Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Mar. 29, 2019 | Jun. 30, 2018 | |
Document And Entity Information | |||
Entity Registrant Name | VerifyMe, Inc. | ||
Entity Central Index Key | 0001104038 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2018 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity a Well-known Seasoned Issuer | No | ||
Entity a Voluntary Filer | No | ||
Entity's Reporting Status Current | Yes | ||
Entity Emerging Growth Company | false | ||
Entity Ex Transition Period | false | ||
Entity Small Business | true | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Shell Company | false | ||
Entity Public Float | $ 13,434,238 | ||
Entity Common Stock, Shares Outstanding | 103,963,166 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2018 |
Balance Sheets
Balance Sheets - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 1,673,201 | $ 693,001 |
Accounts Receivable | 30,373 | |
Prepaid expenses and other current assets | 25,781 | 18,668 |
Inventory | 41,982 | |
TOTAL CURRENT ASSETS | 1,771,337 | 711,669 |
OTHER ASSETS | ||
Patents and Trademarks, net of accumulated amortization of $258,294 and $237,331 as of December 31, 2018 and December 31, 2017 | 209,049 | 191,507 |
Capitalized Software Costs | 70,231 | |
TOTAL ASSETS | 2,050,617 | 903,176 |
CURRENT LIABILITIES | ||
Accounts payable and other accrued expenses | 411,211 | 923,202 |
Accrued Payroll | 69,041 | |
Notes payable | 50,000 | |
Common Stock payable | 122,478 | |
TOTAL CURRENT LIABILITIES | 480,252 | 1,095,680 |
STOCKHOLDERS' EQUITY (DEFICIT) | ||
Common stock of $.001 par value; 675,000,000 authorized; 102,553,706 and 53,873,872 issued, 102,203,166 and 53,523,332 shares outstanding as of December 31, 2018 and December 31, 2017 | 102,203 | 53,522 |
Additional paid in capital | 60,844,796 | 56,198,126 |
Treasury stock as cost (350,540 shares at December 31, 2018 and December 31, 2017) | (113,389) | (113,389) |
Accumulated deficit | (59,263,550) | (56,331,088) |
STOCKHOLDERS' EQUITY (DEFICIT) | 1,570,365 | (192,504) |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | 2,050,617 | 903,176 |
Series A Convertible Preferred Stock [Member] | ||
STOCKHOLDERS' EQUITY (DEFICIT) | ||
Convertible Preferred Stock | 305 | 325 |
STOCKHOLDERS' EQUITY (DEFICIT) | 305 | 325 |
Series B Convertible Preferred Stock [Member] | ||
STOCKHOLDERS' EQUITY (DEFICIT) | ||
Convertible Preferred Stock | ||
STOCKHOLDERS' EQUITY (DEFICIT) |
Balance Sheets (Parenthetical)
Balance Sheets (Parenthetical) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Accumulated amortization, patent and trademarks | $ 258,294 | $ 237,331 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 675,000,000 | 675,000,000 |
Common stock, shares issued | 102,553,706 | 53,873,872 |
Common stock, shares outstanding | 102,203,166 | 53,523,332 |
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 | 304,778 | 324,778 |
Preferred stock, shares outstanding | 304,778 | 324,778 |
Series B Convertible Preferred Stock [Member] | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 85 | 85 |
Preferred stock, shares issued | 0.85 | 0.92 |
Preferred stock, shares outstanding | 0.85 | 0.92 |
Statements of Operations
Statements of Operations - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | ||
NET REVENUE | |||
Sales | $ 74,884 | ||
COST OF SALES | 28,802 | ||
GROSS PROFIT | 46,082 | ||
OPERATING EXPENSES | |||
General and administrative | [1] | 1,585,329 | 1,689,883 |
Legal and accounting | 416,772 | 246,520 | |
Payroll expenses | [1] | 316,837 | 767,257 |
Research and development | 187,655 | 128,044 | |
Sales and marketing | 135,290 | 3,800 | |
Total Operating expenses | 2,641,883 | 2,835,504 | |
LOSS BEFORE OTHER INCOME (EXPENSE) | (2,595,801) | (2,835,504) | |
OTHER (EXPENSE) INCOME | |||
Interest income (expenses), net | 6,664 | (218,316) | |
Gain on derecognition of note payable and accrued interest | 83,667 | ||
Settlement agreement with shareholders | (779,000) | ||
Gain on accounts payable forgiveness | 352,008 | ||
Loss on settlement of related party notes payable | (331,912) | ||
Other income | 392 | ||
TOTAL OTHER INCOME (EXPENSE) | (336,661) | (549,836) | |
NET LOSS | (2,932,462) | (3,385,340) | |
Less: Deemed dividend on convertible preferred shares | (596,878) | ||
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS | $ (2,932,462) | $ (3,982,218) | |
LOSS PER SHARE | |||
BASIC (in dollars per share) | $ (0.03) | $ (0.14) | |
DILUTED (in dollars per share) | $ (0.03) | $ (0.14) | |
WEIGHTED AVERAGE COMMON SHARE OUTSTANDING | |||
BASIC (in shares) | 93,851,170 | 28,244,361 | |
DILUTED (in shares) | 93,851,170 | 28,244,361 | |
[1] | Includes share-based compensation of $828,203 and $1,800,181 for the years ended December 31, 2018 and 2017, respectively. |
Statements of Cash Flows
Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net loss | $ (2,932,462) | $ (3,385,340) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Stock based compensation | 44,120 | 139,808 |
Fair value of options and warrants issued in exchange for services | 329,193 | 1,295,741 |
Fair value of restricted stock and restricted stock units issued in exchange for services | 454,890 | 66,825 |
Common stock and warrants issued for services | 297,807 | |
Gain on accounts payable forgiveness | (352,008) | |
Share-based payment for settlement agreement with shareholders | 279,000 | |
Gain on derecognition of note payable and accrued interest | (83,667) | |
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 | |
Amortization and depreciation | 20,963 | 43,095 |
Changes in operating assets and liabilities: | ||
Accounts Receivable | (30,373) | |
Inventory | (41,982) | 17,093 |
Prepaid expenses and other current assets | (7,113) | (9,243) |
Accounts payable and accrued expenses | (57,275) | 61,867 |
Net cash used in operating activities | (2,376,714) | (935,918) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Purchase of Patents | (38,505) | (2,650) |
Capitalized Software Costs | (70,231) | |
Net cash used in investing activities | (108,736) | (2,650) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Proceeds from exercise of warrants | 2,312,005 | |
Proceeds from issuance of related party notes payable | 281,000 | |
Proceeds from sale of common stock | 1,153,645 | 1,327,925 |
Net cash provided by financing activities | 3,465,650 | 1,608,925 |
NETINCREASE IN CASH AND CASH EQUIVALENTS | 980,200 | 670,357 |
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD | 693,001 | 22,644 |
CASH AND CASH EQUIVALENTS - END OF PERIOD | 1,673,201 | 693,001 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | ||
Interest | ||
Income taxes | ||
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES | ||
Cumulative effect of adoption of ASU 2017-11 | 623,462 | |
Convertible Preferred Stock converted to common stock | 400 | 1,460 |
Cashless Exercise of Stock Options | 4,028 | |
Cashless Exercise of Warrants | 183 | |
Common Stock and Warrants Issued for Common Stock Payable | 122,478 | |
Deemed divided distribution on issuance of common stock for conversion of Series C and Series D | 596,878 | |
Warrants issued as discount to notes payable | 113,586 | |
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 | |
Sale of common stock - past issuances | 503 | |
Series A Convertible Preferred Stock [Member] | ||
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES | ||
Convertible Preferred Stock converted to common stock | 400 | 1,460 |
Series B Convertible Preferred Stock [Member] | ||
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES | ||
Convertible Preferred Stock converted to common stock | 599 | |
SeriesCConvertiblePreferredStockMember | ||
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES | ||
