease in assets | ||
Inventory | (14,904) | (30,692) |
Prepaid expenses | (12,348) | 5,625 |
Decrease in liabilities | ||
Accounts payable and accrued expenses | 111,472 | 115,886 |
Net cash used in operating activities | (626,743) | (1,215,113) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Proceeds from issuance of notes payable | 281,000 | |
Proceeds from sale of common stock | 1,100,250 | 1,235,000 |
Stock issuance costs | (17,453) | (17,500) |
Net cash provided by financing activities | 1,363,797 | 1,217,500 |
CASH EQUIVALENTS | 737,054 | 2,387 |
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD | 22,644 | 4,152 |
CASH AND CASH EQUIVALENTS - END OF PERIOD | 759,698 | 6,539 |
Cash paid during the year for: Interest | ||
Cash paid during the year for: Income taxes | ||
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES | ||
Security deposit offset against accounts payable | 37,197 | |
Accretion of discount on preferred stock as deemed dividend distribution | 1,235,000 | |
Deemed dividend distribution on issuance of common stock for conversion of Series C and Series D | 525,630 | |
Revaluation of restricted stock units additional paid in capital and deferred compensation | 90,375 | |
Forfeited restricted common stock | 918,000 | |
Warrants issued as discount to notes payable | 113,585 | |
Conversion of accounts payable and accrued expenses to common stock | 80,750 | |
Conversion of notes payable and accrued interest to common stock | 396,101 | |
Series A Convertible Preferred Stock [Member] | ||
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net loss | ||
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Stock issuance costs | ||
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES | ||
Convertible Preferred Stock converted to common stock | 1,060 | 883 |
Series B Convertible Preferred Stock [Member] | ||
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net loss | ||
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Stock issuance costs | ||
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES | ||
Convertible Preferred Stock converted to common stock | 292 | |
Series C Convertible Preferred Stock [Member] | ||
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net loss | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Change in fair value of embedded derivative liability | (184,990) | |
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES | ||
Convertible Preferred Stock converted to common stock | 12,014 | 1,050 |
Revaluation of embedded derivative liability upon conversion of Convertible Preferred Stock | 137,625 | 313,000 |
Revaluation of warrant liability upon conversion Convertible Preferred Stock | 189,383 | |
Series D Convertible Preferred Stock [Member] | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Change in fair value of embedded derivative liability | 20,010 | |
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES | ||
Convertible Preferred Stock converted to common stock | 1,810 | |
Revaluation of embedded derivative liability upon conversion of Convertible Preferred Stock | 11,673 | |
Revaluation of warrant liability upon conversion Convertible Preferred Stock | $ 43,105 |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of the Business The Company was incorporated in the State of Nevada on November 10, 1999. The Company is based in Rochester, 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 OTCQB under the ticker symbol “VRME.” The Company is a This broad market encompasses counterfeiting of physical and material goods and products, as well as counterfeiting the identity of people in digital transactions. The Company is able to deliver 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. In addition, the Company has begun developing comprehensive authentication security software and biometrics to secure physical and logical access to facilities, computer networks, internet sites, secure mobile banking transactions and other mobile applications such as social media verification. The Company has a patented methodology/process that gives a 99% confidence level based on biometrics and other proprietary user data as to the true identity of individuals that require authentication prior to making transactions, gaining access to computer networks or facilities, email, or any other process requiring a verifiable identity. In addition, the Company has secure technologies that authenticate, prevent product diversion and protect counterfeiting of labels, packaging, products, metal objects, secure documents etc. that need this type of technology protection. These particular technologies can be printed using traditional printing presses or high speed digital presses such as the HP Indigo press. Secret invisible coding can be variable or static and they work in combination with secure QR codes for product checking and business intelligence data gathering. . The Company has signed a five-year global contract with the Indigo division of HP Inc. HP Indigo incorporates the Company’s proprietary pigments into a security HP Electroink. The combination of the HP Indigo press and the VerifyMe patented ink provides a unique solution for packaging and label authentication against counterfeiting as well as item level serialization for diversion tracking which gives a traceable identity to each product. The Company will receive a royalty for each impression utilizing the ink from printers and brand owners. HP Indigo will market the technology globally to owners of the 6000 series of HP Indigo digital presses. Management believes that this agreement will impact revenues beginning in 2018. However, there can be no assurance that any revenues will be generated. 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 unaudited condensed financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and with the instructions for Form 10-Q and Rule 8-03 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The accompanying unaudited financial statements should be read in conjunction with the financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 as filed with the Securities and Exchange Commission (SEC). Operating results for the three and nine months ended September 30, 2017 are not necessarily indicative of the results that may be expected for the year ending December 31, 2017. Reclassifications: Certain prior period amounts have been reclassified to conform to the current period’s financial statement presentations. Basic and Diluted Net Income per Share of Common Stock The Company follows Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 260, “Earnings Per Share,” when reporting earnings per share resulting in the presentation of basic and diluted earnings per share. As of September 30, 2017, there were approximately 72.0 million (25.0 million at September 30, 2016) shares potentially issuable pursuant to preferred share agreements, options, and warrants that could dilute basic earnings per share in the future that were excluded from the calculation of diluted earnings per share because their inclusion would have been anti-dilutive to the Company’s losses during the periods presented. Recently Adopted Accounting Pronouncements In March 2016, the FASB issued ASU No. 2016-09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting , which simplifies several aspects of the accounting for share-based payment award transactions, including: (1) income tax consequences; (2) classification of awards as either equity or liabilities, and (3) classification on the statement of cash flows. For public companies, the amendments in the ASU are effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. This pronouncement had no impact on the financial statements since any excess tax benefits were fully offset by the valuation allowance and not recognized for financial statement purposes. Recently Issued Accounting Pronouncements Not Yet Adopted As of September, 30, 2017, there are no recently issued accounting standards not yet adopted which would have a material effect on the Company’s financial statements through 2017. |
