Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Apr. 12, 2018 | Jun. 30, 2017 | |
Document And Entity Information | |||
Entity Registrant Name | VerifyMe, Inc. | ||
Entity Central Index Key | 1,104,038 | ||
Document Type | 10-K/A | ||
Document Period End Date | Dec. 31, 2017 | ||
Amendment Flag | true | ||
Amendment Description | This Amendment No. 1 on Form 10-K/A (the Amendment) amends our Annual Report on Form 10-K for the year ended December 31, 2017, as filed with the Securities and Exchange Commission on April 16, 2018 (the 2017 Annual Report). We are filing this Amendment to i) add the Companys Report of Independent Registered Public Accounting Firm for the year ended December 31, 2016 and ii) edit applicable dates and page numbers of the financial statements to reflect the filing of this Amendment. Except as described above, no other changes have been made to the 2017 Annual Report. The 2017 Annual Report continues to speak as of the date of filing, and we have not updated the disclosures contained therein to reflect any events which occurred at a date subsequent to the filing of the 2017 Annual Report other than as expressly indicated in this Amendment. | ||
Current Fiscal Year End Date | --12-31 | ||
Is Entity a Well-known Seasoned Issuer? | No | ||
Is Entity a Voluntary Filer? | No | ||
Is Entity's Reporting Status Current? | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Public Float | $ 1,941,452 | ||
Entity Common Stock, Shares Outstanding | 84,896,325 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,017 |
Balance Sheets
Balance Sheets - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 693,001 | $ 22,644 |
Prepaid expenses and other current assets | 18,668 | 9,425 |
Inventory | 17,093 | |
TOTAL CURRENT ASSETS | 711,669 | 49,162 |
OTHER ASSETS | ||
Patents and Trademarks, net of accumulated amortization of $237,331 and $194,236 as of December 31, 2017 and December 31, 2016 | 191,507 | 231,952 |
TOTAL ASSETS | 903,176 | 281,114 |
CURRENT LIABILITIES | ||
Accounts payable and accrued expenses | 923,202 | 867,436 |
Notes payable net of discount of $0 and $60,931, as of December 31, 2017 and December 31, 2016 | 50,000 | 68,069 |
Common stock payable - related party | 122,478 | |
Embedded derivative liability | 228,718 | |
Warrant liability | 394,744 | |
TOTAL CURRENT LIABILITIES | 1,095,680 | 1,558,967 |
STOCKHOLDERS' DEFICIT | ||
Common stock of $.001 par value; 675,000,000 authorized; 53,873,872 and 8,681,236 issued, 53,523,332 and 8,330,696 shares outstanding as of December 31, 2017 and December 31, 2016 | 53,522 | 8,331 |
Additional paid in capital | 56,198,126 | 40,469,272 |
Treasury stock at cost (350,540 shares at December 31, 2017 and December 31, 2016) | (113,389) | (113,389) |
Accumulated deficit | (56,331,088) | (41,644,545) |
STOCKHOLDERS' DEFICIT | (192,504) | (1,277,853) |
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | 903,176 | 281,114 |
Series A Convertible Preferred Stock [Member] | ||
STOCKHOLDERS' DEFICIT | ||
Convertible Preferred Stock | 325 | 398 |
STOCKHOLDERS' DEFICIT | 325 | 398 |
Series B Convertible Preferred Stock [Member] | ||
STOCKHOLDERS' DEFICIT | ||
Convertible Preferred Stock | ||
STOCKHOLDERS' DEFICIT | ||
Series C Convertible Preferred Stock [Member] | ||
STOCKHOLDERS' DEFICIT | ||
Convertible Preferred Stock | 1,913 | |
STOCKHOLDERS' DEFICIT | 1,913 | |
Series D Convertible Preferred Stock [Member] | ||
STOCKHOLDERS' DEFICIT | ||
Convertible Preferred Stock | 167 | |
STOCKHOLDERS' DEFICIT | $ 167 |
Balance Sheets (Parenthetical)
Balance Sheets (Parenthetical) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Accumulated depreciation on capital equipment | $ 203,223 | $ 203,223 |
Accumulated amortization, patent and trademarks | 237,331 | 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 | 53,873,872 | 8,681,236 |
Common stock, shares outstanding | 53,523,332 | 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 | 37,564,767 | 37,564,767 |
Preferred stock, shares issued | 324,778 | 397,778 |
Preferred stock, shares outstanding | 324,778 | 397,778 |
Series B Convertible Preferred Stock [Member] | ||
Preferred stock, par value | $ 0.001 | |
Preferred stock, shares authorized | 85 | |
Preferred stock, shares issued | 0.92 | |
Preferred stock, shares outstanding | 0.92 | |
Series C Convertible Preferred Stock [Member] | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 7,500,000 | 7,500,000 |
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 | 6,000,000 | 6,000,000 |
Preferred stock, shares issued | 0 | 166,750 |
Preferred stock, shares outstanding | 0 | 166,750 |
Statements of Operations
Statements of Operations - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | ||
NET REVENUE | |||
Sales | $ 37,055 | ||
TOTAL NET REVENUE | 37,055 | ||
COST OF SALES | 24,363 | ||
GROSS PROFIT | 12,692 | ||
OPERATING EXPENSES | |||
General and administrative | [1] | 1,689,883 | 1,010,648 |
Legal and accounting | 246,520 | 414,032 | |
Payroll expenses | [1] | 767,257 | 1,789,303 |
Research and development | 128,044 | 250,180 | |
Sales and marketing | 3,800 | 282,867 | |
Total operating expenses | 2,835,504 | 3,747,030 | |
LOSS BEFORE OTHER INCOME (EXPENSE) | (2,835,504) | (3,734,338) | |
OTHER (EXPENSE) INCOME | |||
Interest expenses | (218,316) | (12,871) | |
Loss on settlement of related party notes payable | (331,912) | ||
Other income | 392 | ||
Loss on disposition of fixed assets | (4,981) | ||
Change in fair value of warrants | 3,357,149 | ||
Change in fair value of embedded derivative liability | 698,303 | ||
Fair value of warrants in excess of consideration for convertible preferred stock | (1,949,517) | ||
TOTAL OTHER INCOME (EXPENSE) | (549,836) | 2,088,083 | |
NET LOSS | (3,385,340) | (1,646,255) | |
Deemed dividend on convertible preferred shares | (596,878) | ||
NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS | $ (3,982,218) | $ (1,646,255) | |
LOSS PER SHARE | |||
BASIC | $ (0.14) | $ (0.24) | |
DILUTED | $ (0.14) | $ (0.24) | |
WEIGHTED AVERAGE COMMON SHARE OUTSTANDING | |||
BASIC | 28,244,361 | 6,860,955 | |
DILUTED | 28,244,361 | 6,860,955 | |
[1] | Includes share based compensation of $1,800,181 and $1,405,877 for the years ended December 31, 2017 and 2016, respectively. |
Statements of Changes in Stockh
Statements of Changes in Stockholders’ Deficit - USD ($) | Series A Convertible Preferred Stock [Member] | Series B Convertible Preferred Stock [Member] | Series C Convertible Preferred Stock [Member] | Series D Convertible Preferred Stock [Member] | Common Stock [Member] | Additional Paid-In Capital [Member] | Treasury Stock [Member] | Deferred Compensation [Member] | Accumulated Deficit [Member] | Total | Series A- Convertible Preferred Stock [Member]Common Stock [Member] | Series A- Convertible Preferred Stock [Member]Additional Paid-In Capital [Member] | Series A- Convertible Preferred Stock [Member]Treasury Stock [Member] | Series A- Convertible Preferred Stock [Member]Deferred Compensation [Member] | Series A- Convertible Preferred Stock [Member]Accumulated Deficit [Member] | Series A- Convertible Preferred Stock [Member]Total [Member] | Series C Convertible Preferred Stock [Member]Common Stock [Member] | Series C Convertible Preferred Stock [Member]Additional Paid-In Capital [Member] | Series C Convertible Preferred Stock [Member]Treasury Stock [Member] | Series C Convertible Preferred Stock [Member]Deferred Compensation [Member] | Series C Convertible Preferred Stock [Member]Accumulated Deficit [Member] | Series C Convertible Preferred Stock [Member]Total [Member] | Series D Convertible Preferred Stock [Member]Common Stock [Member] | Series D Convertible Preferred Stock [Member]Additional Paid-In Capital [Member] | Series D Convertible Preferred Stock [Member]Treasury Stock [Member] | Series D Convertible Preferred Stock [Member]Deferred Compensation [Member] | Series D Convertible Preferred Stock [Member]Accumulated Deficit [Member] | Series D Convertible Preferred Stock [Member]Total [Member] | Series B Convertible Preferred Stock [Member]Common Stock [Member] | Series B Convertible Preferred Stock [Member]Additional Paid-In Capital [Member] | Series B Convertible Preferred Stock [Member]Treasury Stock [Member] | Series B Convertible Preferred Stock [Member]Deferred Compensation [Member] | Series B Convertible Preferred Stock [Member]Accumulated Deficit [Member] | Series B Convertible Preferred Stock [Member]Total [Member] |
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 | |||||||||||||||||||||||||||||||
Conversion of Convertible Preferred Stock | $ (44) | $ (1,175) | $ 167 | $ 883 | $ (839) | $ 1,175 | $ 883 | $ (839) | ||||||||||||||||||||||||||
Conversion of Convertible Preferred Stock, (in shares) | (44,160) | (0.08) | (1,175,000) | 166,750 | 883,200 | 1,175,000 | 883,200 | |||||||||||||||||||||||||||
Sale of Convertible Preferred Stock | $ 3,088 | 1,235,000 | $ 66,533 | $ 66,700 | ||||||||||||||||||||||||||||||
Sale of Convertible Preferred Stock, shares | 3,087,500 | 1,231,912 | ||||||||||||||||||||||||||||||||
Sale of common stock, shares | ||||||||||||||||||||||||||||||||||
Stock issuance costs | $ (17,500) | (17,500) | ||||||||||||||||||||||||||||||||
Stock on embedded derivative liability | 350,500 | 350,500 | ||||||||||||||||||||||||||||||||
Deemed dividend distribution | (1,277,521) | (1,277,521) | ||||||||||||||||||||||||||||||||
Issuance of stock for services | $ 33 | 20,742 | 20,775 | |||||||||||||||||||||||||||||||
Issuance of stock for services, Shares | 32,983 | |||||||||||||||||||||||||||||||||
Issuance of restricted stock for services | $ 40 | (40) | ||||||||||||||||||||||||||||||||
Issuance of restricted stock for services, shares | 40,000 | |||||||||||||||||||||||||||||||||
Forfeiture of restricted stock units | $ (452) | (1,069,256) | 1,069,708 | 1,069,708 | ||||||||||||||||||||||||||||||
Forfeiture of restricted stock units, shares | (452,500) | |||||||||||||||||||||||||||||||||
Warrants issued in conjunction with notes payable | 69,500 | |||||||||||||||||||||||||||||||||
Fair value of stock options and warrants | 1,405,877 | 1,405,877 | ||||||||||||||||||||||||||||||||
Decrease in fair value of restricted stock units | (89,375) | 89,375 | ||||||||||||||||||||||||||||||||
Amortization of deferred compensation | 683,251 | 683,251 | ||||||||||||||||||||||||||||||||
Common stock and warrants issued for services | 20,775 | |||||||||||||||||||||||||||||||||
Net loss | (1,646,255) | (1,646,255) | ||||||||||||||||||||||||||||||||
Cumulative adjustment related to change in accounting principle (Note 1, Change in | 11,924,665 | (11,301,203) | 623,462 | |||||||||||||||||||||||||||||||
Balance at Dec. 31, 2016 | $ 398 | $ 1,913 | $ 167 | $ 8,331 | 40,469,272 | (113,389) | (41,644,545) | (1,277,853) | ||||||||||||||||||||||||||
Balance, shares at Dec. 31, 2016 | 397,778 | 0.92 | 1,912,500 | 166,750 | 8,330,696 | |||||||||||||||||||||||||||||
Conversion of Convertible Preferred Stock | $ (73) | $ (1,913) | $ (167) | $ 1,460 | $ (1,387) | $ 4,768 | (2,855) | $ 496 | (329) | |||||||||||||||||||||||||
Conversion of Convertible Preferred Stock, (in shares) | (73,000) | (1,912,500) | (166,750) | 1,460,000 | 4,767,858 | 496,429 | ||||||||||||||||||||||||||||
Conversion Preferred Warrants | $ 6,175 | $ (6,175) | $ 1,986 | $ (1,986) | ||||||||||||||||||||||||||||||
Conversion Preferred Warrants, Shares | 6,175,000 | 1,985,716 | ||||||||||||||||||||||||||||||||
Sale of common stock | $ 19,452 | 1,340,798 | 1,360,250 | |||||||||||||||||||||||||||||||
Sale of common stock, shares | 19,451,575 | |||||||||||||||||||||||||||||||||
Sale of common stock - Past issuances | $ 503 | (503) | ||||||||||||||||||||||||||||||||
Sale of common stock - Past issuances, Shares | 503,432 | |||||||||||||||||||||||||||||||||
Stock Based Compensation | $ 2,050 | 137,758 | 139,808 | |||||||||||||||||||||||||||||||
Stock Based Compensation, Shares | 2,050,372 | |||||||||||||||||||||||||||||||||
Stock issuance costs | (32,325) | |||||||||||||||||||||||||||||||||
Conversion of related party notes payable and accrued interest into common stock | $ 4,402 | 601,333 | 605,535 | |||||||||||||||||||||||||||||||
Conversion of related party notes payable and accrued interest into common stock, shares | 4,402,079 | |||||||||||||||||||||||||||||||||
Discount on warrants issued in conjunction with related party notes payable | 113,586 | 113,586 | ||||||||||||||||||||||||||||||||
Issuance of stock for services | 297,807 | |||||||||||||||||||||||||||||||||
Forfeiture of restricted stock units | ||||||||||||||||||||||||||||||||||
Warrants issued in conjunction with notes payable | (331,912) | |||||||||||||||||||||||||||||||||
Fair value of stock options and warrants | 1,295,741 | 1,295,741 | ||||||||||||||||||||||||||||||||
Restricted Stock units and awards | $ 2,175 | 64,650 | 66,825 | |||||||||||||||||||||||||||||||
Restricted Stock units and awards, Shares | 2,175,000 | |||||||||||||||||||||||||||||||||
Deemed dividend distribution on issuance of common stock for conversion of Series C and Series D | (596,878) | (596,878) | ||||||||||||||||||||||||||||||||
Accretion of deemed dividend distribution on issuance of common stock for conversion of Series C and Series D | 596,878 | 596,878 | ||||||||||||||||||||||||||||||||
Common stock and warrants issued for services | $ 1,724 | 296,083 | 297,807 | |||||||||||||||||||||||||||||||
Common stock and warrants issued for services, shares | 1,725,175 | |||||||||||||||||||||||||||||||||
Net loss | (3,385,340) | (3,385,340) | ||||||||||||||||||||||||||||||||
Cumulative adjustment related to change in accounting principle (Note 1, Change in | 623,462 | |||||||||||||||||||||||||||||||||
Balance at Dec. 31, 2017 | $ 325 | $ 53,522 | $ 56,198,126 | $ (113,389) | $ (56,331,088) | $ (192,504) | ||||||||||||||||||||||||||||
Balance, shares at Dec. 31, 2017 | 324,778 | 0.92 | 53,523,332 |
Statements of Cash Flows
Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net loss | $ (3,385,340) | $ (1,646,255) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Loss on sale of fixed assets | 4,980 | |
Stock based compensation | 139,808 | |
Fair value of options issued in exchange for services | 1,295,741 | 1,405,877 |
Fair value of restricted stock units and awards issued in exchange for services | 66,825 | |
Common stock and warrants issued for services | 297,807 | 20,775 |
Accretion of discount on notes payable | 8,569 | |
Amortization of debt discount | 174,517 | |
Interest rolled into principal | 30,000 | |
Loss on conversion of related party notes payable and accrued interest | (331,912) | |
Change in fair value of warrant liability | (1,407,631) | |
Change in fair value of embedded derivative liability | (698,303) | |
Amortization and depreciation | 43,095 | 30,199 |
Amortization of deferred compensation | 683,251 | |
Series B Preferred Stock issue for licensing fees | ||
(Increase) decrease in assets | ||
Accounts receivable | ||
Inventory | 17,093 | 11,594 |
Prepaid expenses and other current assets | (9,243) | (9,425) |
Increase in liabilities | ||
Accounts payable and accrued expenses | 61,867 | 251,661 |
Net cash used in operating activities | (935,918) | (1,344,708) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Purchase of patents | (2,650) | |
Net cash provided by investing activities | (2,650) | |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Proceeds from issuance of notes payable | 79,000 | |
Proceeds from issuance of related party notes payable | 281,000 | |
Stock issuance costs | (17,500) | |
Proceeds from sale of common stock | 1,327,925 | |
Net cash provided by financing activities | 1,608,925 | 1,363,200 |
NET INCREASE IN CASH AND CASH EQUIVALENTS | 670,357 | 18,492 |
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD | 22,644 | 4,152 |
CASH AND CASH EQUIVALENTS - END OF PERIOD | 693,001 | 22,644 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Cash paid during the year for: | ||
Interest | ||
Income taxes | ||
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES | ||
Cumulative effect of adoption of new accounting standard | 623,462 | |
Security deposit offset against accounts payable | 37,197 | |
Accretion of discount on preferred stock as deemed dividend distribution | 1,277,521 | |
Deemed dividend distribution on issuance of common stock for conversion of Series C and Series D | 596,878 | |
Revaluation of restricted stock units additional paid in capital and deferred compensation | 89,375 | |
Forfeited restricted common stock | 1,069,708 | |
Revaluation of embedded derivative liability upon conversion of Convertible Preferred Stock | 350,500 | |
Conversion of related party notes payable and accrued interest into common stock | 273,623 | |
Common stock payable for conversion of related party notes payable and accrued interest | 122,478 | |