Convertible Preferred Stock converted to common stock | 4,768 | |
Warrants into common stock | 6,175 | |
Series D Convertible Preferred Stock [Member] | ||
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES | ||
Convertible Preferred Stock converted to common stock | 496 | |
Warrants into common stock | $ 1,986 |
Statement of Stockholders' Equi
Statement of Stockholders' Equity (Deficit) - USD ($) | 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] | 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] | 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] | 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] | Common Stock [Member] | Additional Paid-In Capital [Member] | Treasury Stock [Member] | Accumulated Deficit [Member] | Total |
Balance at beginning at Dec. 31, 2016 | $ 398 | $ 1,913 | $ 167 | $ 8,331 | $ 40,469,272 | $ (113,389) | $ (41,644,545) | $ (1,277,853) | |||||||||
Balance at beginning (in shares) at Dec. 31, 2016 | 397,778 | 0.92 | 1,912,500 | 166,750 | 8,330,696 | ||||||||||||
Cumulative adjustment related to change in accounting principle (Note 1, Change in Accounting Principle) at Dec. 31, 2016 | 11,924,665 | (11,301,203) | 623,462 | ||||||||||||||
Adjusted balance at beginning at Dec. 31, 2016 | $ 398 | $ 1,913 | $ 167 | $ 8,331 | 52,393,937 | (113,389) | (52,945,748) | (654,391) | |||||||||
Adjusted balance at beginning (in shares) at Dec. 31, 2016 | 397,778 | 0.92 | 1,912,500 | 166,750 | 8,330,696 | ||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||||
Conversion of Convertible Preferred Stock | $ 1,460 | $ (1,387) | $ (73) | $ 4,768 | $ (2,855) | $ (1,913) | $ 496 | $ (329) | $ (167) | ||||||||
Conversion of Convertible Preferred Stock (in shares) | 1,460,000 | (73,000) | 4,767,858 | (1,912,500) | 496,429 | (166,750) | |||||||||||
Conversion Preferred Warrants | $ 6,175 | $ (6,175) | $ 1,986 | $ (1,986) | |||||||||||||
Conversion Preferred Warrants (in shares) | 6,175,000 | 1,985,716 | |||||||||||||||
Sale of common stock | $ 19,452 | 1,340,798 | $ 1,360,250 | ||||||||||||||
Sale of common stock (in shares) | 19,451,575 | 120,000 | |||||||||||||||
Sale of common stock - Past issuances | $ 503 | (503) | |||||||||||||||
Sale of common stock - Past issuances (in shares) | 503,432 | ||||||||||||||||
Stock Based Compensation | $ 2,050 | 137,758 | $ 139,808 | ||||||||||||||
Stock Based Compensation (in shares) | 2,050,372 | 2,050,372 | |||||||||||||||
Stock issuance costs | (32,325) | $ (32,325) | |||||||||||||||
Conversion of related party notes payable and accrued interest into common stock | $ 4,402 | 601,133 | 605,535 | ||||||||||||||
Conversion of related party notes payable and accrued interest into common stock (in shares) | 4,402,079 | ||||||||||||||||
Discount on warrants issued in conjunction with related party notes payable | 113,586 | 113,586 | |||||||||||||||
Fair value of stock option | 1,295,741 | 1,295,741 | |||||||||||||||
Restricted Stock awards and Restricted Stock Units | $ 2,175 | 64,650 | 66,825 | ||||||||||||||
Restricted Stock awards and Restricted Stock Units (in 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 issued for services | $ 1,724 | 296,083 | 297,807 | ||||||||||||||
Common stock issued for services (in shares) | 1,725,175 | ||||||||||||||||
Net loss | (3,385,340) | (3,385,340) | |||||||||||||||
Balance at beginning at Dec. 31, 2017 | $ 325 | $ 53,522 | 56,198,126 | (113,389) | (56,331,088) | (192,504) | |||||||||||
Balance at beginning (in shares) at Dec. 31, 2017 | 324,778 | 0.92 | 53,523,332 | ||||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||||
Conversion of Convertible Preferred Stock | $ 400 | $ (380) | $ (20) | $ 599 | $ (599) | ||||||||||||
Conversion of Convertible Preferred Stock (in shares) | 400,000 | (20,000) | 599,362 | (0.07) | |||||||||||||
Sale of common stock | $ 15,906 | 1,137,739 | $ 1,153,645 | ||||||||||||||
Sale of common stock (in shares) | 15,906,168 | 16,513,311 | |||||||||||||||
Settlement Agreement | $ 1,000 | 278,000 | $ 279,000 | ||||||||||||||
Settlement Agreement (in shares) | 1,000,000 | ||||||||||||||||
Conversion of notes payable | $ 1,750 | 120,728 | 122,478 | ||||||||||||||
Conversion of notes payable (in shares) | 1,749,683 | ||||||||||||||||
Cash Exercise of Warrants | $ 22,432 | 2,289,573 | 2,312,005 | ||||||||||||||
Cash Exercise of Warrants (in shares) | 22,432,184 | ||||||||||||||||
Cashless Exercise of Warrants | $ 183 | (183) | |||||||||||||||
Cashless Exercise of Warrants (in shares) | 182,659 | ||||||||||||||||
Cashless Exercise of Stock Options | $ 4,028 | (4,028) | |||||||||||||||
Cashless Exercise of Stock Options (in shares) | 4,027,778 | ||||||||||||||||
Fair value of stock option | 329,193 | 329,193 | |||||||||||||||
Restricted Stock awards and Restricted Stock Units | $ 2,213 | 452,677 | 454,890 | ||||||||||||||
Restricted Stock awards and Restricted Stock Units (in shares) | 2,212,500 | ||||||||||||||||
Common stock issued for services | $ 170 | 43,950 | 44,120 | ||||||||||||||
Common stock issued for services (in shares) | 169,500 | ||||||||||||||||
Net loss | (2,995,050) | (2,932,462) | |||||||||||||||
Balance at beginning at Dec. 31, 2018 | $ 305 | $ 102,203 | $ 60,907,384 | $ (113,389) | $ (59,326,138) | $ 1,570,365 | |||||||||||
Balance at beginning (in shares) at Dec. 31, 2018 | 304,778 | 0.85 | 102,203,166 |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2018 | |
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, 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 6 and 7) 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. 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 $ — 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 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. 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. 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. Allowance for Doubtful Accounts The Company considers allowances for doubtful accounts for estimated losses that may result from the inability of the Company’s customers to make required payments. If the financial condition of the Company’s customers were to deteriorate, resulting in an impairment of their ability to make payments, such allowances may be required. Inventory Inventory principally consists of canisters 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 and trademark portfolios consist of 10 granted US patents and 1 granted European patent validated in 4 countries, 3 pending US and foreign patent applications, 1 registered US trademark, and 13 pending US and foreign trademark applications. 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 19 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. Related Parties Related parties, which can be a corporation or individual, are considered to be related if the Company has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operational decisions. Companies are also considered to be related if they are subject to common control or common significant influence. During the year ended December 31, 2018, the Company incurred $30,000 related to consulting services performed by a Director of the Board included in General and administrative on the Statement of Operations. Capitalized Software Costs incurred in connection with the development of software related to our proprietary digital products are accounted for in accordance with the Financial Accounting Standards Board Accounting Standards Codification ("ASC") 985 “Costs of Software to Be Sold, Leased or Marketed.” Costs incurred prior to the establishment of technological feasibility are charged to research and development expense. Software development costs are capitalized after a product is determined to be technologically feasible and is in the process of being developed for market. Amortization of capitalized software development costs begins once the product is available to the market. Capitalized software development costs are amortized over the estimated life of the related product, generally three years, using the straight-line method. The Company will evaluate its software assets for impairment whenever events or change in circumstances indicate that the carrying amount of such assets may not be recoverable. As of December 31, 2018, the Company capitalized $70,231. As of December 31, 2017, the Company had not capitalized any software development costs. The Company has not incurred a depreciation charge as the software was not available for use as of December 31, 2018. 