MANAGEMENT PLANS
MANAGEMENT PLANS | 9 Months Ended |
Sep. 30, 2017 | |
MANAGEMENT PLANS [Abstract] | |
MANAGEMENT PLANS | NOTE 2 – MANAGEMENT PLANS The accompanying condensed 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. The Company does not believe that its existing cash resources will be sufficient to sustain operations during the next twelve months. The Company currently needs to generate revenue in order to sustain its operations. In the event that the Company cannot generate sufficient revenue to sustain its operations, the Company will need to reduce expenses or obtain financing through the sale of debt and/or equity securities. The issuance of additional equity would result in dilution to existing stockholders. If the Company is unable to obtain additional funds when they are needed or if such funds cannot be obtained on terms acceptable to the Company, the Company may be unable to execute upon the business plan or pay costs and expenses as they are incurred, which could have a material adverse effect on the business, financial condition and results of operations. 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. |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Sep. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | NOTE 3 – INCOME TAXES Income tax expense was $0 for the three and nine months ended September 30, 2017 and 2016. As of January 1, 2017, the Company had no unrecognized tax benefits, and accordingly, the Company did not recognize interest or penalties during 2017 related to unrecognized tax benefits. There has been no change in unrecognized tax benefits during the three and nine months ended September 30, 2017, and there was no accrual for uncertain tax positions as of September 30, 2017. Tax years from 2013 through 2016 remain subject to examination by major tax jurisdictions. There is no income tax benefit for the losses for the three and nine months ended September 30, 2017 and 2016, since management has determined that the realization of the net tax deferred asset is not assured and has created a valuation allowance for the entire amount of such benefits. |
NOTES PAYABLE
NOTES PAYABLE | 9 Months Ended |
Sep. 30, 2017 | |
Notes Payable [Abstract] | |
NOTES PAYABLE | NOTE 4 – NOTES PAYABLE Notes payable consist of the following as of September 30, 2017 and December 31, 2016: September 30, December 31, 2017 2016 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 rate at 5% per annum; principal and accrued interest due at maturity on June 30, 2017 - 79,000 Less: Unamortized discount - (60,931 ) 50,000 68,069 Less: Current portion 50,000 68,069 $ - $ - On January 24, 2017 and January 31, 2017, the Company issued notes payable in the amount of $20,000, in addition to warrants to purchase 1,000,000 shares of the Company’s common stock at an exercise price of $0.40 per share and a term of five years. The notes bear interest at the rate of 5% per annum and are due on June 30, 2017. In accordance with FASB ASC 470-20, “Debt with Conversion and Other Options,” the proceeds of notes payable with detachable stock purchase warrants have been allocated between the two based on the relative fair values of the debt instrument without the warrants and of the warrants themselves at the time of issuance. The warrants were valued at $15,895 fair value, 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 197.5% to 197.7%, risk free interest rate of 1.94% to 1.90% and expected option life of 5 years. The warrant values were treated as a discount to the value of the note payable in accordance with FASB ASC 835-30-25, Recognition On February 13, 2017, the Company issued a note payable in the amount of $100,000 in addition to a warrant to purchase 5,000,000 shares of the Company’s common stock at an exercise price of $0.40 per share and a term of five years. The notes bear no interest and are due on June 30, 2017. In accordance with FASB ASC 470-20, “Debt with Conversion and Other Options,” the proceeds of notes payable with detachable stock purchase warrants have been allocated between the two based on the relative fair values of the debt instrument without the warrants and of the warrants themselves at the time of issuance. The warrants were valued at $76,390 fair value, 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 197.4%, risk free interest rate of 1.88% and expected option life of 5 years. The warrant values were treated as a discount to the value of the note payable in accordance with FASB ASC 835-30-25, Recognition On March 28, 2017, the Company issued a note payable in the amount of $25,000 in addition to a warrant to purchase 1,250,000 shares of the Company’s common stock at an exercise price of $0.40 per share and a term of five years. The notes bear no interest and are due on June 30, 2017. In accordance with FASB ASC 470-20, “Debt with Conversion and Other Options,” the proceeds of notes payable with detachable stock purchase warrants have been allocated between the two based on the relative fair values of the debt instrument without the warrants and of the warrants themselves at the time of issuance. The warrants were valued at $21,300 fair value, 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 202.1%, risk free interest rate of 1.97% and expected option life of 5 years. The warrant values were treated as a discount to the value of the note payable in accordance with FASB ASC 835-30-25, Recognition and were accreted over the term of the note payable for financial statement purposes. On April 13, 2017, the Company issued notes payable in the principal amount of $10,000 in exchange for a loan bearing no interest maturing June 30, 2017. On April 26, 2017, the Company issued a secured promissory note (the “Note”) in the principal amount of $30,000 in exchange for a loan bearing no interest maturing October 31, 2017. The Note is secured by a first lien on all assets of the Company in accordance with a security agreement entered into in connection with the Note. In the event the Company completes a financing of at least $750,000 prior to maturity of the Note, the principal of the Note will automatically convert into a number of shares of common stock of the Company equivalent to an investment of $60,000 under the terms of such financing. In the event of such a conversion or a voluntary prepayment by the Company, the Company will also pay six months of interest payments on the $60,000 principal of the Note. In May 2017, the Company issued notes payable in the principal amount of $60,000 in exchange for a loan bearing no interest maturing June 30, 2017. In June 2017, the Company issued notes payable in the principal amount of $36,000 in exchange for a loan bearing no annual interest maturing June 30, 2017. On June 30, 2017, all of these notes payable (including the Note) amounting to $360,000 and converting at $390,000 plus accrued interest of $6,101, except for the $50,000 note payable from 2009, were converted into 5,664,246 shares of the Company’s common stock and warrants to purchase 5,664,246 shares of the Company’s common stock at an exercise price of $0.15, with a term of five years (See Note 8). As of September 30, 2017, and December 31, 2016, accrued interest on notes payable was $32,667 and $29,968. Interest expense including accretion of debt discount for the three and nine months ended September 30, 2017 was $1,000 and $205,516. Interest expense for the three and nine months ended September 30, 2016 was $1,000 and $2,000. |
EMBEDDED DERIVATIVE LIABILITY
EMBEDDED DERIVATIVE LIABILITY | 9 Months Ended |
Sep. 30, 2017 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