Warrants issued as discount to related party notes payable | 113,586 | 69,500 |
Sale of common stock - past issuances | 503 | |
Series A Convertible Preferred Stock [Member] | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Common stock and warrants issued for services | ||
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Stock issuance costs | ||
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES | ||
Convertible Preferred Stock converted to common stock | 1,460 | 883 |
Series B Convertible Preferred Stock [Member] | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Common stock and warrants issued for services | ||
Loss on conversion of related party notes payable and accrued interest | ||
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Stock issuance costs | ||
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES | ||
Convertible Preferred Stock converted to common stock | 675 | |
Series C Convertible Preferred Stock [Member] | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Common stock and warrants issued for services | ||
Loss on conversion of related party notes payable and accrued interest | ||
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Proceeds from sale of Convertible Preferred Stock | 1,235,000 | |
Stock issuance costs | ||
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES | ||
Convertible Preferred Stock converted to common stock | 4,768 | 1,175 |
Warrants into common stock | 6,175 | |
Series D Convertible Preferred Stock [Member] | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Common stock and warrants issued for services | ||
Loss on conversion of related party notes payable and accrued interest | ||
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Proceeds from sale of Convertible Preferred Stock | 66,700 | |
Stock issuance costs | ||
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES | ||
Convertible Preferred Stock converted to common stock | 496 | |
Warrants into common stock | $ 1,986 |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of 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. 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 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 physical transactions and owns digital patents which are in the same field. 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 further develop the Company’s patents. Basis of Presentation The accompanying financial statements are presented in accordance with accounting principles generally accepted in the United States of America. Change in Accounting Principle In July 2017, the FASB issued ASU 2017-11. Part I relates to the accounting for certain financial instruments with down round features in Subtopic 815-40, which is considered in determining whether an equity-linked financial instrument qualifies for a scope exception from derivative accounting. Down round features are features of certain equity-linked instruments (or embedded features) that result in the strike price being reduced based on the pricing of future equity offerings. An entity still is required to determine whether instruments would be classified in equity under the guidance in Subtopic 815-40 in determining whether they qualify for that scope exception. If they do qualify, freestanding instruments with down round features are no longer classified as liabilities. In the case where the exception from derivative accounting does not apply, warrants must be accounted for as a liability and recorded at fair value at the date of grant and re-valued at the end of each reporting period. The Company’s warrants and embedded conversion feature on its preferred stock (see Notes 8 and 9) include anti-dilution provisions characterized as down round features and have previously been accounted for as liabilities, with the fair value of the liabilities remeasured at each reporting date and the change in liabilities recorded as other non-operating income or loss. The Company had recorded a “Warrant liability” and “Embedded derivative liability” of $623,462, in the aggregate, and gain on the change in fair value of warrants and embedded derivative liability of $11,301,203, in the aggregate, in its “Accumulated deficit” as reported in its Balance Sheets for the year ended December 31, 2016 relating to the warrant liability and embedded derivative liability. Except for the down round features in the warrants and embedded conversion feature, the warrants and embedded conversion feature would have been classified in equity under the guidance in Subtopic 815-40 and therefore qualify for the scope exception in ASU 2017-11. As permitted, the Company elected to adopt the accounting principles prescribed by ASU 2017-11 for the year ending December 31, 2017 and has recorded a cumulative-effect adjustment stemming from a change in accounting principle in its financial statements for the year ended December 31, 2017 measured retrospectively to the beginning of 2017. The cumulative effect adjustment appears at the beginning of 2017 in the Company’s Statement of Changes in Stockholders Deficit. The results of operations for the Company for year ended December 31, 2017 reflects application of the change in accounting principle from the beginning of 2017. The following table details the impact stemming from the cumulative effect of the change in accounting principle on the Company’s Consolidated Balance Sheets as of the beginning of 2017. Balance Sheet Accounts Impacted by As Cumulative Reported after the Embedded derivative liability $ 228,718 $ (228,718 ) $ - Warrant liability 394,744 (394,744 ) - Additional paid in capital 40,469,272 11,924,665 52,393,937 Accumulated deficit (41,644,545 ) (11,301,203 ) (52,945,748 ) Because the Company has retroactively applied the change in accounting principle discussed above to the beginning of 2017, the Company is no longer reporting warrant derivative gains or losses for the warrants and embedded conversion feature beginning in 2017. Amounts reported for periods ending on or prior to December 31, 2016 have not been adjusted. 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, notes payable, embedded derivative liability and warrant liability. The carrying value of accounts receivable, accounts payable and accrued expenses approximate their fair value because of their short maturities. The Company believes the carrying amount of its notes payable approximate fair value based on rates and other terms currently available to the Company for similar debt instruments. 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 Trademarks The current patent portfolio consists of 11 granted US patents, and two US patent applications pending. 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.” Notes Payable with detachable warrants 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 portion allocated to the warrants has been accounted for as a discount to the notes payable, and amortized over the term of the notes. 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 2013 through 2016 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 $550 and $0 for the years ended December 31, 2017 and 2016 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, 2017 and 2016 were $128,044 and $250,180. 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. For the year ended December 31, 2017 and 2016, there were shares potentially issuable, 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 years presented. For the year ended December 31, 2017 there were approximately 68,612,000 anti-dilutive shares consisting of 32,292,000 relating to warrants, 22,013,000 relating to options and 14,307,000 relating to preferred share agreements. For the year ended 9,216,000 relating to warrants, 3,282,000 relating to options and 10,033,000 relating to preferred share agreements. 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 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 July 2017, the Financial Accounting Standards Board (“FASB”) issued ASU 2017-11,“ Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): (Part 1) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Non public Entities and Certain Mandatorily Redeemable Non-controlling Interests with a Scope Exception” (“ASU 2017-11”). Part I relates to the accounting or certain financial instruments with down round features in Subtopic 815-40, which is considered in determining whether an equity-linked financial instrument qualifies for a scope exception from derivative accounting. Down Round features are features of certain equity-linked instruments (or embedded features) that result in the strike price being reduced based on the pricing of future equity offerings. An entity still is required to determine whether instruments would be classified as equity under the guidance in Subtopic 815-40 in determining whether they qualify for that scope exception. If they do qualify, freestanding instruments with down round features are no longer classified as liabilities. ASU 2017-11 is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period. Early adoption is permitted and may be applied on a retrospective basis, including in an interim period. The Company early adopted ASU 2017-11 during the interim period ended December 31, 2017 and retrospectively applied the adoption from January 1, 2017 (see Note 1, Change in Accounting Principle). Recently Issued Accounting Pronouncements Not Yet Adopted as of December 31, 2017 We have reviewed the FASB issued Accounting Standards Update (“ASU”) accounting pronouncements and interpretations thereof that have effective dates during the periods reported and in future periods. The Company has carefully considered the new pronouncements that alter previous generally accepted accounting principles and does not believe that any new or modified principles will have a material impact on the Company’s reported financial position or operations in the near term. The applicability of any standard is subject to the formal review of our financial management and certain standards are under consideration. The FASB issued several updates on Topic 606 “Revenue from Contracts with Customers”, including: • ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)” • ASU 2016-08 “Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net).” • ASU 2016-10, “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing.” • ASU 2016-11, “Revenue Recognition (Topic 605) and Derivatives and Hedging (Topic 815): Rescission of SEC Guidance Because of Accounting Standards Updates 2014-09 and 2014-16 Pursuant to Staff Announcements at the March 3, 2016 EITF (Emerging Issue Task Force) Meeting.” • ASU 2016-12, “Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients.” • ASU 2016-20, “Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers.” • ASU 2017-13, “Revenue Recognition (Topic 605), Revenue from Contracts with Customers (Topic 606), Leases (Topic 840) and Leases (Topic 842). Amendments to SEC Paragraphs Pursuant to the Staff Announcement at the July 20, 2017 EITF Meeting and Rescission of Prior SEC Staff Announcements and Observer Comments.” The standards provide companies with a single model for use in accounting for revenue arising from contracts with customers that supersedes current revenue recognition guidance, including industry-specific revenue guidance. The core principle of the model is to recognize revenue when control of the goods or services transfers to the customer, as opposed to recognizing revenue when the risks and rewards transfer to the customer under the existing revenue guidance. The guidance permits companies to either apply the requirements retrospectively to all prior periods presented, or apply the requirements in the year of adoption, through a cumulative adjustment. The guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. Early adoption is permitted, to be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. The Company has adopted this guidance effective January 1, 2018, as required. In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments—Overall: Recognition and Measurement of Financial Assets and Financial Liabilities In February 2016, the FASB issued ASU No. 2016-02, Leases In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”). ASU 2016-15 addresses eight specific cash flow issues with the objective of reducing diversity in practice regarding how certain cash receipts and cash payments are presented in the statement of cash flows. The standard provides guidance on the classification of the following items: (1) debt prepayment or debt extinguishment costs, (2) settlement of zero-coupon debt instruments, (3) contingent consideration payments made after a business combination, (4) proceeds from the settlement of insurance claims, (5) proceeds from the settlement of corporate-owned life insurance policies, (6) distributions received from equity method investments, (7) beneficial interests in securitization transactions, and (8) separately identifiable cash flows. The Company is required to adopt ASU 2016-15 for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2017 on a retrospective basis. Early adoption is permitted, including adoption in an interim period. The Company has adopted this guidance effective January 1, 2018, as required. In May 2017, the FASB issued ASU 2017-09, “Compensation-Stock Compensation” (Topic 718): Scope of Modification Accounting. The amendments provide guidance on determining which changes to the terms and conditions of share-based payment awards require an entity to apply modification accounting under Topic 718 Compensation-Stock Compensation. An entity should account for the effects of a modification unless all the following are met: 1. The fair value (or calculated value or intrinsic value, if such an alternative measurement method is used) of the modified award is the same as the fair value (or calculated value or intrinsic value, if such an alternative measurement method is used) of the original award immediately before the original award is modified. If the modification does not affect any of the inputs to the valuation technique that the entity uses to value the award, the entity is not required to estimate the value immediately before and after the modification. 2. The vesting conditions of the modified award are the same as the vesting conditions of the original award immediately before the original award is modified. 3. The classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before the original award is modified. The ASU is effective for all entities for annual periods, including interim periods within those annual periods, beginning after December 15, 2017. The Company has adopted this guidance effective January 1, 2018, as required. |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 12 Months Ended |
Dec. 31, 2017 | |
PROPERTY AND EQUIPMENT | |
Property and Equipment | NOTE 2 – PROPERTY AND EQUIPMENT Equipment consists of the following: Year ended December 31, 2017 2016 Software, furniture and fixtures $ 200,000 $ 200,000 Equipment 3,223 3,223 Total 203,223 203,223 Less: accumulated depreciation (203,223 ) (203,223 ) Balance $ - $ - Depreciation of property and equipment was $0 and $2,856 for the years ended December 31, 2017 and 2016. |
PATENTS AND TRADEMARKS
PATENTS AND TRADEMARKS | 12 Months Ended |