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. Revenue Recognition The Company accounts for revenues according to ASC Topic 606, “ Revenue from Contracts with Customers” The Company applies the following five steps in order to determine the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its agreements: identify the contract with a customer; identify the performance obligations in the contract; determine the transaction price; allocate the transaction price to performance obligations in the contract; and recognize revenue as the performance obligation is satisfied. During the year ended December 31, 2018, the Company’s revenues were primarily made up of revenue generated from printing labels with the Company’s technology. 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 2014 through 2017 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 $3,987 and $550 for the years ended December 31, 2018 and 2017 and are included in Sales and Marketing on the Statement of Operations. 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, 2018 and 2017 were $187,655 and $128,044. 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, 2018 and 2017, 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, 2018 there were approximately 54,173,000 anti-dilutive shares consisting of 22,241,000 relating to warrants, 18,614,000 relating to options and 13,318,000 relating to preferred share agreements. 32,292,000 relating to warrants, 22,013,000 relating to options and 14,307,000 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 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). Going Concern The Company has suffered recurring losses from operations and negative cash flows from operations. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. In order to continue as a going concern, develop a reliable source of revenues, and achieve a profitable level of operations the Company will need, among other things, additional capital resources. Management's plans to continue as a going concern include raising additional capital through increased sales of product and by sale of common shares. The Company’s business plans are dependent on the ability to raise capital through private placements of our common stock and/or preferred stock, through the possible exercise of outstanding options and warrants, through debt financing and/or through future public offering of our securities. However, management cannot provide any assurances that the Company will be successful in accomplishing any of its plans. The Company’s existing cash resources are sufficient to sustain the Company’s operations during the next six months, however the Company may need to raise additional funds in the future in order to expand our business or if sales do not meet our internal budget. |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 12 Months Ended |
Dec. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | NOTE 2 – PROPERTY AND EQUIPMENT Equipment consists of the following: Year ended December 31, 2018 2017 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 $0 for the years ended December 31, 2018 and 2017. |
PATENTS AND TRADEMARKS
PATENTS AND TRADEMARKS | 12 Months Ended |
Dec. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
PATENTS AND TRADEMARKS | NOTE 3 – PATENTS AND TRADEMARKS During the years ended December 31, 2018 and 2017, the Company capitalized $38,505 and $2,650, respectively, for patent costs and trademarks. Amortization and impairment expense for patents and trademarks was $20,963 and $43,095 for the years ended December 31, 2018 and 2017. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2018 | |
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, 2018 and 2017 is as follows (in thousands) Year Ended December 31 US 2018 2017 Income before income taxes $ (2,932 ) $ (3,385 ) Taxes under statutory US tax rates (616 ) (1,202 ) Increase (decrease) in taxes resulting from: Increase (decrease) in valuation allowance (92 ) 1,346 Non-deductible changes in derivative liability and share based transactions - 1 All other 857 - State taxes (149 ) (145 ) 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, 2018 2017 US Net operating loss $ 8,316 $ 7,035 Share based compensation 447 1,800 Reserves and accruals (21 ) - Gross deferred tax assets 8,742 8,835 Less valuation allowance (8,742 ) (8,835 ) Total deferred tax assets - - Deferred tax liabilities: Total deferred tax liabilities - - Net deferred tax assets / (liabilities) $ - $ - As of December 31, 2018, the Company had federal and state net operating loss carry forwards of $36.9 million and $10.6 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, 2018 or 2017 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, 2018 and December 31, 2017, 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 balance sheets and has not recognized interest and/or penalties in the statements of operations and comprehensive loss for the years ended December 31, 2018 and 2017. 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, 2018 or December 31, 2017. |
NOTES PAYABLE
NOTES PAYABLE | 12 Months Ended |
Dec. 31, 2018 | |
Debt Disclosure [Abstract] | |
NOTES PAYABLE | NOTE 5– NOTES PAYABLE Notes payable consists of the following as of December 31: Year ended December 31, 2018 2017 Series A notes payable; interest at 8% per annum; principal and $ - $ 50,000 Less: current portion - (50,000 ) Balance $ - $ - At December 31, 2018 and 2017 accrued interest on notes payable was $0 and $33,667. 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 holder has never demanded payment. Since the note matured on September 30, 2011, the holder cannot commence an action to enforce payment of the note as the statute of limitations for the note expired on September 30, 2017. Applying guidance from ASC Topic 405-20, liabilities should be derecognized only when the obligor is legally released from the obligation, which occurred for the Company upon expiration of the statute of limitations. The carrying value of the note payable of $50,000 and accrued interest of $33,667 was derecognized in the year ended December 31, 2018 and recorded as Gain on derecognition of note payable and accrued interest included on the Statement of Operations. 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. During the year ended December 31, 2018, those shares of common stock and warrants were issued and delivered. Pursuant to ASC 470-50- 40 Modifications and Extinguishments, the Company assessed the nature of the transaction and based on its assessment concluded it is a capital transaction in essence, and as such accounted for it through Additional Paid-In Capital with no gain or loss recognized in the Income Statement during the period. Interest expense including accretion of debt discount for the years ended December 31, 2018 and 2017 was $0 and $218,316. |
CONVERTIBLE PREFERRED STOCK
CONVERTIBLE PREFERRED STOCK | 12 Months Ended |
Dec. 31, 2018 | |