EMBEDDED DERIVATIVE LIABILITY | NOTE 5 – EMBEDDED DERIVATIVE LIABILITY The conversion feature of the 0% Series C Convertible Preferred Stock (“Series C”) is an embedded derivative, which due to anti-dilution adjustments is classified as a liability in accordance with FASB ASC Topic 815, “Derivatives and Hedging” and ASU 2014-16, and was valued in accordance with FASB ASC 470, “Debt”, as a beneficial conversion feature at a combined fair market value of $1,235,000 as of February 2016. This was classified as an embedded derivative liability and a discount to Series C. Because the Series C can be converted at any time, the full amount was accreted and classified as a reduction to the discount on Series C and a deemed dividend. The conversion feature of the 0% Series D Convertible Preferred Stock (“Series D”) is an embedded derivative, which due to anti-dilution adjustments is classified as a liability in accordance with FASB ASC Topic 815, “Derivatives and Hedging” and ASU 2014-16, and was valued in accordance with FASB ASC 470, “Debt”, as a beneficial conversion feature at a combined fair market value of $181,942 as of October 24, 2016. This was classified as an embedded derivative liability and a discount to Series D. Because the Series D can be converted at any time, the full amount was accreted and classified as a reduction to the discount on Series D and a deemed dividend. In addition, the embedded derivative liability must be valued every reporting period and adjusted to market with the increase or decrease being adjusted through earnings. On April 14, 2017, 375,000 shares of the Series C were converted into 375,000 shares of the Company’s common stock and the associated embedded derivative liability was valued at $45,000 at March 31, 2017 and $30,000 at April 14, 2017. Therefore, $15,000 was adjusted through earnings and $30,000 was adjusted through additional paid in capital. On June 30, 2017, the Company cancelled the outstanding warrants to purchase 3,087,500 of the Company’s common stock related to the Series C and issued 6,175,000 shares of the Company’s common stock which is equivalent to two times the previously outstanding warrants for the Series C. In addition, on June 30, 2017, the remaining 1,537,500 shares of Series C were converted into 5,464,286 shares of the Company’s common stock (See Notes 7 and 8). The embedded derivative liability was valued as of June 30, 2017 at $107,625 and the difference between the remaining value of $184,990 and $107,625, or $77,365 was adjusted through earnings as of June 30, 2017. The balance of $107,625 was adjusted through additional paid in capital. On June 30, 2017, the Company cancelled the outstanding warrants to purchase 667,000 shares of the Company’s common stock related to the Series D and issued 1,334,000 shares of the Company’s common stock, which is equivalent to two times the previously outstanding warrants for the Series D. In addition, on June 30, 2017, the 166,750 shares of Series D and the warrants were converted into 467,429 shares of the Company’s common stock (See Notes 7 and 8). The embedded derivative liability was valued as of June 30, 2017 at $11,673 and the difference between the remaining value of $20,010 and $11,673, or $8,337, was adjusted through earnings as of June 30, 2017. The balance of $11,673 was adjusted through additional paid in capital. As of September 30, 2017, and December 31, 2016, the fair value of the embedded derivative liability was $0 and $228,718. For the three and nine months ended September 30, 2017, the Company realized income of $0 and $79,420 relative to the embedded derivative liability. For the three and nine months ended September 30, 2016, the Company realized loss of $500,000 and income of $239,000 relative to the embedded derivative liability. |
WARRANT LIABILITY
WARRANT LIABILITY | 9 Months Ended |
Sep. 30, 2017 | |
Warrants and Rights Note Disclosure [Abstract] | |
WARRANT LIABILITY | NOTE 6 – 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 (collectively, the “VFM Agreements”) with VerifyMe, Inc. – Texas (“VFM”) on the same date entered into a Technology and Service Agreement with Zaah Technologies, Inc. (collectively with the VFM Agreements, the “Agreements”). The Agreements contemplate warrant issuances by the Company for the purchase of common stock. Warrants exercisable for 627,451 shares 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 September 30, 2017, and December 31, 2016, the fair value of the warrant liability was $33,099 and $22,063. The 392,157 warrants associated with the Company’s Series A Convertible Preferred Stock were also classified as a liability since they were 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 September 30, 2017, and December 31, 2016 the fair value of the warrants was $20,686 and $18,107. On January 1, 2014, the Company issued warrants to purchase 74,697 shares of Common Stock as consideration for technology received from VFM under the VFM Patent and Technology License Agreement dated December 31, 2012. The warrants were exercisable at $0.10 per share. The warrants are subject to anti-dilution adjustments outlined in the VFM Patent and Technology 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 September 30, 2017, and December 31, 2016, the fair value of the warrant liability was $5,076 and $4,885. Warrants to purchase 3,529 shares of Common Stock associated with the notes payable incurred on August 5, 2014, were revalued and at September 30, 2017 and December 31, 2016, the fair value of those warrants was $243 and $262. In conjunction with the issuance of Series C, the Company issued warrants to purchase 3,087,500 shares of the Company’s Common Stock. The warrants are subject to anti-dilution adjustments outlined in the warrant agreement. In accordance with FASB ASC 815 and ASU 2014-16, the warrants were classified as a liability with an initial fair value of $1,767,576, which was immediately expensed. 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 June 30, 2017, and December 31, 2016, the fair value of the warrant liability was $189,383 and $285,290. On June 30, 2017, the Company cancelled the outstanding warrants to purchase 3,087,500 of the Company’s common stock related to the Series C and issued 6,175,000 shares of the Company’s common stock which is equivalent to two times the previously outstanding warrants for the Series C. The common stock was valued at $432,250 based on the closing price of the Company’s common stock of $0.07 on June 30, 2017 and was recorded as a deemed dividend distribution. The net effect in additional paid in capital relating to this transactions was $0, as both sides of the entry affected additional paid in capital. In addition, the warrant liability write off of $189,008 was recorded as a negative deemed dividend distribution. In conjunction with the issuance of Series D, the Company issued warrants to purchase 667,000 shares of the Company’s Common Stock. The warrants are subject to anti-dilution adjustments outlined in the warrant agreement. In accordance with FASB ASC 815 and ASU 2014-16, the warrants were classified as a liability with an initial fair value of $181,942, which was immediately expensed. 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 June 30, 2017, and December 31, 2016, the fair value of the warrant liability was $43,105 and $64,137. On June 30, 2017, the Company cancelled the outstanding warrants to purchase 667,000 shares of the Company’s common stock related to the Series D and issued 1,334,000 shares of the Company’s common stock, which is equivalent to two times the previously outstanding warrants for the Series C. The common stock was valued at $93,380 based on the closing price of the Company’s common stock of $0.07 on June 30, 2017 and was recorded as a deemed dividend distribution. The net effect in additional paid in capital relating to this transactions was $0, as both sides of the entry affected additional paid in capital. In addition, the warrant liability write off of $43,105 was recorded as a negative deemed dividend distribution. |
CONVERTIBLE PREFERRED STOCK
CONVERTIBLE PREFERRED STOCK | 9 Months Ended |
Sep. 30, 2017 | |
CONVERTIBLE PREFERRED STOCK [Abstract] | |