Dec. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Patents and Trademark | NOTE 3 – PATENTS AND TRADEMARKS The current patent portfolio consists of 11 granted patents. 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 19 years. During the years ended December 31, 2017 and 2016, the Company capitalized $2,650 and $200,100 of patent costs and trademarks. Amortization and impairment expense for patents and trademarks was 30,406 and $24,707 for the years ended December 31, 2017 and 2016. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | NOTE 4 – INCOME TAXES The reconciliation of income tax expense computed at the U.S. federal statutory rate to the income tax provision for the years ended December 31, 2017 and 2016 is as follows (in thousands) : Year Ended December 31 US 2017 2016 Income before income taxes $ (3,385 ) $ (1,646 ) Taxes under statutory US tax rates (1,202 ) (576 ) Increase (decrease) in taxes resulting from: Increase (decrease) in valuation allowance 1,346 1,391 Foreign tax rate differential Non-deductible changes in derivative liability and share based transactions 1 (716 ) State taxes (145 ) (99 ) Income tax expense $ - $ - The increase in the Company's net increase in the valuation allowance was caused by continued net operating losses from ongoing operations. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and amounts used for income tax purposes. Significant components of the Company's deferred tax assets and liabilities consist of the following: December 31, 2017 2016 US Net operating loss $ 7,035 $ 13,263 Share based compensation 1,800 5,165 Reserves and accruals 12 Gross deferred tax assets 8,835 18,440 Less valuation allowance (8,835 ) (18,275 ) Total deferred tax assets - 165 Deferred tax liabilities: Amortization of acquired intangibles - (165 ) Total deferred tax liabilities - (165 ) Net deferred tax assets / (liabilities) $ - $ - As of December 31, 2017, the Company had federal and state net operating loss carry forwards of $32.0 million and $5.9 million, respectively that may be offset against future taxable income, subject to limitation under IRC Section 382, which begin to expire in 2019. No tax benefit has been reported in the December 31, 2017 or 2016 consolidated financial statements due to the uncertainty surrounding the realizability of the benefit, based on a more likely than not criteria and in consideration of available positive and negative evidence. Utilization of the net operating losses (NOL) carryforwards may be subject to a substantial annual limitation due to ownership change limitations that may have occurred or that could occur in the future, as required by Section 382 of the Internal Revenue Code (IRC) of 1986, as amended (the Code), as well as similar state provisions. These ownership changes may limit the amount of NOL carryforwards that can be utilized annually to offset future taxable income. In general, an “ownership change” as defined by Section 382 of the Code results from a transaction or series of transactions over a three-year period resulting in an ownership change of more than 50 percentage points of the outstanding stock of a company by certain stockholders. At the time of closing the books, the Company had not yet completed a study to determine the extent of the limitation. The Company applied the "more-likely-than-not" recognition threshold to all tax positions taken or expected to be taken in a tax return, which resulted in no unrecognized tax benefits as of December 31, 2017 and December 31, 2016, respectively. The Company’s practice is to recognize interest and/or penalties related to income tax matters in income tax expense. The Company had no accrual for interest and penalties on the consolidated balance sheets and has not recognized interest and/or penalties in the consolidated statements of operations and comprehensive loss for the years ended December 31, 2017 and 2016. The Company is subject to taxation in the United States and various state jurisdictions. The Company’s tax years from inception are subject to examination by the United States and state taxing authorities due to the carryforward of unutilized NOLs. On December 22, 2017, the United States enacted significant changes to the U.S. tax law following the passage and signing of H.R.1, “An Act to Provide for Reconciliation Pursuant to Titles II and V of the Concurrent Resolution on the Budget for Fiscal Year 2018” (the “Tax Act”) (previously known as “The Tax Cuts and Jobs Act”). The Tax Act significantly revised the U.S. corporate income tax regime by, among other things, lowering the corporate tax rate from 35% to 21%. The Tax Act reduced the U.S. corporate income tax rate reduction to 21% becomes effective January 1, 2018. The Company re-measured its deferred tax assets and liabilities as of December 31, 2017, applying the reduced corporate income tax rate and recorded a provisional decrease to the deferred tax assets and liabilities of $ 6.2 million, with a corresponding adjustment to the valuation allowance. There are no taxes payable as of December 31, 2017 or December 31, 2016. |
NOTES PAYABLE
NOTES PAYABLE | 12 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
Notes Payable | NOTE 5– NOTES PAYABLE Notes payable consists of the following as of December 31: Year ended December 31, 2017 2016 Series A notes payable; interest at 8% per annum; principal and $ 50,000 $ 50,000 Notes payable; interest rate at 5% per annum; principal and - 79,000 Less: unamortized discount - (60,931 ) Net 50,000 68,069 Less: current portion (50,000 ) (68,069 ) Balance $ - $ - At December 31, 2017 and 2016 accrued interest on notes payable was $33,667 and $29,668. On October 28, 2009 the Company issued an unsecured note payable for $50,000. The note and accrued interest at 8% per annum were due in full in October 2011. The note and accrued interest at 8% per annum were due in full in October 2011. The holder has never demanded payment. During the fourth quarter of 2016, the Company issued notes payable in the amount of $79,000 in addition to 3,950,000 warrants to purchase the Company’s common stock at $0.40 and have 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 portion allocated to the warrants has been accounted for as a discount to the notes payable and amortized over the term of the notes. The warrants were valued using the Black-Scholes option pricing model, with the following assumptions: no dividend yield, expected volatility of 194.6% to 197.5%, risk free interest rate of 1.26% to 2.03% and expected lives of five years. The fair value of the warrants was $729,035, of which $69,500 was allocated to the notes payable as discount to the notes payable. On January 24, 2017 and January 31, 2017, the Company issued notes payable to a director of the board 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 10% 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 $15,896 fair value, using the Black-Scholes option pricing model to calculate the grant-date fair value of the warrants. 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 February 13, 2017, the Company issued a note payable to a director of the board 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. 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 March 28, 2017, the Company issued a note payable to a director of the board 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. 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 to a director of the board 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”) to a relative of director of the board in the principal amount of $30,000 in exchange for a loan bearing 10% 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 to a director of the board 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 to a director of the board 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 6,151,762 shares of the Company’s common stock and warrants to purchase 6,151,762 shares of the Company’s common stock at an exercise price of $0.15, with a term of five years. As of December 31, 2017, from the 6,151,762 shares of common stock and 6,151,762 warrants to purchase shares of the Company, 4,402,079 shares of common stock and 4,402,079 shares of warrants had been issued to convert $270,000 principal (including the Note) and $3,623 accrued interest. The fair value of the warrants issued in connection with the settlement of the notes payable were valued at $605,535 resulting in a Loss on settlement of related party notes payable of $331,912 included in the Statement of Operations. An increase of $30,000 in the Note principal upon conversion was included in Interest expenses in the Statement of Operations. As of December 31, 2017, 1,749,683 shares of common stock and 1,749,683 of warrants issuable upon conversion for $120,000 principal and $2,478 accrued interest had not yet been issued and as such the amount has been recorded as Common Stock payable included on the Balance Sheets. As of December 31, 2017, and December 31, 2016, accrued interest on notes payable was $33,667 and $29,968, respectively. Interest expense including accretion of debt discount for the year ended December 31, 2017 and 2016 was $218,316 and $12,871. |
CONVERTIBLE PREFERRED STOCK
CONVERTIBLE PREFERRED STOCK | 12 Months Ended |
Dec. 31, 2017 | |
Preferred Stock, Number of Shares, Par Value and Other Disclosures [Abstract] | |
Convertible Preferred Stock | NOTE 6 – CONVERTIBLE PREFERRED STOCK The Company has outstanding Series A Preferred Stock (the “Series A”) and Series B Preferred Stock (the “Series B”). As of December 31, 2017, there were 37,564,767 authorized and 324,778 outstanding shares of Series A and 85 authorized and 0.92 outstanding shares of Series B. Each share of Series A and B has limited voting rights, is entitled to participate with the common stock on liquidation and holders of Series A and B have beneficial ownership limitations. Series A Convertible Preferred Stock On March 10, 2016, 14,720 shares of Series A Convertible Preferred Stock were converted into 294,400 shares of the Company’s Common Stock. On June 1, 2016, 14,720 shares of Series A Convertible Preferred Stock were converted into 294,400 shares of the Company’s Common Stock. On August 23, 2016, 14,720 shares of Series A Convertible Preferred Stock were converted into 294,400 shares of the Company’s Common Stock. During the year ended December 31, 2017, 73,000 shares of Series A Convertible Preferred Stock were converted into 1,460,000 shares of the Company’s Common Stock. Series B Convertible Preferred Stock On March 17, 2016, 0.03 shares of Series B Convertible Preferred Stock were converted into 291,780 shares of the Company’s common stock. On October 5, 2016, 0.05 shares of Series B Convertible Preferred Stock were converted into 383,203 shares of the Company’s common stock. During the year ended December 31, 2017, there were no conversions of Series B Convertible Preferred Stock into shares of the Company’s common stock. Series C Convertible Preferred Stock The Series C Convertible Preferred Stock (the “Series C”) described below converted on June 30, 2017 and a Certificate of Withdrawal for the Series C Certificate of Designation was subsequently filed. 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 proscribed period of time, upon the issuance of securities at a price that is less than the exercise price of the Series C. The 3,087,500 warrants associated with the Series C were 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 $1,767,576 at February 9, 2016 and February 29, 2016. In addition, the warrants must be revalued every reporting period and adjusted to market with the increase or decrease being adjusted through earnings. As of December 31, 2017 and 2016, the fair value of the warrants was $0 and $285,290. In addition, the Company incurred stock issuance costs of $17,500 related to the issuance of Series C. On May 30, 2017, the Company entered into Securities Exchange Agreements (the “Agreements”) with the holders of approximately 87% of the outstanding shares of the Company’s 0% Series C and the holders of 100% of the outstanding shares of the Company’s 0% Series D Convertible Preferred Stock (the “Series D”) and certain warrants to purchase the Company’s common stock held by the Series C and Series D holders. The effectiveness of the Agreements was contingent upon the Company raising at least $500,000 in a debt or equity financing transaction which closed on June 30, 2017. Pursuant to the Agreements, the holders exchanged each share of Series C for 2.857 shares of common stock and each warrant for two shares of common stock. The Agreements also eliminate a covenant in the Securities Purchase Agreements with the Series C and Series D investors which adversely affects the Company’s ability to issue securities and incur debt. On July 19, 2017, the Company authorized the withdrawal of the Certificates of Designation for Series C and Series D and on July 13, 2017, the Company ratified the authorization to issue shares of common stock to the holders of Series C and Series D. On May 2, 2016, 487,500 shares of Series C were converted into 487,500 shares of the Company’s Common Stock. On May 3, 2016, 125,000 shares of Series C were converted into 125,000 shares of the Company’s Common Stock. On May 5, 2016, 353,000 shares of Series C were converted into 353,000 shares of the Company’s Common Stock. On June 6, 2016, 84,500 shares of Series C were converted into 84,500 shares of the Company’s Common Stock. On October 14, 2016, 125,000 shares of Series C were converted into 125,000 shares of the Company’s Common Stock. On April 14, 2017, 375,000 shares of Series C were converted into 375,000 shares of the Company’s Common Stock. On June 30, 2017, pursuant to the Agreement, 1,537,500 shares of Series C were converted into 4,392,858 shares of the Company’s Common Stock; 3,087,500 shares of warrants were converted into 6,175,000 shares of the Company’s Common Stock, out of which 230,000 shares was issued to a director of the Board . $473,604 deemed dividend to Series C holders was recorded in conjunction with the transaction. Series D Convertible Preferred Stock The Series D described below converted on June 30, 2017 and a Certificate of Withdrawal Series D Certificate of Designation was subsequently filed. On October 24, 2016, the Company issued 166,750 shares of Series D, par value $0.001 per share, at a purchase price of $0.40 per share to a director of the board with gross proceeds to the Company of $66,700. In connection with the sale of the Series D, the Company issued to the purchasers warrants to purchase in the aggregate 667,000 shares of the Company’s common stock at an exercise price of $0.40 per share. Each share of Series D is convertible into one share of common stock. The Series D 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 D. The 667,000 warrants associated with the Series D were 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 $181,942 at October 24, 2016. In addition, the warrants must be revalued every reporting period and adjusted to market with the increase or decrease being adjusted through earnings. As of December 31, 2017, and 2016, the fair value of the warrants was $0 and $64,137. As noted, above, on May 30, 2017, the Company entered into Agreements with the holders of approximately 87% of the outstanding shares of the Company’s Series C and certain warrants to purchase the Company’s common stock held by the Series C holders. The Company had an oral agreement with the holder of the outstanding shares of the Company’s Series D to convert the Series D when the Series C converted. On July 13, 2017, the Company issued the Series D holder 2,482,145 shares of common stock upon conversion of the Series D and exchange of warrants issued with the Series D. On June 30, 2017, 166,750 shares of Series D were converted into 496,429 shares of the Company’s Common Stock; 667,000 shares of warrants were converted into 1,985,716 shares of the Company’s Common Stock. $123,274 deemed dividend to Series D holders was recorded in conjunction with the transaction. |
FAIR VALUE OF FINANCIAL INSTRUM
FAIR VALUE OF FINANCIAL INSTRUMENTS | 12 Months Ended |
Dec. 31, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments | NOTE 7 – 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: December 31, 2017 December 31, 2016 Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Embedded derivative liability related $ - $ - $ - $ - $ - $ - $ 228,718 $ 228,718 Derivative liability related to fair - - - - - - 394,744 394,744 Total $ - $ - $ - $ - $ - $ - $ 623,462 $ 623,462 The following table details the approximate fair value measurements within the fair value hierarchy of the Company’s derivative liabilities using Level 3 inputs: Total Balance, January 1, 2016 $ 1,802,375 Series C embedded derivative fair value, February 2016 1,235,000 Effect of conversion of Series C Preferred Stock on embedded derivative liability (350,500 ) Series C warrant liability fair value, February 2016 1,767,576 Series D embedded derivative fair value, October 2016 42,521 Series D warrant liability fair value, October 2016 181,942 Change in fair value of derivative liabilities (4,055,452 ) Balance, December 31, 2016 623,462 Cumulative adjustments related to change in accounting principle, January 1, 2017 (623,462 ) Balance, December 31, 2017 $ - 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, 2016. As of December 31, 2016, some of 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, 2017 December 31, 2016 Closing trade price of Common Stock $ - $ 0.11 Effective Series C Preferred Stock Conversion Price - - Effective Series D Preferred Stock Conversion Price - - Intrinsic value of conversion option per share $ - $ 0.11 December 31, 2017 December 31, 2016 Annual Dividend Yield - 0.0% Expected Life (Years) - 1.5 – 2.8 Risk-Free Interest Rate - 1.2% - 1.5% Expected Volatility - 215.8% - 234.1% 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, 2017 | |
Equity [Abstract] | |