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, 2018, there were 37,564,767 authorized and 304,778 outstanding shares of Series A and 85 authorized and 0.85 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 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. During the year ended December 31, 2018, 20,000 shares of Series A Convertible Preferred Stock were converted into 400,000 shares of the Company’s Common Stock. Series B Convertible Preferred Stock 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. During the year ended December 31, 2018 0.07 shares of Series B Convertible Preferred Stock were converted into 599,362 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 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 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 and $473,604 accretion of deemed distribution 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. 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 and $123,274 accretion of deemed distribution to Series D holders was recorded in conjunction with the transaction. |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 12 Months Ended |
Dec. 31, 2018 | |
Equity [Abstract] | |
STOCKHOLDERS' EQUITY | NOTE 7 – STOCKHOLDERS’ EQUITY For the years ended December 31, 2018 and 2017, the Company expensed $8,625 and $6,750 relative to Restricted Stock Units. For the years ended December 31, 2018 and 2017, the Company expensed $446,265 and $60,075 relative to Restricted Stock awards. 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, 2018, the Company issued 49,500 shares and incurred $44,120 related to this agreement. 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 year. 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. During the year ended December 31, 2018, $111,105 compensation expense was recorded in relation to these awards. Of this amount $36,855 was related to the compensation of the six non-employee directors. As of December 31, 2018 and 2017, there is $0 and $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, 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 were related to two members of the Board. During the year ended December 31, 2018, 37,500 restricted stock units were vested in relation to a consulting service agreement and a total of $8,625 was expensed. During the year ended December 31, 2018, the Company granted a total of 600,000 restricted stock awards to two directors of the Company, each receiving 300,000 shares of restricted common stock, for joining the Board of Directors. On April 25, 2018 the Company approved the immediate vesting of all of the Company’s outstanding restricted common stock issued in 2017 and 2018 to non-employee directors of the Company. During the year ended December 31, 2018, $160,500 compensation expense was recorded in relation to this issuance. As of December 31, 2018, there is $0 unrecognized compensation cost related to these shares of restricted common stock. During the year ended December 31, 2018, the Company granted a total of 1,425,000 shares of restricted common stock to the directors and the Chief Executive Officer of the Company for their services and 150,000 shares to one attorney, vesting over a one-year period. During the year ended December 31, 2018, $174,660 compensation expense was recorded in relation to this issuance. As of December 31, 2018, there is $161,311 unrecognized compensation cost related to these shares of restricted common stock. In January 2018, the Chairman of the Board of Directors, made a cashless exercise of 5,000,000 options related to services in 2017, whereby the Chairman disposed of 972,222 shares to the Company as part of his exercise, amounting to an issuance of 4,027,778 shares, see Note 8. In relation to the 2017 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, the Company’s Board of Directors increased the size of the private placement by an additional amount beyond the $2,100,000 limit. During the year ended December 31, 2018 the Company raised gross proceeds of $1,153,645 for the purchase of 16,513,311 shares of common stock and 16,513,311 warrants. Of these amounts, gross proceeds of $530,777 for the purchase of 7,590,111 shares of common stock and 7,590,111 warrants related to current and then directors and relatives of the directors of the Company. 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 per share. This authorization was extended until June 30, 2018. The Company authorized certain holders, who had sent in their exercise notices prior to June 30, 2018, to submit payment before July 27, 2018 and exercise their warrants at $0.10 per share. For the year ended December 31, 2018, 20,787,784 warrants were exercised and a total of 20,787,784 shares of common stock were issued for gross proceeds of $2,079,345. Included in the above amounts are gross proceeds of $1,205,458 from current and then directors in exchange for exercise of 12,054,576 warrants and issuance of 12,054,576 shares of common stock. In January 2018, a member of the Board exercised 104,876 warrants with an exercise price of $0.15 and a total of 104,876 shares of common stock were issued for gross proceeds of $15,731. 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, 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 shares were valued at $279,000 whereby $139,500 related to common stock issued to a related party and $139,500 related to common stock issued to a third party. 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. In April 2018, the former Chief Executive Officer of the Company exercised his warrants at an exercise price of $0.01 for gross proceeds of $1,000 resulting in an issuance of 100,000 shares. On July 27, 2018 the Company cancelled 607,143 shares as a result of an over-issuance of shares to an investor in connection with the Company’s 2017 exchange. On July 31, 2018, a member of the Board exercised 1,439,524 warrants held by an entity under his control at an exercise price of $0.15 per share for a total price of $215,929. |
STOCK OPTIONS, RESTRICTED STOCK
STOCK OPTIONS, RESTRICTED STOCK AND WARRANTS | 12 Months Ended |
Dec. 31, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
STOCK OPTIONS, RESTRICTED STOCK AND WARRANTS | NOTE 8 – 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. 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. 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. 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, 2018 and 2017: 2018 2017 Risk Free Interest Rate 2.30 % 1.90 % Expected Volatility 200.50 % 199.20 % Expected Life (in years) 5.0 5.0 Dividend Yield 0 % 0 % Weighted average estimated fair value of options during the period $ 0.17 $ 0.07 The following table summarizes the activities for the Company’s stock options for the year ended December 31, 2018 and 2017: Options Outstanding Weighted - Average Remaining Aggregate Weighted- Contractual Intrinsic Number of Average Term Value (in 000’) Shares Exercise Price (in years) (1) Balance as of 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 Granted 1,600,000 $ 0.27 Exercised (5,000,000 ) $ 0.07 Balance December 31, 2018 18,613,529 $ 0.14 3.9 Exercisable at December 31, 2018 16,596,863 $ 0.13 3.9 $2,113 (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, 2018 and 2017, the aggregate intrinsic value of options exercised under the Company’s stock option plans was $2,113,368 and $3,480,567, respectively. The following table summarizes the activities for the Company’s unvested stock options for the year ended December 31, 2018 and 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 Granted 1,600,000 0.27 Vested (2,250,001 ) 0.10 Balance December 31, 2018 2,016,666 $ 0.18 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, 2018, the Company amended the consulting agreement held with its Chief Operating Officer