CONVERTIBLE PREFERRED STOCK | NOTE 7 – CONVERTIBLE PREFERRED STOCK Subscription Agreement The Company entered into a Subscription Agreement with VerifyMe, Inc., a Texas corporation (“VFM”) on January 31, 2013 (the “Subscription Agreement”). Under the terms of the Subscription Agreement, VFM purchased 392,157 shares of Series A Convertible Preferred Stock post 85-for-1 reverse stock split and a warrant to purchase 392,157 shares of Common Stock post 85-for-1 reverse stock split at an exercise price of $10.20 per share, for $1 million. Series A Convertible Preferred Stock On January 6, 2017, 13,000 shares of Series A Convertible Preferred Stock were converted into 260,000 shares of the Company’s Common Stock. On March 29, 2017, 20,000 shares of Series A Convertible Preferred Stock were converted into 400,000 shares of the Company’s Common Stock. On May 9, 2017, 20,000 shares of Series A Convertible Preferred Stock were converted into 400,000 shares of the Company’s Common Stock. Series B Convertible Preferred Stock There were no conversions of Series B Convertible Preferred Stock during the nine months ended September 30, 2017. Series C Convertible Preferred Stock On February 9, 2016, the Company issued 2,587,500 shares of Series C, par value $0.001 per share, 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, 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, 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, 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 $0.40 per share. Each share of Series C is convertible into one share of common stock. The Series C 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 prescribed period of time, upon the issuance of securities at a price that is less than the exercise price of the Series C. In addition, the Company incurred stock issuance costs of $17,500 related to the issuance of Series C. On April 14, 2017, 375,000 shares of the Company’s Series C were converted into 375,000 shares of the Company’s common stock. On June 30, 2017, the Company converted the remaining 1,537,500 Series C convertible preferred shares into 5,464,286 shares of the Company’s common stock. In addition, the 3,087,500 outstanding warrants were converted into the Company’s common stock equivalent to two times the outstanding warrants or 6,175,000 shares. The Company issued a total of 11,639,286 shares of the Company’s common stock relative to this transaction (See Note 6). Series D Convertible Preferred Stock On June 30, 2017, the Company converted the remaining 166,750 Series D convertible preferred shares into 476,429 shares of the Company’s common stock. In addition, the 667,000 outstanding warrants were converted into the Company’s common stock equivalent to two times the outstanding warrants or 1,334,000 shares. The Company issued a total of 1,810,429 shares of the Company’s common stock relative to this transaction (See Note 6). |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 9 Months Ended |
Sep. 30, 2017 | |
Equity [Abstract] | |
Stockholders' Equity | NOTE 8 – STOCKHOLDERS’ EQUITY On January 6, 2017, 13,000 shares of Series A Convertible Preferred Stock were converted into 260,000 shares of the Company’s Common Stock. On March 29, 2017, 20,000 shares of Series A Convertible Preferred Stock were converted into 400,000 shares of the Company’s Common Stock. On May 9, 2017, 20,000 shares of Series A Convertible Preferred Stock were converted into 400,000 shares of the Company’s Common Stock. On April 14, 2017, 375,000 shares of the Company’s Series C were converted into 375,000 shares of the Company’s common stock. On June 30, 2017, notes payable in the amount of $360,000 which converted at $390,000, were converted into 5,664,246 shares of the Company’s common stock and warrants to purchase 5,664,246 shares of the Company’s common stock (See Note 4). On June 30, 2017, shareholders of Series C converted 1,537,500 shares of the Company’s common stock and warrants to purchase 3,087,500 shares of the Company’s common stock into 12,014,286 shares of common stock (See Notes 5, 6 and 7). On June 30, 2017, shareholders of Series D converted 166,750 shares of the Company’s common stock and warrants to purchase 667,000 shares of the Company’s common stock into 1,810,429 shares of common stock (See Notes 5, 6 and 7). On June 30, 2017, the Company converted $43,750 of Director’s fees payable into 625,625 shares of the Company’s common stock and warrants to purchase 625,625 shares of the Company’s common stock. On June 30, 2017, the Company converted $26,250 of accounts payable to a consultant into 375,375 shares of the Company’s common stock and warrants to purchase 375,375 shares of the Company’s common stock at an exercise price of $0.15 and a term of five years. In conjunction with this transaction, the consultant forfeited 450,000 options to purchase shares of the Company’s common stock and has agreed to convert $31,500 of consulting fees into 450,450 shares of the Company’s common stock and warrants to purchase 450,450 shares of the Company’s common stock at an exercise price of $0.15 in equal increments through December 31, 2017. On June 30, 2017, the Company converted $10,750 of accounts payable to a consultant into 153,725 shares of the Company’s common stock and a warrant to purchase 153,725 shares of the Company’s common stock. During the nine months ended September 30, 2017, the Company sold an aggregate of 15,733,575 shares of the Company’s common stock and warrants to purchase an aggregate of 15,733,575 of the Company’s common stock for $1,100,250. The Company recognized stock issuance costs of $17,453, which were recorded as a reduction to additional paid in capital. The following table summarizes the activities for our warrants for the nine months ended September 30, 2017: Warrants Outstanding Number of Shares Weighted- Weighted - Aggregate Balance, December 31, 2016 9,216,452 $ 1.82 3.7 $ 10 Granted 29,802,546 0.12 Cancelled (3,754,500 ) 0.40 Balance, September 30, 2017 35,264,498 $ 0.12 4.4 $ 158 Exercisable at September 30, 2017 35,264,498 $ 0.11 4.6 $ 6 (1) The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying warrants and the closing stock price of $0.08 for our common stock on September 30, 2017. All warrants were vested on the date of grant. |
FAIR VALUE OF FINANCIAL INSTRUM
FAIR VALUE OF FINANCIAL INSTRUMENTS | 9 Months Ended |
Sep. 30, 2017 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE OF FINANCIAL INSTRUMENTS | NOTE 9 – 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: September 30, 2017 December 31, 2016 Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Embedded derivative liability related to beneficial conversion option $ - $ - $ - $ - $ - $ - $ 228,718 $ 228,718 Derivative liability related to fair value of warrants - - 59,104 59,104 - - 394,744 394,744 Total $ - $ - $ 59,104 $ 59,104 $ - $ - $ 623,462 $ 623,462 Total Balance at December 31, 2016 $ 623,462 Reduction in value resulting from conversion of Preferred Series C and D shares (381,411 ) Change in fair value of derivative liabilities (182,947 ) Balance at September 30, 2017 $ 59,104 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 three and nine months ended September 30, 2017. As of September 30, 2017, some of the Company’s outstanding warrants were treated as derivative liabilities and changes in the fair value were recognized in earnings. These warrants did not trade in an active securities market, and as such, the Company estimated the fair value of these warrants using the Black-Scholes option pricing model and the following assumptions: September 30, 2017 December 31, 2016 Annual Dividend Yield 0.0% 0.0% Expected Life (Years) 0.75 - 1.9 2.0 - 3.0 Risk-Free Interest Rate 1.3% - 1.5% 1.1% - 1.3% Expected Volatility 199% 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. Theexpected life was based onthe 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. |
STOCK BASED COMPENSATION
STOCK BASED COMPENSATION | 9 Months Ended |
Sep. 30, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