Stockholders' Equity | NOTE 8 – STOCKHOLDERS’ EQUITY For the years ended December 31, 2017 and 2016, the Company expensed $6,750 and $683,251 relative to Restricted Stock Units. For the years ended December 31, 2017 and 2016, the Company expensed $60,075 and $0 relative to Restricted Stock awards. On February 8, 2016, the Company issued 23,500 shares of Common stock to a consultant. The shares were valued at $15,275 based on the closing stock price of the Company’s stock price on February 8, 2016 of $0.65 per share. The value of the shares was expensed immediately. On May 24, 2016, the Company issued 9,483 shares of Common stock to a consultant as a finder’s fee for an employee. The shares were value at $5,500 based on the closing stock price of the Company’s common stock on March 11, 2016 per the agreement. The value of the shares was expensed immediately. On September 8, 2017, the Company entered into a consulting agreement stipulating partial payment in restricted common stock. As of December 31, 2017, 120,000 shares have been issued. These shares were valued at the closing price of the Company’s common stock as they became due for a total of $12,000 for the year ended December 31, 2017. During the year ended December 31, 2017, the Company also issued 1,605,175 shares of common stock and 1,605,175 shares of warrants to two directors of the Board for services already rendered under consulting agreements. The 1,605,175 shares of warrants have an exercise price of $0.15 per share and a term of five years. The common stock and warrants were valued and expensed for $285,807. On August 9, 2017, the Company granted 300,000 shares of restricted common stock to each of six non-employee directors and one attorney vesting quarterly over one. The common stock was measured at fair value at the grant date and expensed based on the vesting schedule. Common stock related to the Company’s attorney were revalued as of the year end. During the year ended December 31, 2017, $60,075 compensation expense was recorded. As of December 31, 2017, there is $84,105 unrecognized compensation cost related to these shares of restricted common stock. During 2017, 19,451,575 shares of common stock and 19,451,575 shares of warrants to purchase common stock were issued for gross proceeds of $1,360,250 from the sale of units with each unit consisting of 715,000 shares of common stock and 715,00 five-year warrants exercisable at $0.15 per share. Legal costs related to this offering amounted to $32,325 and were recorded in Additional Paid In Capital. Net proceeds related to the sale of common stock were $1,327,925 for the year ended December 31, 2017. In connection with the sale of common stock noted above, 8,712,275 shares were issued and 8,712,275 warrants to purchase common stock were issued for gross proceeds of $609,250 to directors of the Board and relatives of the directors of the Board. During 2017, 75,000 Restricted Stock Units were vested in relation to a consulting service agreement and a total of $6,750 was expensed. During 2017, 2,050,372 shares were issued as stock-based compensation with a total non-cash expense of $139,808. Of this amount 371,800 shares were issued to a director of the Board, for a total non-cash expense of $22,308. During 2017, 503,432 shares were issued for sale of common stock in prior years. Of this amount, 479,901 related to two members of the Board. |
STOCK OPTIONS, RESTRICTED STOCK
STOCK OPTIONS, RESTRICTED STOCK AND WARRANTS | 12 Months Ended |
Dec. 31, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock Options and Warrants | NOTE 9 – STOCK OPTIONS, RESTRICTED STOCK AND WARRANTS On December 17, 2003, the Company 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. As of December 31, 2016, options to purchase 11,765 shares of common stock have been issued and are unexercised, under the 2003 Plan. During 2013, the Company adopted a new incentive compensation plan (the “2013 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. On November 14, 2017, the Executive Committee of the Company’s Board of Directors adopted the 2017 Equity Incentive Plan (the “Plan”) which covers the potential issuance of 13 million shares of common stock. The Plan provides that directors, officers, employees, and consultants of the Company will be eligible to receive equity incentives under the Plan at the discretion of the Board or the Board’s Compensation Committee. The Board’s Compensation Committee may adopt rules and regulations to carry out the terms of the Plan. The Plan terminates on November 14, 2027 unless sooner terminated. The 2017 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. On November 14, 2017, the Executive Committee of the Company’s Board of Directors adopted the 2017 Equity Incentive Plan, which covers the potential issuance of 13 million shares of common stock. The Plan provides that directors, officers, employees, and consultants of the Company will be eligible to receive equity incentives under the Plan at the discretion of the Board or the Board’s Compensation Committee. The Board’s Compensation Committee may adopt rules and regulations to carry out the terms of the Plan. The Plan terminates on November 14, 2027 unless sooner terminated. 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 February 29, 2016, the Company issued options to purchase an aggregate of 100,000 shares of the Company’s common stock at an exercise price of $0.57 per share, with a term of five years, to the former Chairman of the Board. The fair value of options issued was $53,731. 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 202.9%, risk-free interest rate of 1.22% and expected option life of five years. The options were being expensed over the Board Chairman’s remaining service terms as that is shorter than the vesting terms. The former Chairman of the Board resigned on December 1, 2016 and therefore, forfeited the unvested options and the Company did not reverse any expense related to these options. On March 10, 2016, the Company issued options to purchase 150,000 shares of the Company’s Common Stock at an exercise price of $0.56 per share, with a term of five years, to an employee. The fair value of options issued was $82,113. 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 202.9%, risk-free interest rate of 1.45% and expected option life of five years. The options were being expensed over the vesting terms for the employee. The employee was terminated during 2016 and expense related to the options of $2,281 was reversed. On March 24, 2016, the Company issued options to purchase 50,000 shares of Common Stock at an exercise price of $0.43 per share, with a term of five years, to a consultant, which vest immediately. The fair value of options issued was $21,068. 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 203.1%, risk-free interest rate of 1.39% and expected option life of five years. The options were expensed immediately. On December 21, 2016, the Company issued 890,000 options in aggregate to purchase shares of the Company’s common stock to the Board of Directors, the CFO and an employee at an exercise price of $0.11, expiring in ten years and vesting immediately. In conjunction with this issuance the Board of Directors, the CFO and an employee forfeited 789,706 options. The fair value of the options issued was $133,411. All of the 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 324.6%, risk-free interest rate of 2.55% and expected option life of ten years. The options were expensed immediately. On December 22, 2016, the Company issued 1,300,000 options in aggregate to purchase shares of the Company’s common stock, to the Board of Directors, the CFO and an employee at an exercise price of $0.25, expiring in ten years and vesting immediately. The fair value of the options issued was $148,070. All of the 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 324.7%, risk-free interest rate of 2.55% and expected option life of ten years. The options were expensed immediately. During the year ended December 31, 2017, 19,950,000 options were granted a weighted average exercise price of $0.07 with a term of five years. Of the 19,950,000 options, 450,000 options were issued to a director with a three month vesting period, 10,000,000 to the Chairman of the Board vesting immediately, 7,000,000 were issued to the Chief Executive Officer of which 5,000,000 vested immediately and 2,000,000 vest over a period of two years and 2,000,000 were issued to a director vesting over a six month period. In February 2017, the Company also issued 500,000 options to purchase common stock to a consultant which vested immediately. During the year ended December 31, 2017, 769,111 options were forfeited from employees no longer with the Company and 450,000 options were forfeited by a director of the Company. For the years ended December 31, 2017 and 2016, the Company expensed $1,295,741 and $1,355,992 with respect to the options. As of December 31, 2017, there was $116,832 unrecognized compensation cost related to outstanding stock options expected to vest over the weighted average of 0.9 years. 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, 2017 and 2016: 2017 2016 Risk Free Interest Rate 1.90% 2.41% Expected Volatility 199.20% 310.0% Expected Life (in years) 5.0 9.4 Dividend Yield 0% 0% Weighted average estimated fair value of options during the period $ 0.07 $ 0.18 The following table summarizes the activities for the Company’s stock options for the year ended December 31, 2017 and 2016: Options Outstanding Weighted - Average Remaining Aggregate Weighted- Contractual Intrinsic Number of Average Term Value Shares Exercise Price (in years) (1) Balance as of December 31, 2015 2,157,353 $ 1.80 Granted 2,490,000 0.24 Exercised (7,843 ) 0.05 Forfeited/cancelled (308,235 ) (0.06 ) Balance December 31, 2016 3,282,647 $ 0.52 Granted 19,950,000 $ 0.07 Forfeited/cancelled (1,219,117 ) $ 0.48 Balance December 31, 2017 22,013,529 $ 0.11 4.8 Exercisable at December 31, 2017 19,346,862 $ 0.12 4.8 $ 3,480,567 (1) The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the quoted price of the Company’s common stock for options that were in-the-money at each respective period. During the years ended December 31, 2017 and 2016, the aggregate intrinsic value of options exercised under the Company’s stock option plans was $3,480,567 and less than $1,000, respectively. The following table summarizes the activities for the Company’s unvested stock options for the year ended December 31, 2017: Unvested Options Weighted - Average Grant Number of Unvested Date Exercise Price Options Balance December 31, 2016 - $ - Granted 19,950,000 0.07 Vested (16,833,333 ) 0.07 Cancelled/forfeited/expired (450,000 ) 0.08 Balance December 31, 2017 2,666,667 $ 0.06 The following table summarizes the activities for the Company’s warrants for the year ended December 31, 2017 and 2016: Warrants Outstanding Number of Weighted- Average Exercise Price Weighted - Average Remaining Contractual Term in years) Aggregate Intrinsic Value (in 000's) Balance, December 31, 2015 1,414,893 $ 9.67 Expired (2,941 ) 0.85 Granted 7,804,500 0.39 Balance, December 31, 2016 9,216,452 $ 1.82 Issued 33,080,629 0.20 Cancelled/Forfeited (10,004,500 ) 0.40 Balance, December 31, 2017 32,292,580 $ 0.30 4.30 Exercisable at December 31, 2017 32,292,580 $ 0.30 4.30 $ 3,345 (1) The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying warrants and the closing stock price of $0.27 for our common stock on December 31, 2017. All warrants were vested on the date of grant. During the year ended December 31, 2017, 3,087,500 warrants to purchase common stock with an exercise price of $0.40 were cancelled and converted into 6,175,000 common stock in connection with the conversion of Series C preferred stock. See Note 6. During the year ended December 31, 2017, 667,000 warrants to purchase common stock with an exercise price of $0.40 were cancelled and converted into 1,985,716 common stock in connection with the conversion of Series D preferred stock. See Note 6. During the year ended December 31, 2017, the Company issued 19,451,575 warrants to purchase common stock with an exercise price of $0.15 in connection to the sale of units occurring during the year. See Note 9. During the year ended December 31, 2017, the Company issued 4,402,079 warrants to purchase common stock with an exercise price of $0.15 in connection with the settlement or related party note payables. See Note 5. During the year ended December 31, 2017, a director was issued and then cancelled 6,250,000 warrants to purchase common stock in connection with the settlement of the related party note payable. See Note 5. During the year ended December 31, 2017, a director was issued 1,000,000 warrants to purchase common stock at an exercise price of $0.40 in connection with the issuance of notes payable. See Note 5. During the year ended December 31, 2017, the Company issued 1,976,975 warrants to directors of the Board to purchase common stock at an exercise price of $0.15 in connection with services provided. See Note 9. |
OPERATING LEASES
OPERATING LEASES | 12 Months Ended |
Dec. 31, 2017 | |
Leases [Abstract] | |
Operating Leases | NOTE 10 – OPERATING LEASES For the year ended December 31, 2017 and 2016, total rent expense under leases amounted to $12,674 and $11,835. At December 31, 2017, the Company was not obligated under any non-cancelable operating leases. |
MAJOR CUSTOMERS_VENDORS
MAJOR CUSTOMERS/VENDORS | 12 Months Ended |
Dec. 31, 2017 | |
Risks and Uncertainties [Abstract] | |
Major Customers/Vendors | NOTE 11 – MAJOR CUSTOMERS/VENDORS During the year ended December 31, 2017 there were no sales and during the year ended December 31, 2016, one customer 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, 2017 and 2016, we purchased 100.0% of our pigment from one vendor. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | NOTE 12 – SUBSEQUENT EVENTS In 2017 the Company authorized a private placement with a maximum offering amount of $2,100,000 allowing investors to purchase units consisting of 715,000 shares of common stock and 715,000 five-year warrants exercisable at $0.15 per share. In January 2018 the Company’s Board of Directors increased the size of the private placement by an additional beyond the $2,100,000 limit. After the reporting period and as of the date of this filing, the Company has raised gross proceeds of $1,145,343 for purchase of 16,370,311 shares of common stock and 16,370,311 shares of warrants. As of April 12, 2018, the Company has issued 15,769,711 shares and 15,769,711 warrants to purchase common stock at the exercise price of $0.15 per share, in connection with this private placement. The remaining 600,600 shares will be issued in the second quarter of 2018. In relation to the above mentioned private placement, gross proceeds of $365,343 were received and 5,230,611 shares were issued to three directors of the Company and one director of the Company exercised warrants resulting in an issuance of 104,876 shares. In January 2018, the Chairman of the Board of Directors, made a cashless exercise of options related to services in 2017, amounting to an issuance of 4,027,778 shares. On January 30, 2018, the Company authorized a 30-day offer, beginning on February 20, 2018, to the holders of the Company’s outstanding warrants exercisable at $0.15 to exercise their warrants at $0.10. This authorization was since extended until May 22, 2018. As of April 12, 2018, the Company has received gross proceeds of $1,532,258, in relation to the reduced warrant exercise program and has issued 7,201,583 shares and intends to complete the issuance of the remaining shares related to the gross proceeds of 8,121,000 shares in the second quarter of 2018. Included in the above amounts are gross proceeds of $907,598 from two directors of the Company attributing to 9,075,983 shares of which 3,355,983 shares have been issued as of the filing date. On February 17, 2018, Carl Berg was appointed to the Board of Directors and granted 300,000 shares of restricted common stock vesting quarterly over one-year subject to continued service as of each applicable vesting date. Also on March 13, 2018, the Company approved an amendment to a Consulting Agreement with Keith Goldstein, the Chief Operating Officer extending it for one year in exchange for a grant of 1,000,000 options exercisable at approximately $0.21 per share. On February 2018, 20,000 shares of Series A Convertible Preferred Stock were converted into 400,000 shares of the Company’s Common Stock. In March 2018, 0.0706 shares of Series B Convertible Preferred Stock were converted into 599,362 shares of Common Stock and transferred to two Directors of the Company. On March 31, 2018, the Company entered into a Confidential Settlement Agreement (the “Settlement Agreement”) with Paul Klapper, a member of the Company’s Board of Directors, Stephen Silver, PFK Development Group, Ltd. (“PFKD”) and certain other parties named in the Settlement Agreement. Pursuant to the terms of the Settlement Agreement, the Company (i) paid a total of $500,000 (the “Settlement Amount”) to PFKD and Mr. Silver and (ii) issued them each 500,000 shares of the Company’s common stock (the “Settlement Shares”). The Settlement Agreement provides for cancellation as of March 31, 2018 of certain revenue sharing agreements between the Company and each of Mr. Klapper, Mr. Silver and PFKD, and terminates the Company’s obligation to issue warrants to purchase 3.7 million shares of the Company’s common stock at an exercise price of $0.40 per share. Mr. Klapper joined the Board of Directors on July 14, 2017 and resigned as of March 31, 2018. The Settlement Shares were issued pursuant to a Stock Purchase Agreement entered into in connection with the closing of the Settlement Agreement. The Company also entered into a Registration Rights Agreement (the “Registration Rights Agreement”) with certain parties named therein with respect to the Settlement Shares and certain other shares of the Company’s common stock specified in the Registration Rights Agreement and the Settlement Agreement. In January 2018, the Company issued 1,749,683 shares to Mr. Klapper relating to the Note payable conversion that took place in June 2017. See Note 5. On March 28, 2018, the Company accelerated the vesting of 150,000 shares of restricted common stock owned by Mr. Klapper. See Note 6. In April 2018, a Consultant of the Company exercised their warrants at an exercise price of $0.01 for gross proceeds of $1,000 resulting in an issuance of 100,000 shares. In 2018, the Company issued 120,000 shares in connection with a Consulting Services Agreement for services performed in 2018. |