and granted him 1,000,000 stock options with an exercise price of $0.2102 with 500,000 stock options vesting immediately and the remaining 500,000 stock options vesting on February 28, 2019 subject to continuing to provide consulting services. In January 2018, the Chairman of the Board made a cashless exercise of 5,000,000 options related to services in 2017, whereby the Chairman disposed of 972,222 shares to the Company as part of his exercise, amounting to an issuance of 4,027,778 shares, see Note 7. In November 2018, 600,000 options were granted a weighted average exercise price of $0.37 with a term of five years. Of the 600,000 options, 500,000 options were issued to an employee of the Company vesting monthly over a six-month period, 100,000 to the Chief Financial Officer vesting quarterly over a one-year period. For the years ended December 31, 2018 and 2017, the Company expensed $329,193 and $1,295,741 with respect to the options. As of December 31, 2018, there was $198,438 unrecognized compensation cost related to outstanding stock options expected to vest over the weighted average of 3.9 years. The following table summarizes the activities for the Company’s warrants for the year ended December 31, 2018 and 2017: Warrants Outstanding Number of Shares Weighted- Average Exercise Price Weighted - Average Remaining Contractual Term in years) Aggregate Intrinsic Value (in 000's) (1) Balance, December 31, 2016 9,216,451 $ 1.82 Issued 33,080,629 0.20 Cancelled/Forfeited (10,004,500 ) 0.40 Balance, December 31, 2017 32,292,580 $ 0.30 Issued 18,727,769 0.15 Exercised (22,809,908 ) 0.11 Expired (1,019,608 ) 0.07 Cancelled/Forfeited (4,950,000 ) 0.40 Balance, December 31, 2018 22,240,833 $ 0.31 3.70 Exercisable at December 31, 2018 22,240,833 $ 0.31 3.70 $ 1,858 (1) The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying warrants and the closing stock price of $0.22 for our common stock on December 31, 2018. All warrants were vested on the date of grant. During the year ended December 31, 2017, holders of Series C Preferred Stock and 3,087,500 warrants exchanged these securities for 6,175,000 shares of common stock. See Note 7. During the year ended December 31, 2017, holders of Series D Preferred Stock and 667,000 warrants exchanged these securities for 1,985,716 shares of common stock. See Note 7. 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 7. 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. The fair value of the warrants accounted for in Additional Paid in Capital, for the year ended December 31, 2017, was $113,586. See Note 7. 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. 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. 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 7. For the year ended December 31, 2018, the Company has received gross proceeds of $1,153,645 for the purchase of 16,513,311 shares of common stock and 16,513,311 warrants in relation to the private placement. See Note 7. In January 2018, the Company issued 1,749,683 shares of common stock and 1,749,683 warrants with an exercise price of $0.15 to Mr. Klapper relating to the Note payable conversion that took place in June 2017. Additionally, 3,700,000 warrants were forfeited. See Note 5. During the year ended December 31, 2018, in relation to the Settlement Agreement, the Company issued 464,775 warrants at an exercise price of $0.15 which were paid for in 2014 but had not been previously issued. See Note 7. For the year ended December 31, 2018, 20,787,784 shares of warrants were exercised and a total of 20,787,784 shares of common stock were issued for gross proceeds of $2,079,345. See Note 7. In January 2018, a member of the Board exercised 104,876 warrants with an exercise price of $0.15 and a total of 104,876 shares of common stock were issued for gross proceeds of $15,731, see Note 7. In April 2018, the former Chief Executive Officer of the Company exercised 100,000 warrants at an exercise price of $0.01 for gross proceeds of $1,000 resulting in an issuance of 100,000 shares, see Note 7. On July 31, 2018, a member of the Board exercised 1,439,524 warrants held by an entity under his control at an exercise price of $0.15 per share for a total price of $215,929. See note 7. In August 2018, a warrant holder, made a cashless exercise of 366,047 warrants, whereby the warrant holder disposed of 190,386 shares to the Company as part of this exercise, amounting to an issuance of 175,661 shares. In October 2018, a warrant holder, made a cashless exercise of 11,678 warrants, whereby the warrant holder disposed of 4,680 shares to the Company as part of this exercise, amounting to an issuance of 6,998 shares. During the year ended December 31, 2018 an additional 1,250,000 warrants were forfeited in relation to a note payable conversion occurring in the prior year. |
DEBT FORGIVENESS
DEBT FORGIVENESS | 12 Months Ended |
Dec. 31, 2018 | |
Debt Forgiveness | |
DEBT FORGIVENESS | NOTE 9 – DEBT FORGIVENESS During the year ended December 31, 2018 the Company negotiated with certain vendors regarding balances outstanding for prior year services resulting in a Gain on accounts payable forgiveness included in the Statement of Operations for $352,008. |
OPERATING LEASES
OPERATING LEASES | 12 Months Ended |
Dec. 31, 2018 | |
Leases [Abstract] | |
OPERATING LEASES | NOTE 10 – OPERATING LEASES For the year ended December 31, 2018 and 2017, total rent expense under leases amounted to $12,395 and $12,674. At December 31, 2018, the Company was not obligated under any non-cancelable operating leases. |
MAJOR CUSTOMERS_VENDORS
MAJOR CUSTOMERS/VENDORS | 12 Months Ended |
Dec. 31, 2018 | |
Risks and Uncertainties [Abstract] | |
MAJOR CUSTOMERS/VENDORS | NOTE 11 – MAJOR CUSTOMERS/VENDORS During the year ended December 31, 2018, four customers accounted for 100.0% of total sales. During the year ended December 31, 2017 there were no 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, 2018 and 2017, the Company purchased 100.0% of pigment from one vendor. Additionally, during the years ended December 31, 2018 and 2017, the Company purchased 100.0% of canisters from one vendor. As of December 31, 2018, two customers accounted for 100% of total accounts receivable. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2018 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 12 – SUBSEQUENT EVENTS In January 2019, 20,000 shares of Series A Convertible Preferred Stock were converted into 400,000 shares of the Company’s Common Stock. On February 27, 2019 three Board Members provided their resignations as members of the Company’s Board of Directors, effective March 1, 2019. On March 5, 2019 the Company appointed Mr. Eugene Robin to the Company’s Board of Directors. On March 20, 2019 the Company granted three directors the option of each receiving 240,000 shares of restricted stock or 240,000 restricted units, either of which shall vest over a one-year period in equal increments from March 15, 2019. Each of the directors elected to receive restricted stock awards. In March 2019, the Company appointed Dr. Arthur Laffer to its Board of Directors and granted 240,000 shares of restricted which shall vest over a one-year period in equal quarterly increments from March 15, 2019. In March 2019, 20,000 shares of Series A Convertible Preferred Stock were converted into 400,000 shares of the Company’s Common Stock. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
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, 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 6 and 7) 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. 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 $ — 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 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. |