STOCK BASED COMPENSATION | NOTE 10 – STOCK BASED COMPENSATION During the three and nine months ended September 30, 2017, $101,229 and $452,949 respectively, was charged to operations as stock based compensation costs for the options and the restricted shares granted. At September 30, 2017, there was approximately $883,018 of unrecognized compensation cost related to non-vested options and stock grants that is expected to be recognized over a period of approximately five years. The Company granted 2,100,000 shares of restricted stock with a fair value of $73,710 to its directors that vest over a year. A restricted stock award is an award of common shares that are subject to certain restrictions during a specified period. Restricted stock awards are independent of option grants and are generally subject to forfeiture if employment terminates prior to the release of restrictions. The grantee cannot transfer the shares before the restricted shares vest. Shares on non-vested restricted stock have the same voting rights as common stock, are entitled to receive dividends and other distributions thereon and are currently issued and outstanding. The Company’s restricted stock awards vest of a period of one to three years. The Company expenses the cost of restricted stock awards, which is determined to be the fair market value of the shares at the date of grant, straight-line over the period during which the restrictions lapse with corresponding credit to additional paid in capital. For these purposes, the fair market value of the restricted stock is determined on the Closing price of the Company’s common stock on the grant date. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2017 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 11 – SUBSEQUENT EVENTS In October 2017, the Company sold an aggregate of 1,430,000 shares of the Company’s common stock and warrants to purchase an aggregate of 1,430,000 of the Company’s common stock for $100,000. In November 2017, the Company adopted the 2017 Equity Incentive Plan Covering 13 million shares of common stock issuable upon exercise of options and grant of restricted stock and other equity awards. |
SUMMARY OF SIGNIFICANT ACCOUN18
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Nature of the Business | Nature of the Business The Company was incorporated in the State of Nevada on November 10, 1999. The Company is based in Rochester, 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 OTCQB under the ticker symbol “VRME.” The Company is a This broad market encompasses counterfeiting of physical and material goods and products, as well as counterfeiting the identity of people in digital transactions. The Company is able to deliver 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. In addition, the Company has begun developing comprehensive authentication security software and biometrics to secure physical and logical access to facilities, computer networks, internet sites, secure mobile banking transactions and other mobile applications such as social media verification. The Company has a patented methodology/process that gives a 99% confidence level based on biometrics and other proprietary user data as to the true identity of individuals that require authentication prior to making transactions, gaining access to computer networks or facilities, email, or any other process requiring a verifiable identity. In addition, the Company has secure technologies that authenticate, prevent product diversion and protect counterfeiting of labels, packaging, products, metal objects, secure documents etc. that need this type of technology protection. These particular technologies can be printed using traditional printing presses or high speed digital presses such as the HP Indigo press. Secret invisible coding can be variable or static and they work in combination with secure QR codes for product checking and business intelligence data gathering. . The Company has signed a five-year global contract with the Indigo division of HP Inc. HP Indigo incorporates the Company’s proprietary pigments into a security HP Electroink. The combination of the HP Indigo press and the VerifyMe patented ink provides a unique solution for packaging and label authentication against counterfeiting as well as item level serialization for diversion tracking which gives a traceable identity to each product. The Company will receive a royalty for each impression utilizing the ink from printers and brand owners. HP Indigo will market the technology globally to owners of the 6000 series of HP Indigo digital presses. Management believes that this agreement will impact revenues beginning in 2018. However, there can be no assurance that any revenues will be generated. 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 unaudited condensed financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and with the instructions for Form 10-Q and Rule 8-03 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The accompanying unaudited financial statements should be read in conjunction with the financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 as filed with the Securities and Exchange Commission (SEC). Operating results for the three and nine months ended September 30, 2017 are not necessarily indicative of the results that may be expected for the year ending December 31, 2017. |
Reclassifications | Reclassifications: Certain prior period amounts have been reclassified to conform to the current period’s financial statement presentations. |
Basic and Diluted Net Income per Share of Common Stock | Basic and Diluted Net Income per Share of Common Stock The Company follows Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 260, “Earnings Per Share,” when reporting earnings per share resulting in the presentation of basic and diluted earnings per share. As of September 30, 2017, there were approximately 72.0 million (25.0 million at September 30, 2016) shares potentially issuable pursuant to preferred share agreements, options, and warrants that could dilute basic earnings per share in the future that were excluded from the calculation of diluted earnings per share because their inclusion would have been anti-dilutive to the Company’s losses during the periods presented. |
Recently Adopted Accounting Pronouncements | Recently Adopted Accounting Pronouncements In March 2016, the FASB issued ASU No. 2016-09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting , which simplifies several aspects of the accounting for share-based payment award transactions, including: (1) income tax consequences; (2) classification of awards as either equity or liabilities, and (3) classification on the statement of cash flows. For public companies, the amendments in the ASU are effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. This pronouncement had no impact on the financial statements since any excess tax benefits were fully offset by the valuation allowance and not recognized for financial statement purposes. |
Recently Issued Accounting Pronouncements Not Yet Adopted | Recently Issued Accounting Pronouncements Not Yet Adopted As of September, 30, 2017, there are no recently issued accounting standards not yet adopted which would have a material effect on the Company’s financial statements through 2017. |
NOTES PAYABLE (Tables)
NOTES PAYABLE (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Notes Payable [Abstract] | |
NOTES PAYABLE | Notes payable consist of the following as of September 30, 2017 and December 31, 2016: September 30, December 31, 2017 2016 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 rate at 5% per annum; principal and accrued interest due at maturity on June 30, 2017 - 79,000 Less: Unamortized discount - (60,931 ) 50,000 68,069 Less: Current portion 50,000 68,069 $ - $ - |
STOCKHOLDERS_ EQUITY (Tables)
STOCKHOLDERS’ EQUITY (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Equity [Abstract] | |