SUMMARY OF SIGNIFICANT ACCOUN19
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Nature of Business | Nature of 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. 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 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 physical transactions and owns digital patents which are in the same field. 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 further develop the Company’s patents. |
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. |
Change in Accounting Principle | Change in Accounting Principle In July 2017, the FASB issued ASU 2017-11. Part I relates to the accounting for certain financial instruments with down round features in Subtopic 815-40, which is considered in determining whether an equity-linked financial instrument qualifies for a scope exception from derivative accounting. Down round features are features of certain equity-linked instruments (or embedded features) that result in the strike price being reduced based on the pricing of future equity offerings. An entity still is required to determine whether instruments would be classified in equity under the guidance in Subtopic 815-40 in determining whether they qualify for that scope exception. If they do qualify, freestanding instruments with down round features are no longer classified as liabilities. In the case where the exception from derivative accounting does not apply, warrants must be accounted for as a liability and recorded at fair value at the date of grant and re-valued at the end of each reporting period. The Company’s warrants and embedded conversion feature on its preferred stock (see Notes 8 and 9) include anti-dilution provisions characterized as down round features and have previously been accounted for as liabilities, with the fair value of the liabilities remeasured at each reporting date and the change in liabilities recorded as other non-operating income or loss. The Company had recorded a “Warrant liability” and “Embedded derivative liability” of $623,462, in the aggregate, and gain on the change in fair value of warrants and embedded derivative liability of $11,301,203, in the aggregate, in its “Accumulated deficit” as reported in its Balance Sheets for the year ended December 31, 2016 relating to the warrant liability and embedded derivative liability. Except for the down round features in the warrants and embedded conversion feature, the warrants and embedded conversion feature would have been classified in equity under the guidance in Subtopic 815-40 and therefore qualify for the scope exception in ASU 2017-11. As permitted, the Company elected to adopt the accounting principles prescribed by ASU 2017-11 for the year ending December 31, 2017 and has recorded a cumulative-effect adjustment stemming from a change in accounting principle in its financial statements for the year ended December 31, 2017 measured retrospectively to the beginning of 2017. The cumulative effect adjustment appears at the beginning of 2017 in the Company’s Statement of Changes in Stockholders Deficit. The results of operations for the Company for year ended December 31, 2017 reflects application of the change in accounting principle from the beginning of 2017. The following table details the impact stemming from the cumulative effect of the change in accounting principle on the Company’s Consolidated Balance Sheets as of the beginning of 2017. Balance Sheet Accounts Impacted by As Cumulative Reported after the Embedded derivative liability $ 228,718 $ (228,718 ) $ - Warrant liability 394,744 (394,744 ) - Additional paid in capital 40,469,272 11,924,665 52,393,937 Accumulated deficit (41,644,545 ) (11,301,203 ) (52,945,748 ) Because the Company has retroactively applied the change in accounting principle discussed above to the beginning of 2017, the Company is no longer reporting warrant derivative gains or losses for the warrants and embedded conversion feature beginning in 2017. Amounts reported for periods ending on or prior to December 31, 2016 have not been adjusted. |
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, notes payable, embedded derivative liability and warrant liability. The carrying value of accounts receivable, accounts payable and accrued expenses approximate their fair value because of their short maturities. The Company believes the carrying amount of its notes payable approximate fair value based on rates and other terms currently available to the Company for similar debt instruments. 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 Trademarks The current patent portfolio consists of 11 granted US patents, and two US patent applications pending. 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.” |
Notes Payable with detachable warrants | Notes Payable with detachable warrants 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 portion allocated to the warrants has been accounted for as a discount to the notes payable, and amortized over the term of the notes. |
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 2013 through 2016 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 $550 and $0 for the years ended December 31, 2017 and 2016 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, 2017 and 2016 were $128,044 and $250,180. |
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. For the year ended December 31, 2017 and 2016, there were shares potentially issuable, 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 years presented. For the year ended December 31, 2017 there were approximately 68,612,000 anti-dilutive shares consisting of 32,292,000 relating to warrants, 22,013,000 relating to options and 14,307,000 relating to preferred share agreements. For the year ended 9,216,000 relating to warrants, 3,282,000 relating to options and 10,033,000 relating to preferred share agreements. |
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 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 July 2017, the Financial Accounting Standards Board (“FASB”) issued ASU 2017-11,“ Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): (Part 1) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Non public Entities and Certain Mandatorily Redeemable Non-controlling Interests with a Scope Exception” (“ASU 2017-11”). Part I relates to the accounting or certain financial instruments with down round features in Subtopic 815-40, which is considered in determining whether an equity-linked financial instrument qualifies for a scope exception from derivative accounting. Down Round features are features of certain equity-linked instruments (or embedded features) that result in the strike price being reduced based on the pricing of future equity offerings. An entity still is required to determine whether instruments would be classified as equity under the guidance in Subtopic 815-40 in determining whether they qualify for that scope exception. If they do qualify, freestanding instruments with down round features are no longer classified as liabilities. ASU 2017-11 is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period. Early adoption is permitted and may be applied on a retrospective basis, including in an interim period. The Company early adopted ASU 2017-11 during the interim period ended December 31, 2017 and retrospectively applied the adoption from January 1, 2017 (see Note 1, Change in Accounting Principle). |
Recently Issued Accounting Pronouncements Not Yet Adopted | Recently Issued Accounting Pronouncements Not Yet Adopted as of December 31, 2017 We have reviewed the FASB issued Accounting Standards Update (“ASU”) accounting pronouncements and interpretations thereof that have effective dates during the periods reported and in future periods. The Company has carefully considered the new pronouncements that alter previous generally accepted accounting principles and does not believe that any new or modified principles will have a material impact on the Company’s reported financial position or operations in the near term. The applicability of any standard is subject to the formal review of our financial management and certain standards are under consideration. The FASB issued several updates on Topic 606 “Revenue from Contracts with Customers”, including: • ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)” • ASU 2016-08 “Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net).” • ASU 2016-10, “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing.” • ASU 2016-11, “Revenue Recognition (Topic 605) and Derivatives and Hedging (Topic 815): Rescission of SEC Guidance Because of Accounting Standards Updates 2014-09 and 2014-16 Pursuant to Staff Announcements at the March 3, 2016 EITF (Emerging Issue Task Force) Meeting.” • ASU 2016-12, “Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients.” • ASU 2016-20, “Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers.” • ASU 2017-13, “Revenue Recognition (Topic 605), Revenue from Contracts with Customers (Topic 606), Leases (Topic 840) and Leases (Topic 842). Amendments to SEC Paragraphs Pursuant to the Staff Announcement at the July 20, 2017 EITF Meeting and Rescission of Prior SEC Staff Announcements and Observer Comments.” The standards provide companies with a single model for use in accounting for revenue arising from contracts with customers that supersedes current revenue recognition guidance, including industry-specific revenue guidance. The core principle of the model is to recognize revenue when control of the goods or services transfers to the customer, as opposed to recognizing revenue when the risks and rewards transfer to the customer under the existing revenue guidance. The guidance permits companies to either apply the requirements retrospectively to all prior periods presented, or apply the requirements in the year of adoption, through a cumulative adjustment. The guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. Early adoption is permitted, to be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. The Company has adopted this guidance effective January 1, 2018, as required. In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments—Overall: Recognition and Measurement of Financial Assets and Financial Liabilities In February 2016, the FASB issued ASU No. 2016-02, Leases In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”). ASU 2016-15 addresses eight specific cash flow issues with the objective of reducing diversity in practice regarding how certain cash receipts and cash payments are presented in the statement of cash flows. The standard provides guidance on the classification of the following items: (1) debt prepayment or debt extinguishment costs, (2) settlement of zero-coupon debt instruments, (3) contingent consideration payments made after a business combination, (4) proceeds from the settlement of insurance claims, (5) proceeds from the settlement of corporate-owned life insurance policies, (6) distributions received from equity method investments, (7) beneficial interests in securitization transactions, and (8) separately identifiable cash flows. The Company is required to adopt ASU 2016-15 for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2017 on a retrospective basis. Early adoption is permitted, including adoption in an interim period. The Company has adopted this guidance effective January 1, 2018, as required. In May 2017, the FASB issued ASU 2017-09, “Compensation-Stock Compensation” (Topic 718): Scope of Modification Accounting. The amendments provide guidance on determining which changes to the terms and conditions of share-based payment awards require an entity to apply modification accounting under Topic 718 Compensation-Stock Compensation. An entity should account for the effects of a modification unless all the following are met: 1. The fair value (or calculated value or intrinsic value, if such an alternative measurement method is used) of the modified award is the same as the fair value (or calculated value or intrinsic value, if such an alternative measurement method is used) of the original award immediately before the original award is modified. If the modification does not affect any of the inputs to the valuation technique that the entity uses to value the award, the entity is not required to estimate the value immediately before and after the modification. 2. The vesting conditions of the modified award are the same as the vesting conditions of the original award immediately before the original award is modified. 3. The classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before the original award is modified. The ASU is effective for all entities for annual periods, including interim periods within those annual periods, beginning after December 15, 2017. The Company has adopted this guidance effective January 1, 2018, as required. |
SUMMARY OF SIGNIFICANT ACCOUN20
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Schedule of Cumulative effect of Change in Accounting Principle | The following table details the impact stemming from the cumulative effect of the change in accounting principle on the Company’s Consolidated Balance Sheets as of the beginning of 2017. Balance Sheet Accounts Impacted by As Cumulative Reported after the Embedded derivative liability $ 228,718 $ (228,718 ) $ - Warrant liability 394,744 (394,744 ) - Additional paid in capital 40,469,272 11,924,665 52,393,937 Accumulated deficit (41,644,545 ) (11,301,203 ) (52,945,748 ) |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
PROPERTY AND EQUIPMENT | |
Schedule of Property and Equipment | Equipment consists of the following: Year ended December 31, 2017 2016 Software, furniture and fixtures $ 200,000 $ 200,000 Equipment 3,223 3,223 Total 203,223 203,223 Less: accumulated depreciation (203,223 ) (203,223 ) Balance $ - $ - |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Reconciliation of Federal Statutory Tax Rate | The reconciliation of income tax expense computed at the U.S. federal statutory rate to the income tax provision for the years ended December 31, 2017 and 2016 is as follows (in thousands) : Year Ended December 31 US 2017 2016 Income before income taxes $ (3,385 ) $ (1,646 ) Taxes under statutory US tax rates (1,202 ) (576 ) Increase (decrease) in taxes resulting from: Increase (decrease) in valuation allowance 1,346 1,391 Foreign tax rate differential Non-deductible changes in derivative liability and share based transactions 1 (716 ) State taxes (145 ) (99 ) Income tax expense $ - $ - |
Schedule of Deferred Tax Assets and Liabilities | Significant components of the Company's deferred tax assets and liabilities consist of the following: December 31, 2017 2016 US Net operating loss $ 7,035 $ 13,263 Share based compensation 1,800 5,165 Reserves and accruals 12 Gross deferred tax assets 8,835 18,440 Less valuation allowance (8,835 ) (18,275 ) Total deferred tax assets - 165 Deferred tax liabilities: Amortization of acquired intangibles - (165 ) Total deferred tax liabilities - (165 ) Net deferred tax assets / (liabilities) $ - $ - |
NOTES PAYABLE (Tables)
NOTES PAYABLE (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