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. |
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. |
Allowance for Doubtful Accounts | Allowance for Doubtful Accounts The Company considers allowances for doubtful accounts for estimated losses that may result from the inability of the Company’s customers to make required payments. If the financial condition of the Company’s customers were to deteriorate, resulting in an impairment of their ability to make payments, such allowances may be required. |
Inventory | Inventory Inventory principally consists of canisters 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 Trademarks | Patents and Trademarks The current patent and trademark portfolios consist of 10 granted US patents and 1 granted European patent validated in 4 countries, 3 pending US and foreign patent applications, 1 registered US trademark, and 13 pending US and foreign trademark applications. 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 19 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. |
Related Parties | Related Parties Related parties, which can be a corporation or individual, are considered to be related if the Company has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operational decisions. Companies are also considered to be related if they are subject to common control or common significant influence. During the year ended December 31, 2018, the Company incurred $30,000 related to consulting services performed by a Director of the Board included in General and administrative on the Statement of Operations. |
Capitalized Software | Capitalized Software Costs incurred in connection with the development of software related to our proprietary digital products are accounted for in accordance with the Financial Accounting Standards Board Accounting Standards Codification ("ASC") 985 “Costs of Software to Be Sold, Leased or Marketed.” Costs incurred prior to the establishment of technological feasibility are charged to research and development expense. Software development costs are capitalized after a product is determined to be technologically feasible and is in the process of being developed for market. Amortization of capitalized software development costs begins once the product is available to the market. Capitalized software development costs are amortized over the estimated life of the related product, generally three years, using the straight-line method. The Company will evaluate its software assets for impairment whenever events or change in circumstances indicate that the carrying amount of such assets may not be recoverable. As of December 31, 2018, the Company capitalized $70,231. As of December 31, 2017, the Company had not capitalized any software development costs. The Company has not incurred a depreciation charge as the software was not available for use as of December 31, 2018. |
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. |
Revenue Recognition | Revenue Recognition The Company accounts for revenues according to ASC Topic 606, “ Revenue from Contracts with Customers” The Company applies the following five steps in order to determine the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its agreements: · identify the contract with a customer; · identify the performance obligations in the contract; · determine the transaction price; · allocate the transaction price to performance obligations in the contract; and · recognize revenue as the performance obligation is satisfied. During the year ended December 31, 2018, the Company’s revenues were primarily made up of revenue generated from printing labels with the Company’s technology. |
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 2014 through 2017 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 $3,987 and $550 for the years ended December 31, 2018 and 2017 and are included in Sales and Marketing on the Statement of Operations. |
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, 2018 and 2017 were $187,655 and $128,044. |
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, 2018 and 2017, 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, 2018 there were approximately 54,173,000 anti-dilutive shares consisting of 22,241,000 relating to warrants, 18,614,000 relating to options and 13,318,000 relating to preferred share agreements. 32,292,000 relating to warrants, 22,013,000 relating to options and 14,307,000 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 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). |
Going Concern | Going Concern The Company has suffered recurring losses from operations and negative cash flows from operations. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. In order to continue as a going concern, develop a reliable source of revenues, and achieve a profitable level of operations the Company will need, among other things, additional capital resources. Management's plans to continue as a going concern include raising additional capital through increased sales of product and by sale of common shares. The Company’s business plans are dependent on the ability to raise capital through private placements of our common stock and/or preferred stock, through the possible exercise of outstanding options and warrants, through debt financing and/or through future public offering of our securities. However, management cannot provide any assurances that the Company will be successful in accomplishing any of its plans. The Company’s existing cash resources are sufficient to sustain the Company’s operations during the next six months, however the Company may need to raise additional funds in the future in order to expand our business or if sales do not meet our internal budget. |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Schedule of fair value measurements within the fair value hierarchy of the company’s 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 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 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, 2018 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment | Equipment consists of the following: Year ended December 31, 2018 2017 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, 2018 | |
Income Tax Disclosure [Abstract] | |
Schedule of 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, 2018 and 2017 is as follows (in thousands) Year Ended December 31 US 2018 2017 Income before income taxes $ (2,932 ) $ (3,385 ) Taxes under statutory US tax rates (616 ) (1,202 ) Increase (decrease) in taxes resulting from: Increase (decrease) in valuation allowance (92 ) 1,346 Non-deductible changes in derivative liability and share based transactions - 1 All other 857 - State taxes (149 ) (145 ) Income tax expense $ - $ - |
Schedule of deferred tax assets and liabilities | 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, 2018 2017 US Net operating loss $ 8,316 $ 7,035 Share based compensation 447 1,800 Reserves and accruals (21 ) - Gross deferred tax assets 8,742 8,835 Less valuation allowance (8,742 ) (8,835 ) Total deferred tax assets - - Deferred tax liabilities: Total deferred tax liabilities - - Net deferred tax assets / (liabilities) $ - $ - |
NOTES PAYABLE (Tables)
NOTES PAYABLE (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of notes Payable | Notes payable consists of the following as of December 31: Year ended December 31, 2018 2017 Series A notes payable; interest at 8% per annum; principal and $ - $ 50,000 Less: current portion - (50,000 ) Balance $ - $ - |
STOCK OPTIONS, RESTRICTED STO_2