Summary of the activities for warrants | The following table summarizes the activities for our warrants for the nine months ended September 30, 2017: Warrants Outstanding Number of Shares Weighted- Weighted - Aggregate Balance, December 31, 2016 9,216,452 $ 1.82 3.7 $ 10 Granted 29,802,546 0.12 Cancelled (3,754,500 ) 0.40 Balance, September 30, 2017 35,264,498 $ 0.12 4.4 $ 158 Exercisable at September 30, 2017 35,264,498 $ 0.11 4.6 $ 6 |
FAIR VALUE OF FINANCIAL INSTR21
FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
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: September 30, 2017 December 31, 2016 Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Embedded derivative liability related to beneficial conversion option $ - $ - $ - $ - $ - $ - $ 228,718 $ 228,718 Derivative liability related to fair value of warrants - - 59,104 59,104 - - 394,744 394,744 Total $ - $ - $ 59,104 $ 59,104 $ - $ - $ 623,462 $ 623,462 Total Balance at December 31, 2016 $ 623,462 Reduction in value resulting from conversion of Preferred Series C and D shares (381,411 ) Change in fair value of derivative liabilities (182,947 ) Balance at September 30, 2017 $ 59,104 |
Schedule of Common Stock Purchase Warrants Valuation Assumptions | These warrants did not trade in an active securities market, and as such, the Company estimated the fair value of these warrants using the Black-Scholes option pricing model and the following assumptions: September 30, 2017 December 31, 2016 Annual Dividend Yield 0.0% 0.0% Expected Life (Years) 0.75 - 1.9 2.0 - 3.0 Risk-Free Interest Rate 1.3% - 1.5% 1.1% - 1.3% Expected Volatility 199% 178.5% - 179.3% |
SUMMARY OF SIGNIFICANT ACCOUN22
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - $ / shares | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Accounting Policies [Abstract] | |||
Common stock, par value | $ 0.001 | $ 0.001 | |
Anti-dilutive common stock equivalents, excluded from the calculation of earnings per share | 72,000,000 | 25,000,000 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Income Tax Disclosure [Abstract] | ||||
Income Tax Expense (Benefit) | $ 0 | $ 0 | $ 0 | $ 0 |
Unrecognized tax benefits | 0 | 0 | ||
Change in unrecognized tax benefits | 0 | 0 | ||
Accrual for uncertain tax positions | $ 0 | $ 0 |
NOTES PAYABLE (Narrative) (Deta
NOTES PAYABLE (Narrative) (Details) - USD ($) | Apr. 13, 2017 | Jun. 30, 2017 | May 31, 2017 | Apr. 26, 2017 | Feb. 13, 2017 | Jan. 31, 2017 | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 |
Debt Instrument [Line Items] | |||||||||||
Proceeds from issuance of notes payable | $ 281,000 | ||||||||||
Interest expense | $ 5,000 | $ 1,000 | 217,316 | $ 3,000 | |||||||
Interest expense including accretion of debt discount | 1,000 | 205,516 | |||||||||
Note payable balance | 50,000 | 50,000 | $ 68,069 | ||||||||
Accrued interest | $ 32,667 | $ 32,667 | $ 29,668 | ||||||||
Notes Payable [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Expected warrant term | 5 years | ||||||||||
Proceeds from issuance of notes payable | $ 360,000 | ||||||||||
Debt conversion, converted amount | $ 390,000 | ||||||||||
Number of common stock called by warrants (in shares) | 5,664,246 | ||||||||||
Exercise price (in dollars per share) | $ 0.15 | $ 0.15 | |||||||||
Note payable balance | $ 50,000 | ||||||||||
Accrued interest | 6,101 | $ 6,101 | $ 6,101 | ||||||||
Notes Payable [Member] | Loan [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Proceeds from issuance of notes payable | $ 10,000 | $ 36,000 | $ 60,000 | ||||||||
Promissory Note [Member] | Loan [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Proceeds from issuance of notes payable | $ 30,000 | ||||||||||
Financing [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Proceeds from issuance of notes payable | 750,000 | ||||||||||
Investment in common stock | 60,000 | ||||||||||
Interest expense | $ 60,000 | ||||||||||
Warrant [Member] | Notes Payable [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Expected dividend yield | 0.00% | 0.00% | 0.00% | ||||||||
Expected volatility | 197.40% | 202.10% | |||||||||
Risk-free interest rate | 1.88% | 1.97% | |||||||||
Expected warrant term | 5 years | 5 years | 5 years | ||||||||
Proceeds from issuance of notes payable | $ 100,000 | $ 20,000 | $ 25,000 | ||||||||
Number of common stock called by warrants (in shares) | 5,000,000 | 1,000,000 | 1,250,000 | 1,250,000 | |||||||
Exercise price (in dollars per share) | $ 0.40 | $ 0.40 | $ 0.40 | $ 0.40 | |||||||
Fair value of warrant liability | $ 76,390 | $ 15,895 | $ 21,300 | $ 21,300 | |||||||
Interest rate, notes payable | 5.00% | 5.00% | 5.00% | ||||||||
Warrant [Member] | Notes Payable [Member] | Minimum [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Expected volatility | 197.50% | ||||||||||
Risk-free interest rate | 1.94% | ||||||||||
Warrant [Member] | Notes Payable [Member] | Maximum [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Expected volatility | 197.70% | ||||||||||
Risk-free interest rate | 1.90% |
NOTES PAYABLE (Schedule of Note
NOTES PAYABLE (Schedule of Notes Payable) (Details) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Debt Instrument [Line Items] | ||
Less: Unamortized discount | $ (60,931) | |
Less: Current portion | 50,000 | 68,069 |
Long-term portion | ||
Adjustment [Member] | ||
Debt Instrument [Line Items] | ||
Less: Current portion | 50,000 | 68,069 |
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 June Thirty Thousand Seventeen [Member] | ||
Debt Instrument [Line Items] | ||
Notes payable | 79,000 | |
Notes Payable One Due Junel Thirty Thousand Seventeen [Member] | ||
Debt Instrument [Line Items] | ||
Notes payable |
NOTES PAYABLE (Schedule of No26
NOTES PAYABLE (Schedule of Notes Payable) (Details) | Sep. 30, 2017 | Dec. 31, 2016 |
Series A Notes Payable Due At Maturity In October 2011 (Past Due) [Member] | ||
Debt Instrument [Line Items] | ||
Interest rate | 8.00% | 8.00% |
Notes Payable Due At Maturity In June 30, 2017 [Member] | ||
Debt Instrument [Line Items] | ||
Interest rate | 5.00% | 5.00% |
EMBEDDED DERIVATIVE LIABILITY (
EMBEDDED DERIVATIVE LIABILITY (Details) - USD ($) | Apr. 14, 2017 | Jun. 30, 2017 | Oct. 24, 2016 | Feb. 29, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Mar. 31, 2017 | Dec. 31, 2016 |
Beneficial conversion feature at a combined fair market value | $ 181,942 | $ 1,235,000 | ||||||||
Adjustment through earnings | $ 15,000 | |||||||||
Adjustment through additional paid in captial | 30,000 | |||||||||
Deemed dividend distribution | $ 525,630 | |||||||||
Fair value of the embedded derivative liability | $ 30,000 | $ 45,000 | $ 228,718 | |||||||
Change in fair value of embedded derivative liability | $ (500,000) | $ 79,420 | $ 239,000 | |||||||
Warrant [Member] | ||||||||||
Conversion of Stock, Shares Converted | 467,429 | |||||||||
Series C Convertible Preferred Stock [Member] | ||||||||||
Dividend rate percentage | 0.00% | |||||||||
Conversion of Stock, Shares Converted | 375,000 | 5,464,286 | 5,464,286 | |||||||
Adjustment through earnings | $ 77,365 | |||||||||
Adjustment through additional paid in captial | $ 107,625 | |||||||||
Outstanding warrant cancelled | 3,087,500 | |||||||||
Sale of common stock, shares | 6,175,000 | |||||||||
Remaining shares converted | 1,537,500 | |||||||||
Fair value of the embedded derivative liability | $ 107,625 | |||||||||
Change in fair value of embedded derivative liability | $ 184,990 | $ 184,990 | ||||||||
Series D Convertible Preferred Stock [Member] | ||||||||||
Dividend rate percentage | 0.00% | |||||||||
Conversion of Stock, Shares Converted | 476,429 | 476,429 | ||||||||
Adjustment through earnings | $ 8,337 | |||||||||
Adjustment through additional paid in captial | $ 11,673 | |||||||||
Outstanding warrant cancelled | 667,000 | |||||||||
Sale of common stock, shares | 1,334,000 | |||||||||
Remaining shares converted | 166,750 | |||||||||
Fair value of the embedded derivative liability | $ 11,673 | |||||||||
Change in fair value of embedded derivative liability | $ (20,010) | $ (20,010) |
WARRANT LIABILITY (Details)