Schedule of Notes Payable | Notes payable consists of the following as of December 31: Year ended December 31, 2017 2016 Series A notes payable; interest at 8% per annum; principal and $ 50,000 $ 50,000 Notes payable; interest rate at 5% per annum; principal and - 79,000 Less: unamortized discount - (60,931 ) Net 50,000 68,069 Less: current portion (50,000 ) (68,069 ) Balance $ - $ - |
FAIR VALUE OF FINANCIAL INSTR24
FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables) | 12 Months Ended |
Dec. 31, 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: December 31, 2017 December 31, 2016 Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Embedded derivative liability related $ - $ - $ - $ - $ - $ - $ 228,718 $ 228,718 Derivative liability related to fair - - - - - - 394,744 394,744 Total $ - $ - $ - $ - $ - $ - $ 623,462 $ 623,462 |
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: Total Balance, January 1, 2016 $ 1,802,375 Series C embedded derivative fair value, February 2016 1,235,000 Effect of conversion of Series C Preferred Stock on embedded derivative liability (350,500 ) Series C warrant liability fair value, February 2016 1,767,576 Series D embedded derivative fair value, October 2016 42,521 Series D warrant liability fair value, October 2016 181,942 Change in fair value of derivative liabilities (4,055,452 ) Balance, December 31, 2016 623,462 Cumulative adjustments related to change in accounting principle, January 1, 2017 (623,462 ) Balance, December 31, 2017 $ - |
Schedule of Common Stock Purchase Warrants Valuation Assumptions | As of December 31, 2016, some of 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, 2017 December 31, 2016 Closing trade price of Common Stock $ - $ 0.11 Effective Series C Preferred Stock Conversion Price - - Effective Series D Preferred Stock Conversion Price - - Intrinsic value of conversion option per share $ - $ 0.11 December 31, 2017 December 31, 2016 Annual Dividend Yield - 0.0% Expected Life (Years) - 1.5 – 2.8 Risk-Free Interest Rate - 1.2% - 1.5% Expected Volatility - 215.8% - 234.1% |
STOCK OPTIONS, RESTRICTED STO25
STOCK OPTIONS, RESTRICTED STOCK AND WARRANTS (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
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, 2017 and 2016: 2017 2016 Risk Free Interest Rate 1.90% 2.41% Expected Volatility 199.20% 310.0% Expected Life (in years) 5.0 9.4 Dividend Yield 0% 0% Weighted average estimated fair value of options during the period $ 0.07 $ 0.18 |
Schedule of Stock Option Activity | The following table summarizes the activities for the Company’s stock options for the year ended December 31, 2017 and 2016: Options Outstanding Weighted - Average Remaining Aggregate Weighted- Contractual Intrinsic Number of Average Term Value Shares Exercise Price (in years) (1) Balance as of December 31, 2015 2,157,353 $ 1.80 Granted 2,490,000 0.24 Exercised (7,843 ) 0.05 Forfeited/cancelled (308,235 ) (0.06 ) Balance December 31, 2016 3,282,647 $ 0.52 Granted 19,950,000 $ 0.07 Forfeited/cancelled (1,219,117 ) $ 0.48 Balance December 31, 2017 22,013,529 $ 0.11 4.8 Exercisable at December 31, 2017 19,346,862 $ 0.12 4.8 $ 3,480,567 (1) The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the quoted price of the Company’s common stock for options that were in-the-money at each respective period. During the years ended December 31, 2017 and 2016, the aggregate intrinsic value of options exercised under the Company’s stock option plans was $3,480,567 and less than $1,000, respectively. |
Summary of the Activities of Unvested Stock Options | The following table summarizes the activities for the Company’s unvested stock options for the year ended December 31, 2017: Unvested Options Weighted - Average Grant Number of Unvested Date Exercise Price Options Balance December 31, 2016 - $ - Granted 19,950,000 0.07 Vested (16,833,333 ) 0.07 Cancelled/forfeited/expired (450,000 ) 0.08 Balance December 31, 2017 2,666,667 $ 0.06 |
Schedule of Warrant Activity | The following table summarizes the activities for the Company’s warrants for the year ended December 31, 2017 and 2016: Warrants Outstanding Number of Weighted- Average Exercise Price Weighted - Average Remaining Contractual Term in years) Aggregate Intrinsic Value (in 000's) Balance, December 31, 2015 1,414,893 $ 9.67 Expired (2,941 ) 0.85 Granted 7,804,500 0.39 Balance, December 31, 2016 9,216,452 $ 1.82 Issued 33,080,629 0.20 Cancelled/Forfeited (10,004,500 ) 0.40 Balance, December 31, 2017 32,292,580 $ 0.30 4.30 Exercisable at December 31, 2017 32,292,580 $ 0.30 4.30 $ 3,345 (1) The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying warrants and the closing stock price of $0.27 for our common stock on December 31, 2017. |
SUMMARY OF SIGNIFICANT ACCOUN26
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Reverse Stock Split and Changes to Company's Preferred Stock ) (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Restructuring Cost and Reserve [Line Items] | ||
Common stock, par value | $ 0.001 | $ 0.001 |
Warrant liability | $ 394,744 | |
Embedded derivative liability | 11,301,203 | |
Warrant [Member] | ||
Restructuring Cost and Reserve [Line Items] | ||
Warrant liability | $ 623,462 |
SUMMARY OF SIGNIFICANT ACCOUN27
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Property and Equipment) (Details) | 12 Months Ended |
Dec. 31, 2017 | |
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 ACCOUN28
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Patents and Trademark) (Details) - Patents [Member] | 12 Months Ended |
Dec. 31, 2017Patents | |
Finite-Lived Intangible Assets [Line Items] | |
Number of patents granted | 11 |
Number of provisional patent applications pending | 3 |
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 | 19 years |
SUMMARY OF SIGNIFICANT ACCOUN29
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Other) (Details) | 12 Months Ended | |
Dec. 31, 2017USD ($)Segmentsshares | Dec. 31, 2016USD ($)shares | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Advertising expense | $ | $ 550 | $ 0 |
Research and development costs | $ | $ 128,044 | $ 250,180 |
Number of operating segment | Segments | 1 | |
Anti-dilutive common stock equivalents, excluded from the calculation of earnings per share | 68,612,000 | 22,531,000 |
Warrant [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive common stock equivalents, excluded from the calculation of earnings per share | 32,292,000 | 9,216,000 |
Stock Options [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive common stock equivalents, excluded from the calculation of earnings per share | 22,013,000 | 3,282,000 |
Preferred share agreements [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive common stock equivalents, excluded from the calculation of earnings per share | 14,307,000 | 10,033,000 |
SUMMARY OF SIGNIFICANT ACCOUN30
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Schedule of Cumulative effect of Change in Accounting Principle) (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Embedded derivative liability | $ 11,301,203 | |
Warrant liability | $ 394,744 | |
Additional paid in capital | 56,198,126 | 40,469,272 |
Accumulated deficit | (56,331,088) | (41,644,545) |
Previously Reported [Member] | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Embedded derivative liability | 228,718 | |
Warrant liability | 394,744 | |
Additional paid in capital | 40,469,272 | |
Accumulated deficit | $ (41,644,545) | |
Cumulative Effect Adjustment [Member] | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Embedded derivative liability | (228,718) | |
Warrant liability | (394,744) | |
Additional paid in capital | 11,924,665 | |
Accumulated deficit | (11,301,203) | |
Reported after Effect of Change in Accountingt [Member] | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Embedded derivative liability | ||
Warrant liability | ||
Additional paid in capital | 52,393,937 | |
Accumulated deficit | $ (52,945,748) |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Property, Plant and Equipment, Net [Abstract] | ||
Software, furniture and fixtures | $ 200,000 | $ 200,000 |
Equipment | 3,223 | 3,223 |
Total | 203,223 | 203,223 |
Less: Accumulated depreciation | (203,223) | (203,223) |
Depreciation of property and equipment | $ 0 | $ 2,856 |
PATENTS AND TRADEMARKS (Details
PATENTS AND TRADEMARKS (Details) | 12 Months Ended | |
Dec. 31, 2017USD ($)PatentsTrademarks | Dec. 31, 2016USD ($) | |
Patents [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Number of patents granted | Patents | 11 | |
Number of new patent | Patents | 2 | |
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 | 19 years | |
Trademarks [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Number of trademarks | Trademarks | 3 | |
Amortization method | Straight-line basis | |
Patents And Trademark [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Capitalized patent costs and trademarks | $ | $ 2,650 | $ 200,100 |
Amortization expense | $ | $ 30,406 | $ 24,707 |
INCOME TAX (Narrative) (Detail)
INCOME TAX (Narrative) (Detail) - USD ($) $ in Millions | 1 Months Ended | 12 Months Ended |
Jan. 31, 2018 | Dec. 31, 2017 | |
Operating Loss Carryforwards [Line Items] | ||
Provisional decrease to deferred tax assets and liabilities | $ 6.2 | |
Subsequent Event [Member] | ||
Operating Loss Carryforwards [Line Items] | ||
Federal Statutory Rate | 21.00% | |
Minimum [Member] | ||
Operating Loss Carryforwards [Line Items] | ||
Federal Statutory Rate | 21.00% | |
Maximum [Member] | ||
Operating Loss Carryforwards [Line Items] | ||
Federal Statutory Rate | 35.00% | |
State [Member] | ||
Operating Loss Carryforwards [Line Items] | ||
Net operating loss ("NOL") | $ 32 | |
Fedral [Member] | ||
Operating Loss Carryforwards [Line Items] | ||
Net operating loss ("NOL") | $ 5.9 |
INCOME TAXES (Reconciliation of
INCOME TAXES (Reconciliation of Federal Statutory Tax Rate) (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | ||
Income before income taxes | $ (3,385) | $ (1,646) |
Taxes under statutory US tax rates | (1,202) | (576) |
Increase (decrease) in taxes resulting from: | ||
Increase (decrease) in valuation allowance | 1,346 | 1,391 |
Foreign tax rate differential | ||
Non-deductible changes in derivative liability and share based transactions | 1 | (716) |
State taxes | (145) | (99) |
Income tax expense |
INCOME TAXES (Schedule of Defer
INCOME TAXES (Schedule of Deferred Tax Assets and Liabilities) (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Income Tax Disclosure [Abstract] | ||
Net operating loss | $ 7,035 | $ 13,263 |
Share based compensation | 1,800 | 5,165 |
Reserves and accruals | 12 | |
Gross deferred tax assets | 8,835 | 18,440 |
Less valuation allowance | (8,835) | (18,275) |
Total deferred tax assets | 165 | |
Deferred tax liabilities: | ||
Amortization of acquired intangibles | (165) | |
Total deferred tax liabilities | (165) | |
Net deferred tax assets / (liabilities) |
NOTES PAYABLE (Narrative) (Deta
NOTES PAYABLE (Narrative) (Details) - USD ($) | Apr. 13, 2017 | Dec. 31, 2017 | Jun. 30, 2017 | May 31, 2017 | Apr. 26, 2017 | Mar. 28, 2017 | Feb. 13, 2017 | Jan. 31, 2017 | Oct. 28, 2009 | Dec. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 11, 2011 |
Debt Instrument [Line Items] | |||||||||||||
Proceeds from issuance of notes payable | $ 79,000 | ||||||||||||
Debt conversion, converted amount | $ 120,000 | ||||||||||||
Exercise price (in dollars per share) | $ 0.15 | $ 0.15 | |||||||||||
Accumulated discount, notes payable (in dollars) | $ 60,931 | 60,931 | |||||||||||
Interest expense | 218,316 | 12,871 | |||||||||||
Note payable balance | 50,000 | 68,069 | 50,000 | 68,069 | |||||||||
Accrued interest | $ 33,667 | 29,668 | 33,667 | 29,668 | |||||||||
Repayment of notes payable | $ 281,000 | ||||||||||||
Number of common stock called by warrants | 715,000 | 715,000 | |||||||||||
Warrant value | $ 605,535 | $ 605,535 | |||||||||||
Loss on settlement of related party notes payable | 331,912 | ||||||||||||
Increase decrease in notes payable | $ 30,000 | ||||||||||||
Warrant [Member] | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Shares issued on conversion of debt (in shares) | 1,749,683 | ||||||||||||
Common Stock payable [Member] | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Accrued interest | $ 2,478 | $ 2,478 | |||||||||||
Common Stock [Member] | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Shares issued on conversion of debt (in shares) | 1,749,683 | ||||||||||||
Board of Director [Member] | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Number of common stock called by warrants (in shares) | 1,976,975 | 1,976,975 | |||||||||||
Exercise price (in dollars per share) | $ 0.15 | $ 0.15 | |||||||||||
Maximum [Member] | Warrant [Member] | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Exercise price (in dollars per share) | $ 0.15 | $ 0.15 | |||||||||||
Notes Payable [Member] | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Expected warrant term | 5 years | ||||||||||||
Proceeds from issuance of notes payable | $ 360,000 | ||||||||||||
Debt conversion, converted amount | $ 270,000 | $ 390,000 | |||||||||||
Number of common stock called by warrants (in shares) | 6,151,762 | 6,151,762 | 6,151,762 | ||||||||||
Exercise price (in dollars per share) | $ 0.15 | ||||||||||||
Fair value of warrant liability | $ 0 | ||||||||||||
Note payable balance | 50,000 | ||||||||||||
Accrued interest | $ 33,667 | 6,101 | $ 29,668 | $ 33,667 | $ 29,668 | ||||||||
Notes Payable [Member] | Transaction One [Member] | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Number of common stock called by warrants (in shares) | 4,402,079 | 4,402,079 | |||||||||||
Accrued interest | $ 3,623 | $ 3,623 | |||||||||||
Notes Payable [Member] | Loan [Member] | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Proceeds from issuance of notes payable | $ 10,000 | ||||||||||||
Notes Payable [Member] | Loan [Member] | Board of Director [Member] | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Proceeds from issuance of notes payable | 36,000 | $ 60,000 | |||||||||||
Notes Payable [Member] | Warrant [Member] | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Expected dividend yield | 0.00% | 0.00% | |||||||||||
Expected warrant term | 5 years | 5 years | |||||||||||
Proceeds from issuance of notes payable | $ 25,000 | $ 100,000 | $ 20,000 | $ 50,000 | $ 79,000 | ||||||||
Number of common stock called by warrants (in shares) | 1,250,000 | 5,000,000 | 1,000,000 | 3,950,000 | 3,950,000 | ||||||||
Exercise price (in dollars per share) | $ 0.40 | $ 0.40 | $ 0.40 | $ 0.40 | $ 0.40 | ||||||||
Fair value of warrant liability | $ 21,300 | $ 76,390 | $ 15,896 | ||||||||||
Interest rate, notes payable | 10.00% | 5.00% | 5.00% | ||||||||||
Warrant value | $ 931,573 | ||||||||||||
Notes Payable [Member] | Warrant [Member] | Debt Instrument Date December 2016 [Member] | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Expected warrant term | 5 years | ||||||||||||
Fair value of warrant liability | $ 729,035 | $ 729,035 | |||||||||||
Accumulated discount, notes payable (in dollars) | $ 69,500 | $ 69,500 | |||||||||||
Notes Payable [Member] | Warrant [Member] | Debt Instrument Date December 2016 [Member] | Minimum [Member] | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Expected volatility | 194.60% | ||||||||||||
Risk-free interest rate | 1.26% | ||||||||||||
Notes Payable [Member] | Warrant [Member] | Debt Instrument Date December 2016 [Member] | Maximum [Member] | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Expected volatility | 197.50% | ||||||||||||
Risk-free interest rate | 2.03% | ||||||||||||
Series A Notes Payable Due At Maturity In October 2011 (Past Due) [Member] | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Interest rate, notes payable | 8.00% | ||||||||||||
Promissory Note [Member] | Loan [Member] | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Proceeds from issuance of notes payable | $ 30,000 | ||||||||||||
Interest rate, notes payable | 10.00% | ||||||||||||
Financing [Member] | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Proceeds from issuance of notes payable | $ 750,000 | ||||||||||||
Investment in common stock | 60,000 | ||||||||||||
Interest expense | $ 60,000 |
NOTES PAYABLE (Schedule of Note
NOTES PAYABLE (Schedule of Notes Payable) (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Debt Instrument [Line Items] | ||
Less: Unamortized discount | $ (60,931) | |
Notes payable | 50,000 | 68,069 |
Less: Current portion | (50,000) | (68,069) |
Balance | ||
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 30, 2017 [Member] | ||
Debt Instrument [Line Items] | ||
Notes payable | $ 79,000 |
CONVERTIBLE PREFERRED STOCK (De
CONVERTIBLE PREFERRED STOCK (Details) - USD ($) | Jul. 13, 2017 | Apr. 14, 2017 | Oct. 14, 2016 | Oct. 05, 2016 | Jun. 06, 2016 | Jun. 02, 2016 | May 05, 2016 | May 03, 2016 | May 02, 2016 | Feb. 09, 2016 | Jun. 30, 2017 | Oct. 24, 2016 | Aug. 23, 2016 | Mar. 31, 2016 | Mar. 17, 2016 | Feb. 29, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | May 30, 2017 | Mar. 10, 2016 |