STOCK OPTIONS, RESTRICTED STOCK AND WARRANTS (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of weighted-average assumptions 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, 2018 and 2017: 2018 2017 Risk Free Interest Rate 2.30 % 1.90 % Expected Volatility 200.50 % 199.20 % Expected Life (in years) 5.0 5.0 Dividend Yield 0 % 0 % Weighted average estimated fair value of options during the period $ 0.17 $ 0.07 |
Schedule of Stock option activity | The following table summarizes the activities for the Company’s stock options for the year ended December 31, 2018 and 2017: Options Outstanding Weighted - Average Remaining Aggregate Weighted- Contractual Intrinsic Number of Average Term Value (in 000’) Shares Exercise Price (in years) (1) Balance as of 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 Granted 1,600,000 $ 0.27 Exercised (5,000,000 ) $ 0.07 Balance December 31, 2018 18,613,529 $ 0.14 3.9 Exercisable at December 31, 2018 16,596,863 $ 0.13 3.9 $2,113 (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, 2018 and 2017, the aggregate intrinsic value of options exercised under the Company’s stock option plans was $2,113,368 and $3,480,567, 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, 2018 and 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 Granted 1,600,000 0.27 Vested (2,250,001 ) 0.10 Balance December 31, 2018 2,016,666 $ 0.18 |
Schedule of warrant activity | The following table summarizes the activities for the Company’s warrants for the year ended December 31, 2018 and 2017: Warrants Outstanding Number of Shares Weighted- Average Exercise Price Weighted - Average Remaining Contractual Term in years) Aggregate Intrinsic Value (in 000's) (1) Balance, December 31, 2016 9,216,451 $ 1.82 Issued 33,080,629 0.20 Cancelled/Forfeited (10,004,500 ) 0.40 Balance, December 31, 2017 32,292,580 $ 0.30 Issued 18,727,769 0.15 Exercised (22,809,908 ) 0.11 Expired (1,019,608 ) 0.07 Cancelled/Forfeited (4,950,000 ) 0.40 Balance, December 31, 2018 22,240,833 $ 0.31 3.70 Exercisable at December 31, 2018 22,240,833 $ 0.31 3.70 $ 1,858 (1) The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying warrants and the closing stock price of $0.22 for our common stock on December 31, 2018. |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Embedded derivative liability | $ 623,462 | $ 623,462 | $ 1,802,375 | |
Additional paid in capital | 60,844,796 | 56,198,126 | ||
Accumulated deficit | $ (59,263,550) | (56,331,088) | ||
Reported After Effect Of Change In Accountingt [Member] | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Additional paid in capital | 52,393,937 | |||
Accumulated deficit | (52,945,748) | |||
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) | |||
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) |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Accounting Policies [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 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) | |
Cumulative adjustments related to change in accounting principle, January 1, 2017 | (623,462) | |
Ending balance | $ 623,462 |
SUMMARY OF SIGNIFICANT ACCOUN_6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) | 12 Months Ended | |||
Dec. 31, 2018USD ($)PatentsSegments$ / sharesshares | Dec. 31, 2017USD ($)$ / sharesshares | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | |
Restructuring Cost and Reserve [Line Items] | ||||
Common stock, par value | $ / shares | $ 0.001 | $ 0.001 | ||
Warrant liability and embedded derivative liability | $ 623,462 | $ 623,462 | $ 1,802,375 | |
Amortization method of patents | Straight-line method | |||
Interest rolled into principal | (30,000) | |||
Capitalized software development costs | 70,231 | 0 | ||
Advertising costs | 3,987 | 550 | ||
Research and development costs | $ 187,655 | $ 128,044 | ||
Anti-dilutive common stock equivalents, excluded from the calculation of earnings per share | shares | 54,173,000 | 68,612,000 | ||
Number of operating segment | Segments | 1 | |||
Accumulated deficit | $ (59,263,550) | $ (56,331,088) | ||
Warrant [Member] | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Anti-dilutive common stock equivalents, excluded from the calculation of earnings per share | shares | 22,241,000 | 32,292,000 | ||
Stock Options [Member] | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Anti-dilutive common stock equivalents, excluded from the calculation of earnings per share | shares | 18,614,000 | 22,013,000 | ||
Preferred share agreements [Member] | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Anti-dilutive common stock equivalents, excluded from the calculation of earnings per share | shares | 13,318,000 | 14,307,000 | ||
Director [Member] | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Interest rolled into principal | $ 30,000 | |||
Patents [Member] | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Number of patents granted | Patents | 1 | |||
Number of provisional patent applications pending | Patents | 3 | |||
Patents [Member] | US | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Number of patents granted | Patents | 10 | |||
Trademarks [Member] | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Number of patents granted | Patents | 1 | |||
Number of provisional patent applications pending | Patents | 13 | |||
Minimum [Member] | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Estimated useful lives of property and equipment | 5 years | |||
Minimum [Member] | Patents [Member] | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Estimated lives of patents | 17 years | |||
Maximum [Member] | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Estimated useful lives of property and equipment | 7 years | |||
Maximum [Member] | Patents [Member] | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Estimated lives of patents | 19 years |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
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) |
Balance |
PROPERTY AND EQUIPMENT (Detai_2
PROPERTY AND EQUIPMENT (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Property, Plant and Equipment, Net [Abstract] | ||
Depreciation of property and equipment | $ 0 | $ 0 |
PATENTS AND TRADEMARKS (Details
PATENTS AND TRADEMARKS (Details Narrative) - Patents And Trademark [Member] - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Finite-Lived Intangible Assets [Line Items] | ||
Capitalized patent costs and trademarks | $ 38,505 | $ 2,650 |
Amortization expense | $ 20,963 | $ 43,095 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | ||
Income before income taxes | $ (2,932) | $ (3,385) |
Taxes under statutory US tax rates | (616) | (1,202) |
Increase (decrease) in taxes resulting from: | ||
Increase (decrease) in valuation allowance | (92) | 1,346 |
Non-deductible changes in derivative liability and share based transactions | 1 | |
All other | 857 | |
State taxes | (149) | (145) |
Income tax expense |
INCOME TAXES (Details 1)
INCOME TAXES (Details 1) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Income Tax Disclosure [Abstract] | ||
Net operating loss | $ 8,316 | $ 7,035 |
Share based compensation | 447 | 1,800 |
Reserves and accruals | (21) | |
Gross deferred tax assets | 8,742 | 8,835 |
Less valuation allowance | (8,742) | (8,835) |
Total deferred tax assets | ||
Deferred tax liabilities: | ||
Total deferred tax liabilities | ||
Net deferred tax assets / (liabilities) |
INCOME TAXES (Details Narrative
INCOME TAXES (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Operating Loss Carryforwards [Line Items] | ||
Provisional decrease to deferred tax assets and liabilities | $ 6,200,000 | |
Fedral [Member] | ||
Operating Loss Carryforwards [Line Items] | ||
Net operating loss ("NOL") | $ 36,900,000 | |
State [Member] | ||
Operating Loss Carryforwards [Line Items] | ||
Net operating loss ("NOL") | $ 10,600,000 | |
Maximum [Member] | ||
Operating Loss Carryforwards [Line Items] | ||