WARRANT LIABILITY (Details) - USD ($) | 1 Months Ended | 9 Months Ended | |||||||||
Jun. 30, 2017 | Jan. 31, 2014 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | Feb. 29, 2016 | Feb. 09, 2016 | Aug. 05, 2014 | Jan. 02, 2014 | Jan. 31, 2013 | Dec. 31, 2012 | |
Major Agreements [Line Items] | |||||||||||
Common stock value | $ 47,868 | $ 8,331 | |||||||||
Deemed dividend distribution | 525,630 | ||||||||||
Verify Me [Member] | Agreements [Member] | Research and Development Expense [Member] | |||||||||||
Major Agreements [Line Items] | |||||||||||
Initial fair value of warrant expensed | $ 444,000 | ||||||||||
Verify Me [Member] | Warrants Issued on January 1, 2014 [Member] | |||||||||||
Major Agreements [Line Items] | |||||||||||
Fair value of warrant liability | $ 5,076 | 4,885 | |||||||||
Number of warrants issued | 74,697 | ||||||||||
Exercise price | $ 0.10 | ||||||||||
Zaah Technologies [Member] | Agreements [Member] | |||||||||||
Major Agreements [Line Items] | |||||||||||
Warrant liability | $ 2,400,000 | ||||||||||
Number of common stock shares purchased under warrants (in shares) | 627,451 | ||||||||||
Fair value of warrant liability | $ 33,099 | 22,063 | |||||||||
Notes Payable [Member] | |||||||||||
Major Agreements [Line Items] | |||||||||||
Number of common stock shares purchased under warrants (in shares) | 5,664,246 | ||||||||||
Exercise price | $ 0.15 | ||||||||||
Notes Payable [Member] | Debt Instrument Date Five August 2014 [Member] | |||||||||||
Major Agreements [Line Items] | |||||||||||
Number of common stock shares purchased under warrants (in shares) | 3,529 | ||||||||||
Fair value of warrant liability | $ 243 | 262 | |||||||||
Series A Convertible Preferred Stock [Member] | |||||||||||
Major Agreements [Line Items] | |||||||||||
Number of common stock shares purchased under warrants (in shares) | 392,157 | ||||||||||
Fair value of warrant liability | $ 20,686 | 18,107 | $ 2,995,791 | ||||||||
Sale of common stock, shares | |||||||||||
Series C Convertible Preferred Stock [Member] | |||||||||||
Major Agreements [Line Items] | |||||||||||
Number of common stock shares purchased under warrants (in shares) | 3,087,500 | 500,000 | 2,587,500 | ||||||||
Fair value of warrant liability | $ 189,383 | 285,290 | |||||||||
Initial fair value of warrant expensed | $ 1,767,576 | ||||||||||
Outstanding warrant cancelled | 3,087,500 | ||||||||||
Sale of common stock, shares | 6,175,000 | ||||||||||
Common stock value | $ 432,250 | ||||||||||
Closing price of common stock | $ 0.07 | ||||||||||
Exercise price | $ 0.40 | $ 0.40 | |||||||||
Series D Convertible Preferred Stock [Member] | |||||||||||
Major Agreements [Line Items] | |||||||||||
Number of common stock shares purchased under warrants (in shares) | 667,000 | ||||||||||
Fair value of warrant liability | $ 43,105 | $ 64,137 | |||||||||
Initial fair value of warrant expensed | $ 181,942 | ||||||||||
Outstanding warrant cancelled | 667,000 | ||||||||||
Sale of common stock, shares | 1,334,000 | ||||||||||
Common stock value | $ 93,380 | ||||||||||
Closing price of common stock | $ 0.07 |
CONVERTIBLE PREFERRED STOCK (De
CONVERTIBLE PREFERRED STOCK (Details) - USD ($) | May 09, 2017 | Apr. 14, 2017 | Jan. 06, 2017 | Feb. 29, 2016 | Feb. 09, 2016 | Jun. 30, 2017 | Mar. 29, 2017 | Jan. 31, 2013 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 |
Class of Stock [Line Items] | |||||||||||
Conversion of shares of preferred stock to common stock, shares | |||||||||||
Proceeds from sale of Series C Convertible Preferred Stock | $ 1,100,250 | $ 1,235,000 | |||||||||
Stock issuance costs | $ 17,453 | $ 17,500 | |||||||||
Common stock issued | 48,218,497 | 8,681,236 | |||||||||
Common Stock [Member] | |||||||||||
Class of Stock [Line Items] | |||||||||||
Conversion of Stock, Shares Converted | 400,000 | 375,000 | 260,000 | 400,000 | |||||||
Conversion of shares of preferred stock to common stock, shares | 1,810,429 | ||||||||||
Number of preferred stock purchased | 15,733,575 | ||||||||||
Series A Convertible Preferred Stock [Member] | |||||||||||
Class of Stock [Line Items] | |||||||||||
Number of common stock called by warrants (in shares) | 392,157 | ||||||||||
Verify Me [Member] | Subscription Agreement [Member] | Common Stock [Member] | |||||||||||
Class of Stock [Line Items] | |||||||||||
Exercise price | $ 10.20 | ||||||||||
Value of shares issued | $ 1,000,000 | ||||||||||
Series A Convertible Preferred Stock [Member] | |||||||||||
Class of Stock [Line Items] | |||||||||||
Conversion of Stock, Shares Converted | 20,000 | 13,000 | 20,000 | ||||||||
Conversion of shares of preferred stock to common stock, shares | 400,000 | 260,000 | 400,000 | (53,000) | |||||||
Preferred stock, par value | $ 0.001 | $ 0.001 | |||||||||
Preferred stock, shares authorized | 37,164,767 | 37,164,767 | |||||||||
Number of common stock called by warrants (in shares) | 392,157 | ||||||||||
Number of preferred stock purchased | |||||||||||
Stock issuance costs | |||||||||||
Series A Convertible Preferred Stock [Member] | Common Stock [Member] | |||||||||||
Class of Stock [Line Items] | |||||||||||
Conversion of shares of preferred stock to common stock, shares | 1,060,000 | ||||||||||
Series C Convertible Preferred Stock [Member] | |||||||||||
Class of Stock [Line Items] | |||||||||||
Conversion of Stock, Shares Converted | 375,000 | 5,464,286 | 5,464,286 | ||||||||
Conversion of shares of preferred stock to common stock, shares | (1,912,500) | ||||||||||
Shares of convertible preferred stock issued | 500,000 | 2,587,500 | |||||||||
Preferred stock, par value | $ 0.001 | $ 0.001 | $ 0.001 | ||||||||
Preferred stock, shares authorized | 7,000,000 | 7,000,000 | |||||||||
Proceeds from sale of Series C Convertible Preferred Stock | $ 200,000 | $ 1,035,000 | |||||||||
Number of common stock called by warrants (in shares) | 500,000 | 2,587,500 | 3,087,500 | ||||||||
Purchase price (in dollars per share) | $ 0.40 | $ 0.40 | |||||||||
Exercise price | $ 0.40 | $ 0.40 | |||||||||
Number of preferred stock purchased | 6,175,000 | ||||||||||
Stock issuance costs | $ 17,500 | ||||||||||
Remaining shares converted | 1,537,500 | ||||||||||
Common stock issued | 11,639,286 | ||||||||||
Series C Convertible Preferred Stock [Member] | Common Stock [Member] | |||||||||||
Class of Stock [Line Items] | |||||||||||
Conversion of shares of preferred stock to common stock, shares | 12,014,286 | ||||||||||
Convertible Preferred Stock [Member] | Verify Me [Member] | Subscription Agreement [Member] | Pre Reverse Stock Split [Member] | |||||||||||
Class of Stock [Line Items] | |||||||||||
Number of preferred stock purchased | 392,157 | ||||||||||
Series D Convertible Preferred Stock [Member] | |||||||||||
Class of Stock [Line Items] | |||||||||||
Conversion of Stock, Shares Converted | 476,429 | 476,429 | |||||||||
Conversion of shares of preferred stock to common stock, shares | (166,750) | ||||||||||
Preferred stock, par value | $ 0.001 | $ 0.001 | |||||||||
Preferred stock, shares authorized | 6,500,000 | 6,500,000 | |||||||||
Number of common stock called by warrants (in shares) | 667,000 | ||||||||||
Number of preferred stock purchased | 1,334,000 | ||||||||||
Remaining shares converted | 166,750 | ||||||||||
Common stock issued | 1,810,429 |
STOCKHOLDERS' EQUITY (Narrative
STOCKHOLDERS' EQUITY (Narrative) (Details) - USD ($) | May 09, 2017 | Apr. 14, 2017 | Jan. 06, 2017 | Feb. 29, 2016 | Feb. 09, 2016 | Jun. 30, 2017 | Mar. 29, 2017 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | Jan. 31, 2013 |
Proceeds from issuance of notes payable | $ 281,000 | ||||||||||
Common stock issued | 48,218,497 | 8,681,236 | |||||||||
Proceeds From Issuance Of Convertible Preferred Stock | $ 1,100,250 | 1,235,000 | |||||||||
Issuance costs of stock | $ 17,453 | 17,500 | |||||||||
Conversion of Stock, value Converted | $ 43,750 | ||||||||||
Consultant [Member] | |||||||||||
Number of common stock called by warrants (in shares) | 153,725 | ||||||||||
Shares issued to convert accounts payable | 10,750 | ||||||||||