Class of Stock [Line Items] | ||||||||||||||||||||
Exercise price | $ 0.15 | |||||||||||||||||||
Stock issuance costs | $ 17,500 | |||||||||||||||||||
Board of Director [Member] | ||||||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||||||
Exercise price | $ 0.15 | |||||||||||||||||||
Common Stock [Member] | ||||||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||||||
Number of preferred stock purchased | 19,451,575 | |||||||||||||||||||
Stock issuance costs | $ 17,500 | |||||||||||||||||||
Series A Convertible Preferred Stock [Member] | ||||||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||||||
Number of preferred stock purchased | ||||||||||||||||||||
Preferred stock, par value | $ 0.001 | $ 0.001 | ||||||||||||||||||
Conversion of preferred stock, shares | 14,720 | 14,720 | 73,000 | 14,720 | ||||||||||||||||
Conversion of shares of preferred stock to common stock, shares | (73,000) | (44,160) | ||||||||||||||||||
Preferred stock, shares authorized | 37,564,767 | 37,564,767 | ||||||||||||||||||
Preferred stock, shares issued | 324,778 | 397,778 | ||||||||||||||||||
Preferred stock, shares outstanding | 324,778 | 397,778 | ||||||||||||||||||
Stock issuance costs | ||||||||||||||||||||
Series A Convertible Preferred Stock [Member] | Common Stock [Member] | ||||||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||||||
Preferred stock converted in to common stock | 383,203 | 294,400 | 294,400 | 294,400 | 1,460,000 | |||||||||||||||
Series B Convertible Preferred Stock [Member] | ||||||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||||||
Preferred stock, shares authorized | 85 | |||||||||||||||||||
Preferred stock, shares outstanding | 0.92 | |||||||||||||||||||
Series B Convertible Preferred Stock [Member] | Common Stock [Member] | ||||||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||||||
Preferred stock converted in to common stock | 291,780 | |||||||||||||||||||
Conversion of shares of preferred stock to common stock, shares | 883,200 | |||||||||||||||||||
Series B Convertible Preferred Stock [Member] | ||||||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||||||
Number of preferred stock purchased | ||||||||||||||||||||
Preferred stock, par value | $ 0.001 | |||||||||||||||||||
Conversion of preferred stock, shares | 0.05 | 0.03 | ||||||||||||||||||
Conversion of shares of preferred stock to common stock, shares | (0.08) | |||||||||||||||||||
Preferred stock, shares authorized | 85 | |||||||||||||||||||
Preferred stock, shares issued | 0.92 | |||||||||||||||||||
Preferred stock, shares outstanding | 0.92 | |||||||||||||||||||
Stock issuance costs | ||||||||||||||||||||
Series C Convertible Preferred Stock [Member] | ||||||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||||||
Number of preferred stock purchased | 2,587,500 | 500,000 | ||||||||||||||||||
Purchase price (in dollars per share) | $ 0.40 | $ 0.40 | ||||||||||||||||||
Preferred stock, par value | $ 0.001 | $ 0.001 | $ 0.001 | |||||||||||||||||
Proceeds from sale of Series C Convertible Preferred Stock | $ 1,035,000 | $ 200,000 | $ 1,235,000 | |||||||||||||||||
Number of warrant subject to liability anti-dulitive adjustment | 3,087,500 | |||||||||||||||||||
Shares of convertible preferred stock issued | 2,587,500 | 500,000 | ||||||||||||||||||
Exercise price | $ 0.40 | $ 0.40 | ||||||||||||||||||
Preferred stock converted in to common stock | 375,000 | 125,000 | 84,500 | 353,000 | 125,000 | 487,500 | 1,537,500 | |||||||||||||
Conversion of shares of preferred stock to common stock, shares | 375,000 | 125,000 | 84,500 | 353,000 | 125,000 | 487,500 | 4,392,858 | (1,912,500) | (1,175,000) | |||||||||||
Fair value of warrants | $ 1,767,576 | $ 1,767,576 | $ 0 | $ 285,290 | ||||||||||||||||
Preferred stock, shares authorized | 7,500,000 | 7,500,000 | ||||||||||||||||||
Preferred stock, shares issued | 0 | 1,912,500 | ||||||||||||||||||
Preferred stock, shares outstanding | 0 | 1,912,500 | ||||||||||||||||||
Stock issuance costs | ||||||||||||||||||||
Dividends | $ 473,604 | |||||||||||||||||||
Series C Convertible Preferred Stock [Member] | ||||||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||||||
Conversion of preferred stock, shares | 2.857 | |||||||||||||||||||
Percentage of outstanding shares | 87.00% | |||||||||||||||||||
Series C Convertible Preferred Stock [Member] | Warrant [Member] | ||||||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||||||
Exercise price | $ 0.40 | |||||||||||||||||||
Preferred stock converted in to common stock | 3,087,500 | 3,087,500 | ||||||||||||||||||
Series C Convertible Preferred Stock [Member] | Board of Director [Member] | ||||||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||||||
Number of shares issued | 230,000 | |||||||||||||||||||
Series C Convertible Preferred Stock [Member] | Common Stock [Member] | ||||||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||||||
Preferred stock converted in to common stock | 6,175,000 | 6,175,000 | ||||||||||||||||||
Conversion of shares of preferred stock to common stock, shares | 4,767,858 | 1,175,000 | ||||||||||||||||||
Series D Convertible Preferred Stock [Member] | ||||||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||||||
Number of preferred stock purchased | ||||||||||||||||||||
Preferred stock, par value | $ 0.001 | $ 0.001 | ||||||||||||||||||
Proceeds from sale of Series C Convertible Preferred Stock | $ 66,700 | |||||||||||||||||||
Conversion of shares of preferred stock to common stock, shares | (166,750) | 166,750 | ||||||||||||||||||
Fair value of warrants | $ 0 | $ 64,137 | ||||||||||||||||||
Preferred stock, shares authorized | 6,000,000 | 6,000,000 | ||||||||||||||||||
Preferred stock, shares issued | 0 | 166,750 | ||||||||||||||||||
Preferred stock, shares outstanding | 0 | 166,750 | ||||||||||||||||||
Stock issuance costs | ||||||||||||||||||||
Series D Convertible Preferred Stock [Member] | Board of Director [Member] | ||||||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||||||
Number of preferred stock purchased | 166,750 | |||||||||||||||||||
Purchase price (in dollars per share) | $ 0.40 | |||||||||||||||||||
Preferred stock, par value | $ 0.001 | |||||||||||||||||||
Proceeds from sale of Series C Convertible Preferred Stock | $ 66,700 | |||||||||||||||||||
Number of warrant subject to liability anti-dulitive adjustment | 667,000 | |||||||||||||||||||
Shares of convertible preferred stock issued | 667,000 | |||||||||||||||||||
Exercise price | $ 0.40 | |||||||||||||||||||
Fair value of warrants | $ 181,942 | |||||||||||||||||||
Series D Convertible Preferred Stock [Member] | ||||||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||||||
Shares of convertible preferred stock issued | 2,482,145 | |||||||||||||||||||
Preferred stock converted in to common stock | 166,750 | |||||||||||||||||||
Conversion of shares of preferred stock to common stock, shares | 496,429 | |||||||||||||||||||
Series D Convertible Preferred Stock [Member] | Warrant [Member] | ||||||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||||||
Exercise price | $ 0.40 | |||||||||||||||||||
Preferred stock converted in to common stock | 667,000 | 667,000 | ||||||||||||||||||
Number of shares issued | 123,274 | |||||||||||||||||||
Series D Convertible Preferred Stock [Member] | Common Stock [Member] | ||||||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||||||
Preferred stock converted in to common stock | 1,985,716 | 1,985,716 | ||||||||||||||||||
Conversion of shares of preferred stock to common stock, shares | 496,429 |
FAIR VALUE OF FINANCIAL INSTR39
FAIR VALUE OF FINANCIAL INSTRUMENTS - (Schedule of Liabilities Measured at Fair Value on a Recurring Basis) (Details) - Fair Value, Measurements, Recurring [Member] - USD ($) | Dec. 31, 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 | 394,744 | |
Total | 623,462 | |
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 | ||
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 | ||
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 | 394,744 | |
Total | $ 623,462 |
FAIR VALUE OF FINANCIAL INSTR40
FAIR VALUE OF FINANCIAL INSTRUMENTS - (Fair Value Measurements within Fair Value Hierarchy Using Level 3 Inputs) (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Fair Value Disclosures [Abstract] | ||
Beginning balance | $ 623,462 | $ 1,802,375 |
Series C embedded derivative fair value, February, 2016 | 1,235,000 | |
Effect of conversion of Series C on embedded derivative liability | (350,500) | |
Series C warrant liability fair value, February, 2016 | 1,767,576 | |
Series D embedded derivative fair value, October, 2016 | 42,521 | |
Series D warrant liability fair value, October, 2016 | 181,942 | |
Change in fair value of derivative liabilities | (4,079,349) | |
Cumulative adjustments related to change in accounting principle | (623,462) | (623,462) |
Ending balance | $ 623,462 |
FAIR VALUE OF FINANCIAL INSTR41
FAIR VALUE OF FINANCIAL INSTRUMENTS (Schedule of Market Based Inputs used in Valuation of Embedded Derivative Liability) (Details) - $ / shares | Dec. 31, 2017 | Dec. 31, 2016 |
Fair Value Disclosures [Abstract] | ||
Closing trade price of Common stock | $ 0.11 | |
Effective Series C Preferred Stock Conversion price | ||
Effective Series D Preferred Stock Conversion price | ||
Intrinsic value of conversion option per share | $ 0.11 |
FAIR VALUE OF FINANCIAL INSTR42
FAIR VALUE OF FINANCIAL INSTRUMENTS (Schedule of Common Stock Purchase Warrants Valuation Assumptions) (Details) - Warrant [Member] | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Fair Value, Option, Quantitative Disclosures [Line Items] | ||
Annual Dividend Yield | 0.00% | |
Minimum [Member] | ||
Fair Value, Option, Quantitative Disclosures [Line Items] | ||
Expected Life (Years) | 0 years | 1 year 6 months |
Risk-free interest rate | 1.20% | |
Expected volatility | 215.80% | |
Maximum [Member] | ||
Fair Value, Option, Quantitative Disclosures [Line Items] | ||
Expected Life (Years) | 0 years | 2 years 9 months 18 days |
Risk-free interest rate | 1.50% | |
Expected volatility | 234.10% |
STOCKHOLDERS' EQUITY (Details)
STOCKHOLDERS' EQUITY (Details) - USD ($) | Aug. 09, 2017 | May 24, 2016 | Dec. 31, 2017 | Feb. 08, 2017 | Dec. 31, 2016 | Feb. 08, 2016 |
Stockholders Equity Note [Line Items] | ||||||
Worth of common stock to be paid | $ 297,807 | $ 20,775 | ||||
Closing stock price per share | $ 0.11 | |||||
Exercise price | $ 0.15 | |||||
Common stock sold, value | $ 1,327,925 | |||||
Shares issued as share based compensation, value | $ 139,808 | |||||
Common Stock [Member] | ||||||
Stockholders Equity Note [Line Items] | ||||||
Issuance of shares for services (in shares) | 32,983 | |||||
Worth of common stock to be paid | $ 33 | |||||
Common stock sold | 503,432 | |||||
Shares issued as share based compensation | 2,050,372 | |||||
Shares issued as share based compensation, value | $ 2,050 | |||||
Common stock and warrant [Member] | ||||||
Stockholders Equity Note [Line Items] | ||||||
Common stock sold | 19,451,575 | |||||
Common stock sold, value | $ 1,360,250 | |||||
Common stock and warrant [Member] | Common Stock [Member] | ||||||
Stockholders Equity Note [Line Items] | ||||||
Exercise price | $ 0.15 | |||||
Warrant term | 5 years | |||||
Common stock sold | 715,000 | |||||
Board of Director [Member] | ||||||
Stockholders Equity Note [Line Items] | ||||||
Exercise price | $ 0.15 | |||||
Directors of Board and relatives of directors of Board [Member] | Common stock and warrant [Member] | ||||||
Stockholders Equity Note [Line Items] | ||||||
Common stock sold | 8,712,275 | |||||
Common stock sold, value | $ 609,250 | |||||
Consultant [Member] | Common Stock [Member] | ||||||
Stockholders Equity Note [Line Items] | ||||||
Issuance of shares for services (in shares) | 23,500 | |||||
Worth of common stock to be paid | $ 15,275 | |||||
Closing stock price per share | $ 0.65 | |||||
Restricted Stock [Member] | ||||||
Stockholders Equity Note [Line Items] | ||||||
Restricted stock units issued | 503,432 | |||||
Restricted stock units, Expense | $ 84,105 | |||||
Shares issued as share based compensation | 2,050,372 | |||||
Shares issued as share based compensation, value | $ 139,808 | |||||
Restricted Stock [Member] | Two members of Board [Member] | ||||||
Stockholders Equity Note [Line Items] | ||||||
Restricted stock units issued | 479,901 | |||||
Restricted Stock [Member] | Board of Director [Member] | ||||||
Stockholders Equity Note [Line Items] | ||||||
Restricted stock units issued | 300,000 | |||||
Restricted stock units, Expense | $ 60,075 | |||||
Vesting period | 1 year | |||||
Shares issued as share based compensation | 371,800 | |||||
Shares issued as share based compensation, value | $ 22,308 | |||||
Restricted Stock [Member] | Consulting service agreement [Member] | ||||||
Stockholders Equity Note [Line Items] | ||||||
Restricted stock units issued | 75,000 | |||||
Restricted stock units, Expense | $ 6,750 | |||||
Restricted Stock [Member] | Two directors [Member] | ||||||
Stockholders Equity Note [Line Items] | ||||||
Restricted stock units issued | 1,605,175 | |||||
Restricted stock units fair value | $ 285,807 | |||||
Restricted Stock [Member] | Consultant [Member] | ||||||
Stockholders Equity Note [Line Items] | ||||||
Restricted stock units issued | 9,483 | 120,000 | ||||
Restricted stock units fair value | $ 5,500 | $ 12,000 | ||||
Warrant [Member] | Common stock and warrant [Member] | ||||||
Stockholders Equity Note [Line Items] | ||||||
Exercise price | $ 0.15 | |||||
Warrant term | 5 years | |||||
Common stock sold | 715,000 | |||||
Warrant [Member] | Two directors [Member] | ||||||
Stockholders Equity Note [Line Items] | ||||||
Restricted stock units issued | 1,605,175 | |||||
Exercise price | $ 0.15 | |||||
Warrant term | 5 years | |||||
Restricted Stock Units (RSUs) [Member] | Share-based Compensation Award, Tranche One [Member] | ||||||
Stockholders Equity Note [Line Items] | ||||||
Restricted stock units, Expense | $ 60,075 | $ 683,251 |
STOCK OPTIONS, RESTRICTED STO44
STOCK OPTIONS, RESTRICTED STOCK AND WARRANTS (Narrative) (Details) - USD ($) | Nov. 14, 2017 | Aug. 09, 2017 | Mar. 10, 2016 | Jun. 30, 2017 | Feb. 28, 2017 | Dec. 22, 2016 | Dec. 21, 2016 | May 24, 2016 | Mar. 24, 2016 | Feb. 29, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 17, 2003 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
Dividend yield | 0.00% | 0.00% | |||||||||||
Risk free interest rate | 1.90% | 2.41% | |||||||||||
Expected Life (Years) | 5 years | 9 years 4 months 24 days | |||||||||||
Option, expense | $ 1,295,741 | $ 1,355,992 | |||||||||||
Intrinsic value of stock options exercised | 3,480,567 | $ 1,000 | |||||||||||
Unrecognized compensation cost related to outstanding stock options | $ 116,832 | ||||||||||||
Unrecognized compensation cost related to stock options, period of recognition | 10 months 24 days | ||||||||||||
Exercise price | $ 0.15 | ||||||||||||
Series C Convertible Preferred Stock [Member] | Common Stock [Member] | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
Conversion of Stock, Shares Converted | 6,175,000 | 6,175,000 | |||||||||||
Series D Convertible Preferred Stock [Member] | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
Conversion of Stock, Shares Converted | 166,750 | ||||||||||||
Series D Convertible Preferred Stock [Member] | Common Stock [Member] | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
Conversion of Stock, Shares Converted | 1,985,716 | 1,985,716 | |||||||||||
Board of Director [Member] | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
Exercise price | $ 0.15 | ||||||||||||
Number of common stock called by warrants (in shares) | 1,976,975 | ||||||||||||
Stock Options [Member] | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
Number of options issued | 19,950,000 | 2,490,000 | |||||||||||
Number of options Forfeited | 1,219,117 | 308,235 | |||||||||||
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 | $ 0.07 | $ 0.24 | |||||||||||
Stock Options [Member] | Director [Member] | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
Number of options issued | 450,000 | ||||||||||||
Number of options Forfeited | 450,000 | ||||||||||||
Vesting period | 3 months | ||||||||||||
Stock Options [Member] | Director [Member] | Vesting over a six month period [Member] | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
Number of options issued | 2,000,000 | ||||||||||||
Stock Options [Member] | Chairman of Board [Member] | Vesting immediately [Member] | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
Number of options issued | 10,000,000 | ||||||||||||
Stock Options [Member] | Chief Executive Officer [Member] | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
Number of options issued | 7,000,000 | ||||||||||||
Stock Options [Member] | Chief Executive Officer [Member] | Vesting immediately [Member] | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
Number of options issued | 5,000,000 | ||||||||||||
Stock Options [Member] | Chief Executive Officer [Member] | Vest over a period of two years [Member] | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
Number of options issued | 2,000,000 | ||||||||||||
Stock Options [Member] | Consultant [Member] | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
Number of options issued | 500,000 | ||||||||||||
Stock Options [Member] | Employees [Member] | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
Number of options Forfeited | 769,111 | ||||||||||||
Stock Options [Member] | Board of Director [Member] | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
Number of options issued | 100,000 | ||||||||||||
Exercisable common stock share price | $ 0.57 | ||||||||||||
Expected option life (in years) | 5 years | ||||||||||||
Dividend yield | 0.00% | ||||||||||||
Risk free interest rate | 1.22% | ||||||||||||
Expected volatility | 202.90% | ||||||||||||
Expected Life (Years) | 5 years | ||||||||||||
Option fair value | $ 53,731 | ||||||||||||
Stock Options [Member] | Employee [Member] | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
Number of options issued | 150,000 | ||||||||||||
Exercisable common stock share price | $ 0.56 | ||||||||||||
Expected option life (in years) | 5 years | ||||||||||||
Dividend yield | 0.00% | ||||||||||||
Risk free interest rate | 1.45% | ||||||||||||
Expected volatility | 202.90% | ||||||||||||
Expected Life (Years) | 5 years | ||||||||||||
Option fair value | $ 82,113 | ||||||||||||
Option, expense | $ 2,281 | ||||||||||||
Stock Options [Member] | Consultant [Member] | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
Number of options issued | 50,000 | ||||||||||||
Exercisable common stock share price | $ 0.43 | ||||||||||||
Expected option life (in years) | 5 years | ||||||||||||
Dividend yield | 0.00% | ||||||||||||
Risk free interest rate | 1.39% | ||||||||||||
Expected volatility | 203.10% | ||||||||||||
Expected Life (Years) | 5 years | ||||||||||||
Option fair value | $ 21,068 | ||||||||||||
Stock Options [Member] | Board of Directors, CEO, Employee [Member] | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
Number of options issued | 890,000 | ||||||||||||
Number of options Forfeited | 789,706 | ||||||||||||
Exercisable common stock share price | $ 0.11 | ||||||||||||
Expected option life (in years) | 10 years | ||||||||||||
Dividend yield | 0.00% | ||||||||||||
Risk free interest rate | 2.55% | ||||||||||||
Expected volatility | 324.60% | ||||||||||||
Expected Life (Years) | 10 years | ||||||||||||
Option fair value | $ 133,411 | ||||||||||||
Stock Options [Member] | Board of Directors, CFO, Employee [Member] | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
Number of options issued | 1,300,000 | ||||||||||||
Exercisable common stock share price | $ 0.25 | ||||||||||||
Expected option life (in years) | 10 years | ||||||||||||
Dividend yield | 0.00% | ||||||||||||
Risk free interest rate | 2.55% | ||||||||||||
Expected volatility | 324.70% | ||||||||||||
Expected Life (Years) | 10 years | ||||||||||||
Option fair value | $ 148,070 | ||||||||||||
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 common shares that can be purchased through equity awards that have been issued, unvested or unexercised | 11,765 | ||||||||||||
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 | ||||||||||||
Restricted Stock Units (RSUs) [Member] | Stock Option 2017 Plan [Member] | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
Conversion of Stock, Shares Converted | 13,000,000 | ||||||||||||
Restricted Stock [Member] | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
Restricted stock units issued | 503,432 | ||||||||||||
Restricted Stock [Member] | Consultant [Member] | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
Restricted stock units issued | 9,483 | 120,000 | |||||||||||
Restricted Stock [Member] | Board of Director [Member] | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
Vesting period | 1 year | ||||||||||||
Restricted stock units issued | 300,000 | ||||||||||||
Warrant [Member] | Series C Convertible Preferred Stock [Member] | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
Conversion of Stock, Shares Converted | 3,087,500 | 3,087,500 | |||||||||||
Exercise price | $ 0.40 | ||||||||||||
Warrant [Member] | Series D Convertible Preferred Stock [Member] | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
Conversion of Stock, Shares Converted | 667,000 | 667,000 | |||||||||||
Exercise price | $ 0.40 | ||||||||||||
Sale of units [Member] | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
Exercise price | $ 0.15 | ||||||||||||
Number of common stock called by warrants (in shares) | 19,451,575 | ||||||||||||
Related party note payables [Member] | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
Exercise price | $ 0.15 | ||||||||||||
Number of common stock called by warrants (in shares) | 4,402,079 | ||||||||||||
Related party note payables [Member] | Director [Member] | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
Number of common stock called by warrants (in shares) | 6,250,000 | ||||||||||||
Issaunce of notes payable [Member] | Director [Member] | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
Exercise price | $ 0.40 | ||||||||||||
Number of common stock called by warrants (in shares) | 1,000,000 |
STOCK OPTIONS, RESTRICTED STO45
STOCK OPTIONS, RESTRICTED STOCK AND WARRANTS (Schedule of Fair Value Assumptions Used to Value Stock Options) (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||
Risk Free Interest Rate | 1.90% | 2.41% |
Expected Volatility | 199.20% | 310.00% |
Expected Life (in years) | 5 years | 9 years 4 months 24 days |
Dividend Yield | 0.00% | 0.00% |
Weighted average estimated fair value of options during the period | $ 0.07 | $ 0.18 |
STOCK OPTIONS, RESTRICTED STO46
STOCK OPTIONS, RESTRICTED STOCK AND WARRANTS (Schedule of Stock Option Activity) (Details) - Stock Options [Member] | 12 Months Ended | ||
Dec. 31, 2017USD ($)$ / sharesshares | Dec. 31, 2016$ / sharesshares | ||
Number of Shares: | |||
Balance, beginning | shares | 3,282,647 | 2,157,353 | |
Granted | shares | 19,950,000 | 2,490,000 | |
Exercised | shares | (7,843) | ||
Forfeited/cancelled | shares | (1,219,117) | (308,235) | |
Balance, ending | shares | 22,013,529 | 3,282,647 | |
Exercisable | shares | 19,346,862 | ||
Weighted Average Exercise Price: | |||
Balance, beginning | $ / shares | $ 0.52 | $ 1.80 | |
Granted | $ / shares | 0.07 | 0.24 | |
Exercised | $ / shares | 0.05 | ||
Forfeited/cancelled | $ / shares | 0.48 | 0.06 | |
Balance, ending | $ / shares | 0.11 | $ 0.52 | |
Exercisable | $ / shares | $ 0.12 | ||
Weighted Average Remaining Contractual Term: | |||
Balance as of December 31, 2017 | 4 years 9 months 18 days | ||
Exercisable as of December 31, 2017 | 4 years 9 months 18 days | ||
Aggregate Intrinsic Value: | |||
Exercisable as of December 31, 2017 | $ | $ 3,480,567 | [1] | |
[1] | The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the quoted price of the Company's common stock for options that were in-the-money at each respective period. During the years ended December 31, 2017 and 2016, the aggregate intrinsic value of options exercised under the Company's stock option plans was 3,480,567 and less than $1,000, respectively. |
STOCK OPTIONS, RESTRICTED STO47
STOCK OPTIONS, RESTRICTED STOCK AND WARRANTS (Schedule of Unvested Stock Option Activity) (Details) - Nonvested Stock Options [Member] | 12 Months Ended |
Dec. 31, 2017$ / sharesshares | |
Number of Shares | |
Balance, Beginning | shares | |
Granted | shares | 19,950,000 |
Vested | shares | (16,833,333) |
Cancelled/forfeited/expired | shares | (450,000) |
Balance, Ending | shares | 2,666,667 |
Weighted-Average Grant Date Fair Value | |
Balance, Beginning | $ / shares | |
Granted | $ / shares | 0.07 |
Vested | $ / shares | 0.07 |
Cancelled/forfeited/expired | $ / shares | 0.08 |
Balance, Ending | $ / shares | $ 0.06 |
STOCK OPTIONS, RESTRICTED STO48
STOCK OPTIONS, RESTRICTED STOCK AND WARRANTS (Schedule of Warrant Activity) (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | ||
Number of Shares: | |||
Balance, beginning | 9,216,452 | 1,114,893 | |
Issued | 33,080,629 | ||
Expired | (2,941) | ||
Granted | 7,804,500 | ||
Cancelled/Forfeited | (10,004,500) | ||
Balance, ending | 32,292,580 | 9,216,452 | |
Exercisable as of December 31, 2017 | 32,292,580 | ||
Weighted Average Exercise Price: | |||
Balance, beginning | $ 1.82 | $ 9.67 | |
Issued | 0.20 | ||
Expired | 0.85 | ||
Granted | 0.39 | ||
Forfeited/canceled | 0.40 | ||
Outstanding, ending | 0.30 | 1.82 | |
Exercisable as of December 31, 2017 | $ 0.30 | ||
Weighted- Average Remaining Contractual Term: | |||
Balance as of December 31, 2017 | 4 years 3 months 18 days | ||
Exercisable as of December 31, 2017 | 4 years 3 months 18 days | ||
Aggregate Intrinsic Value: | |||
Exercisable as of December 31, 2017 | [1] | $ 3,345 | |
Closing stock price | $ 0.11 | ||
[1] | The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying warrants and the closing stock price of $0.27 for our common stock on December 31, 2017. |
OPERATING LEASES (Details)
OPERATING LEASES (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Leases [Abstract] | ||
Total rent expense under leases | $ 12,674 | $ 11,835 |
MAJOR CUSTOMERS_VENDORS (Detail
MAJOR CUSTOMERS/VENDORS (Details) | 12 Months Ended | |
Dec. 31, 2017Vendors | Dec. 31, 2016CustomersVendors | |
Risks and Uncertainties [Abstract] | ||
Number of major customers accounting for 100% of annual sales | Customers | 1 | |
Number of major vendors accounting for 100% of pigment purchases | Vendors | 1 | 1 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - USD ($) | Apr. 12, 2018 | Aug. 09, 2017 | Apr. 30, 2018 | Mar. 31, 2018 | Mar. 28, 2018 | Feb. 28, 2018 | Feb. 17, 2018 | Jan. 31, 2018 | Dec. 31, 2017 | May 24, 2016 | Jun. 30, 2018 | Apr. 12, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2018 | Jan. 30, 2018 |
Subsequent Event [Line Items] | ||||||||||||||||
Exercise price | $ 0.15 | $ 0.15 | ||||||||||||||
Purchase of common shares | 53,873,872 | 53,873,872 | 8,681,236 | |||||||||||||
Common stock exercise price | $ 0.001 | $ 0.001 | $ 0.001 | |||||||||||||
Proceeds from private placement | $ 365,343 | |||||||||||||||
Series B Convertible Preferred Stock [Member] | Common Stock [Member] | ||||||||||||||||
Subsequent Event [Line Items] | ||||||||||||||||
Conversion of shares of preferred stock to common stock, shares | 883,200 | |||||||||||||||
Series A- Convertible Preferred Stock [Member] | Common Stock [Member] | ||||||||||||||||
Subsequent Event [Line Items] | ||||||||||||||||
Conversion of shares of preferred stock to common stock, shares | 1,460,000 | 883,200 | ||||||||||||||
Maximum [Member] | ||||||||||||||||
Subsequent Event [Line Items] | ||||||||||||||||
Proceeds from private placement | $ 2,100,000 | |||||||||||||||
Maximum [Member] | Common Stock [Member] | ||||||||||||||||
Subsequent Event [Line Items] | ||||||||||||||||
Shares issued in private placement | 715,000 | |||||||||||||||
Restricted Stock [Member] | ||||||||||||||||
Subsequent Event [Line Items] | ||||||||||||||||
Vesting restricted common stock | 503,432 | |||||||||||||||
Warrant [Member] | Maximum [Member] | ||||||||||||||||
Subsequent Event [Line Items] | ||||||||||||||||
Exercise price | $ 0.15 | $ 0.15 | ||||||||||||||
Shares issued in private placement | 715,000 | |||||||||||||||
Board of Director [Member] | ||||||||||||||||
Subsequent Event [Line Items] | ||||||||||||||||
Exercise price | $ 0.15 | $ 0.15 | ||||||||||||||
Board of Director [Member] | Restricted Stock [Member] | ||||||||||||||||
Subsequent Event [Line Items] | ||||||||||||||||
Vesting restricted common stock | 300,000 | |||||||||||||||
Vesting period | 1 year | |||||||||||||||
Consultant [Member] | Restricted Stock [Member] | ||||||||||||||||
Subsequent Event [Line Items] | ||||||||||||||||
Vesting restricted common stock | 9,483 | 120,000 | ||||||||||||||
Director [Member] | Warrant [Member] | ||||||||||||||||
Subsequent Event [Line Items] | ||||||||||||||||
Proceeds from warrants exercised, shares | 104,876 | |||||||||||||||
Two directors [Member] | Restricted Stock [Member] | ||||||||||||||||
Subsequent Event [Line Items] | ||||||||||||||||
Vesting restricted common stock | 1,605,175 | |||||||||||||||
Two directors [Member] | Warrant [Member] | ||||||||||||||||
Subsequent Event [Line Items] | ||||||||||||||||
Exercise price | $ 0.15 | $ 0.15 | ||||||||||||||
Vesting restricted common stock | 1,605,175 | |||||||||||||||
Three directors [Member] | ||||||||||||||||
Subsequent Event [Line Items] | ||||||||||||||||
Share issued | 5,230,611 | 5,230,611 | ||||||||||||||
Subsequent Event [Member] | ||||||||||||||||
Subsequent Event [Line Items] | ||||||||||||||||
Share issued | 7,201,583 | 1,026,124 | 7,201,583 | |||||||||||||
Gross proceeds from warrant exercise | $ 8,121,000 | $ 1,532,258 | ||||||||||||||
Conversion of shares of preferred stock to common stock, shares | 599,362 | 400,000 | ||||||||||||||
Proceeds from private placement | $ 1,145,343 | |||||||||||||||
Shares issued in private placement | 600,600 | |||||||||||||||
Subsequent Event [Member] | Common Stock [Member] | ||||||||||||||||
Subsequent Event [Line Items] | ||||||||||||||||
Shares issued in private placement | 15,769,711 | 16,370,311 | ||||||||||||||
Subsequent Event [Member] | Series B Convertible Preferred Stock [Member] | ||||||||||||||||
Subsequent Event [Line Items] | ||||||||||||||||
Conversion of shares of preferred stock to common stock, shares | 0.0706 | |||||||||||||||
Subsequent Event [Member] | Series A- Convertible Preferred Stock [Member] | ||||||||||||||||
Subsequent Event [Line Items] | ||||||||||||||||
Conversion of shares of preferred stock to common stock, shares | 20,000 | |||||||||||||||
Subsequent Event [Member] | Minimum [Member] | ||||||||||||||||
Subsequent Event [Line Items] | ||||||||||||||||
Exercise price | $ 0.10 | |||||||||||||||
Subsequent Event [Member] | Maximum [Member] | ||||||||||||||||
Subsequent Event [Line Items] | ||||||||||||||||
Exercise price | $ 0.15 | |||||||||||||||
Subsequent Event [Member] | PFK Development Group, Ltd [Member] | ||||||||||||||||
Subsequent Event [Line Items] | ||||||||||||||||
Settlement Amount | $ 500,000 | |||||||||||||||
Settlement Shares | 500,000 | |||||||||||||||
Purchase of common shares | 3,700,000 | |||||||||||||||
Common stock exercise price | $ 0.40 | |||||||||||||||
Subsequent Event [Member] | Warrant [Member] | ||||||||||||||||
Subsequent Event [Line Items] | ||||||||||||||||
Exercise price | $ 0.15 | $ 0.15 | ||||||||||||||
Shares issued in private placement | 15,769,711 | 16,370,311 | ||||||||||||||
Subsequent Event [Member] | Board of Director [Member] | ||||||||||||||||
Subsequent Event [Line Items] | ||||||||||||||||
Proceeds from warrants exercised, shares | 4,027,778 | |||||||||||||||
Subsequent Event [Member] | Board of Director [Member] | Restricted Stock [Member] | ||||||||||||||||
Subsequent Event [Line Items] | ||||||||||||||||
Shares granted | 300,000 | |||||||||||||||
Vesting period | 1 year | |||||||||||||||
Subsequent Event [Member] | Chief Operating Officer [Member] | ||||||||||||||||
Subsequent Event [Line Items] | ||||||||||||||||
Exercise price | $ 0.21 | |||||||||||||||
Options exercisable | 1,000,000 | |||||||||||||||
Subsequent Event [Member] | Mr. Klapper [Member] | ||||||||||||||||
Subsequent Event [Line Items] | ||||||||||||||||
Share issued | 1,749,683 | |||||||||||||||
Subsequent Event [Member] | Consulting Services Agreement [Member] | ||||||||||||||||
Subsequent Event [Line Items] | ||||||||||||||||
Share issued | 120,000 | |||||||||||||||
Subsequent Event [Member] | Consultant [Member] | ||||||||||||||||
Subsequent Event [Line Items] | ||||||||||||||||
Exercise price | $ 0.01 | |||||||||||||||
Gross proceeds from warrant exercise | $ 1,000 | |||||||||||||||
Proceeds from warrants exercised, shares | 120,000 | |||||||||||||||
Subsequent Event [Member] | Director [Member] | Restricted Stock [Member] | ||||||||||||||||
Subsequent Event [Line Items] | ||||||||||||||||
Vesting restricted common stock | 150,000 | |||||||||||||||
Subsequent Event [Member] | Two directors [Member] | ||||||||||||||||
Subsequent Event [Line Items] | ||||||||||||||||
Share issued | 9,075,983 | |||||||||||||||
Gross proceeds from warrant exercise | $ 907,598 | |||||||||||||||
Subsequent Event [Member] | Two directors [Member] | Transaction One [Member] | ||||||||||||||||
Subsequent Event [Line Items] | ||||||||||||||||
Share issued | 3,355,983 |