Common Stock [Member] | |||||||||||
Conversion of Stock, Shares Converted | 400,000 | 375,000 | 260,000 | 400,000 | |||||||
Common stock and warrant [Member] | |||||||||||
Common stock sold | 15,733,575 | ||||||||||
Common stock and warrant [Member] | Consultant [Member] | |||||||||||
Conversion of Stock, Shares Converted | 375,375 | ||||||||||
Exercise price | $ 0.15 | ||||||||||
Expected warrant term | 5 years | ||||||||||
Option foreited to purchase common stock | 450,000 | ||||||||||
Series C Convertible Preferred Stock [Member] | |||||||||||
Number of common stock called by warrants (in shares) | 500,000 | 2,587,500 | 3,087,500 | ||||||||
Remaining shares converted | 1,537,500 | ||||||||||
Common stock issued | 11,639,286 | ||||||||||
Proceeds From Issuance Of Convertible Preferred Stock | $ 200,000 | $ 1,035,000 | |||||||||
Issuance costs of stock | $ 17,500 | ||||||||||
Conversion of Stock, value Converted | $ 12,014 | 1,050 | |||||||||
Conversion of Stock, Shares Converted | 375,000 | 5,464,286 | 5,464,286 | ||||||||
Exercise price | $ 0.40 | $ 0.40 | |||||||||
Series D Convertible Preferred Stock [Member] | |||||||||||
Number of common stock called by warrants (in shares) | 667,000 | ||||||||||
Remaining shares converted | 166,750 | ||||||||||
Common stock issued | 1,810,429 | ||||||||||
Conversion of Stock, value Converted | $ 1,810 | ||||||||||
Conversion of Stock, Shares Converted | 476,429 | 476,429 | |||||||||
Series A Convertible Preferred Stock [Member] | |||||||||||
Number of common stock called by warrants (in shares) | 392,157 | ||||||||||
Issuance costs of stock | |||||||||||
Conversion of Stock, value Converted | $ 1,060 | $ 883 | |||||||||
Conversion of Stock, Shares Converted | 20,000 | 13,000 | 20,000 | ||||||||
Notes Payable [Member] | |||||||||||
Proceeds from issuance of notes payable | $ 360,000 | ||||||||||
Debt conversion, converted amount | $ 390,000 | ||||||||||
Number of common stock called by warrants (in shares) | 5,664,246 | ||||||||||
Exercise price | $ 0.15 | ||||||||||
Expected warrant term | 5 years | ||||||||||
Account payable [Member] | |||||||||||
Conversion of Stock, value Converted | $ 26,250 | ||||||||||
Consulting fees [Member] | Common stock and warrant [Member] | |||||||||||
Conversion of Stock, value Converted | $ 31,500 | ||||||||||
Conversion of Stock, Shares Converted | 450,450 | ||||||||||
Exercise price | $ 0.15 |
STOCKHOLDERS' EQUITY (Summary o
STOCKHOLDERS' EQUITY (Summary of Activities for Warrants) (Details) - Warrant [Member] | 9 Months Ended | |
Sep. 30, 2017USD ($)$ / sharesshares | ||
Number of Shares | ||
Balance, December 31, 2016 | shares | 9,216,452 | |
Granted | shares | 29,802,546 | |
Cancelled | shares | (3,754,500) | |
Balance, September 30, 2017 | shares | 35,264,498 | |
Exercisable at September 30, 2017 | shares | 35,264,498 | |
Weighted-Average Exercise Price | ||
Balance, December 31, 2016 | $ / shares | $ 1.82 | |
Granted | $ / shares | 0.12 | |
Expired | $ / shares | 0.40 | |
Balance, September 30, 2017 | $ / shares | 0.12 | |
Exercisable at September 30, 2017 | $ / shares | $ 0.11 | |
Weighted-Average Remaining Contractual Term (in years) | ||
Balance, December 31, 2016 | 3 years 8 months 12 days | |
Balance, September 30, 2017 | 4 years 4 months 24 days | |
Exercisable at September 30, 2017 | 4 years 7 months 6 days | |
Aggregate Intrinsic Value | ||
Balance, December 31, 2016 | $ | $ 10 | [1] |
Balance, September 30, 2017 | $ | 158 | [1] |
Exercisable at September 30, 2017 | $ | $ 6 | [1] |
[1] | The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying warrants and the closing stock price of $0.08 for our common stock on September 30, 2017. |
FAIR VALUE OF FINANCIAL INSTR32
FAIR VALUE OF FINANCIAL INSTRUMENTS (Schedule of Liabilities Measured at Fair Value on a Recurring Basis) (Details) - Fair Value, Measurements, Recurring [Member] - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Embedded derivative liability related to beneficial conversion option | $ 228,718 | |
Derivative liability related to fair value of warrants | 59,104 | 394,744 |
Total | 59,104 | 623,462 |
Fair Value, Inputs, Level 1 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Embedded derivative liability related to beneficial conversion option | ||
Derivative liability related to fair value of warrants | ||
Total | ||
Fair Value, Inputs, Level 2 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Embedded derivative liability related to beneficial conversion option | ||
Derivative liability related to fair value of warrants | ||
Total | ||
Fair Value, Inputs, Level 3 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Embedded derivative liability related to beneficial conversion option | 228,718 | |
Derivative liability related to fair value of warrants | 59,104 | 394,744 |
Total | $ 59,104 | $ 623,462 |
FAIR VALUE OF FINANCIAL INSTR33
FAIR VALUE OF FINANCIAL INSTRUMENTS (Fair Value Measurements within Fair Value Hierarchy of Derivative Liabilities Using Level 3 Inputs) (Details) | 9 Months Ended |
Sep. 30, 2017USD ($) | |
Fair Value Disclosures [Abstract] | |
Balance at December 31, 2016 | $ 623,462 |
Reduction in value resulting from conversion of Preferred Series C and D shares | (381,411) |
Change in fair value of derivative liabilities | (182,947) |
Balance at September 30, 2017 | $ 59,104 |
FAIR VALUE OF FINANCIAL INSTR34
FAIR VALUE OF FINANCIAL INSTRUMENTS (Schedule of Common Stock Purchase Warrants Valuation Assumptions) (Details) - Warrant [Member] | 9 Months Ended | 12 Months Ended |
Sep. 30, 2017 | Dec. 31, 2016 | |
Fair Value, Option, Quantitative Disclosures [Line Items] | ||
Annual Dividend Yield | 0.00% | 0.00% |
Minimum [Member] | ||
Fair Value, Option, Quantitative Disclosures [Line Items] | ||
Expected Life (Years) | 9 months | 2 years |
Risk-Free Interest Rate | 1.30% | 1.10% |
Expected Volatility | 178.50% | |
Maximum [Member] | ||
Fair Value, Option, Quantitative Disclosures [Line Items] | ||
Expected Life (Years) | 1 year 10 months 25 days | 3 years |
Risk-Free Interest Rate | 1.50% | 1.30% |
Expected Volatility | 199.00% | 179.30% |
STOCK BASED COMPENSATION (Narra
STOCK BASED COMPENSATION (Narrative) (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2017 | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Fair value of options | $ 101,229 | $ 134,127 | $ 452,949 | $ 894,177 | |
Consultant fee | 51,926 | $ 71,005 | $ 143,132 | $ 303,932 | |
Conversion of Stock, value Converted | $ 43,750 | ||||
Restricted Stock [Member] | Director [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of options issued | 2,100,000 | ||||
Unrecognized compensation cost related to stock options, period of recognition | 1 year | ||||
Fair value of options | $ 73,710 | ||||
Nonvested Stock Options [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Unrecognized compensation cost related to outstanding stock options | $ 883,018 | $ 883,018 | |||
Unrecognized compensation cost related to stock options, period of recognition | 5 years | ||||
Employee Stock Option [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Options outstanding | 22,013,530 | 22,013,530 | |||
Forfeited/cancelled | 1,219,117 | ||||
Increase in value of options | $ 101,229 | $ 452,949 | |||
Number of options issued | 19,950,000 | ||||
Exercise price of options issued | $ 0.07 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - USD ($) | 1 Months Ended | 9 Months Ended | ||
Nov. 30, 2017 | Oct. 31, 2017 | Sep. 30, 2017 | Sep. 30, 2016 | |
Proceeds From Issuance Of Convertible Preferred Stock | $ 1,100,250 | $ 1,235,000 | ||
Subsequent Event [Member] | Restricted Stock [Member] | ||||
Conversion of Stock, Shares Converted | 13,000,000 | |||
Common stock and warrant [Member] | ||||
Common stock sold | 15,733,575 | |||
Common stock and warrant [Member] | Subsequent Event [Member] | ||||
Common stock sold | 1,430,000 | |||
Conversion of Stock, Shares Converted | 1,430,000 | |||
Proceeds From Issuance Of Convertible Preferred Stock | $ 100,000 |