Federal Statutory Rate | 35.00% | |
Minimum [Member] | ||
Operating Loss Carryforwards [Line Items] | ||
Federal Statutory Rate | 21.00% |
NOTES PAYABLE (Details)
NOTES PAYABLE (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 | Jun. 30, 2017 |
Debt Instrument [Line Items] | |||
Notes payable | |||
Less: current portion | $ (50,000) | ||
Balance | |||
Series A Notes Payable Due At Maturity In October 2011 (Past Due) [Member] | |||
Debt Instrument [Line Items] | |||
Notes payable | 50,000 | ||
Notes Payable [Member] | |||
Debt Instrument [Line Items] | |||
Less: current portion | $ (50,000) | $ (50,000) |
NOTES PAYABLE (Details Narrativ
NOTES PAYABLE (Details Narrative) | Apr. 13, 2017USD ($) | Jan. 31, 2018$ / sharesshares | Dec. 31, 2017USD ($)$ / sharesshares | Jun. 30, 2017USD ($)$ / sharesshares | May 31, 2017USD ($) | Apr. 26, 2017USD ($) | Mar. 28, 2017USD ($)$ / sharesshares | Feb. 13, 2017USD ($)$ / sharesshares | Jan. 31, 2017USD ($)$ / sharesshares | Oct. 28, 2009USD ($) | Dec. 31, 2018USD ($)$ / sharesshares | Dec. 31, 2017USD ($)$ / sharesshares | Jul. 31, 2018$ / shares | Jul. 27, 2018$ / shares | Mar. 31, 2018shares |
Debt Instrument [Line Items] | |||||||||||||||
Proceeds from issuance of notes payable | $ 281,000 | ||||||||||||||
Debt conversion, converted amount | $ 120,000 | ||||||||||||||
Exercise price (in dollars per share) | $ / shares | $ 0.15 | $ 0.15 | |||||||||||||
Interest expense | (6,664) | $ 218,316 | |||||||||||||
Note payable balance | $ 50,000 | 50,000 | |||||||||||||
Accrued interest | $ 33,667 | 0 | 33,667 | ||||||||||||
Warrant value | 605,535 | ||||||||||||||
Loss on settlement of related party notes payable | $ 331,912 | ||||||||||||||
Increase decrease in notes payable | $ 30,000 | ||||||||||||||
Common Stock [Member] | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Shares issued on conversion of debt (in shares) | shares | 1,749,683 | ||||||||||||||
Warrant [Member] | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Shares issued on conversion of debt (in shares) | shares | 1,749,683 | ||||||||||||||
Exercise price (in dollars per share) | $ / shares | $ 0.15 | $ 0.15 | |||||||||||||
Common Stock payable [Member] | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Accrued interest | $ 2,478 | $ 2,478 | |||||||||||||
Sale of units [Member] | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Number of common stock called by warrants (in shares) | shares | 19,451,575 | 19,451,575 | |||||||||||||
Exercise price (in dollars per share) | $ / shares | $ 0.15 | $ 0.15 | |||||||||||||
Related party note payables [Member] | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Number of common stock called by warrants (in shares) | shares | 4,402,079 | 4,402,079 | 4,402,079 | ||||||||||||
Exercise price (in dollars per share) | $ / shares | $ 0.15 | $ 0.15 | $ 0.15 | ||||||||||||
Maximum [Member] | Warrant [Member] | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Exercise price (in dollars per share) | $ / shares | 0.15 | 0.15 | |||||||||||||
Board of Director [Member] | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Exercise price (in dollars per share) | $ / shares | 0.15 | 0.15 | |||||||||||||
Board of Director [Member] | Common Stock [Member] | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Number of common stock called by warrants (in shares) | shares | 3,700,000 | ||||||||||||||
Board of Director [Member] | Warrant [Member] | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Shares issued on conversion of debt (in shares) | shares | 1,749,683 | ||||||||||||||
Exercise price (in dollars per share) | $ / shares | $ 0.15 | $ 0.15 | $ 0.10 | ||||||||||||
Two directors [Member] | Warrant [Member] | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Exercise price (in dollars per share) | $ / shares | $ 0.15 | $ 0.15 | |||||||||||||
Director [Member] | Related party note payables [Member] | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Number of common stock called by warrants (in shares) | shares | 6,250,000 | 6,250,000 | |||||||||||||
Director [Member] | Issaunce of notes payable [Member] | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Number of common stock called by warrants (in shares) | shares | 1,000,000 | 1,000,000 | |||||||||||||
Exercise price (in dollars per share) | $ / shares | $ 0.40 | $ 0.40 | |||||||||||||
Notes Payable [Member] | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Proceeds from issuance of notes payable | $ 360,000 | $ 50,000 | |||||||||||||
Debt conversion, converted amount | $ 270,000 | $ 390,000 | |||||||||||||
Number of common stock called by warrants (in shares) | shares | 6,151,762 | 6,151,762 | 6,151,762 | ||||||||||||
Exercise price (in dollars per share) | $ / shares | $ 0.15 | ||||||||||||||
Fair value of warrant liability | $ 0 | ||||||||||||||
Interest expense | 33,667 | ||||||||||||||
Note payable balance | $ 50,000 | 50,000 | $ 50,000 | ||||||||||||
Accrued interest | $ 6,101 | $ 0 | |||||||||||||
Notes Payable [Member] | Expected Life [Member] | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Expected warrant term | 5 years | ||||||||||||||
Notes Payable [Member] | Transaction One [Member] | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Number of common stock called by warrants (in shares) | shares | 4,402,079 | 4,402,079 | |||||||||||||
Accrued interest | $ 3,623 | $ 3,623 | |||||||||||||
Notes Payable [Member] | Warrant [Member] | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Expected warrant term | 5 years | 5 years | 5 years | ||||||||||||
Proceeds from issuance of notes payable | $ 25,000 | $ 100,000 | $ 20,000 | $ 50,000 | |||||||||||
Number of common stock called by warrants (in shares) | shares | 1,250,000 | 5,000,000 | 1,000,000 | ||||||||||||
Exercise price (in dollars per share) | $ / shares | $ 0.40 | $ 0.40 | $ 0.40 | ||||||||||||
Fair value of warrant liability | $ 21,300 | $ 76,390 | $ 15,896 | ||||||||||||
Interest rate, notes payable | 10.00% | ||||||||||||||
Notes Payable [Member] | Warrant [Member] | Dividend Yield [Member] | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Fair value, measurement input | 0 | 0 | |||||||||||||
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 | |||||||||||||
Financing [Member] | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Proceeds from issuance of notes payable | $ 750,000 | ||||||||||||||
Investment in common stock | 60,000 | ||||||||||||||
Interest expense | 60,000 | ||||||||||||||
Promissory Note [Member] | Loan [Member] | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Proceeds from issuance of notes payable | $ 30,000 | ||||||||||||||
Interest rate, notes payable | 10.00% |
CONVERTIBLE PREFERRED STOCK (De
CONVERTIBLE PREFERRED STOCK (Details Narrative) - USD ($) | Apr. 14, 2017 | Jun. 30, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | May 30, 2017 |
Preferred stock, voting rights | 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 [Member] | |||||
Convertible Preferred Stock, authorized (in shares) | 37,564,767 | 37,564,767 | |||
Convertible Preferred Stock, outstanding (in shares) | 304,778 | 324,778 | |||
Conversion of stock, shares converted (in shares) | 20,000 | 73,000 | |||
Conversion of shares of preferred stock to common stock (in shares) | 400,000 | 1,460,000 | |||
Series B Convertible Preferred Stock [Member] | |||||
Convertible Preferred Stock, authorized (in shares) | 85 | 85 | |||
Convertible Preferred Stock, outstanding (in shares) | 0.85 | 0.92 | |||
Conversion of stock, shares converted (in shares) | 0.07 | ||||
Conversion of shares of preferred stock to common stock (in shares) | 599,362 | ||||
Series C Convertible Preferred Stock [Member] | |||||
Conversion of stock, shares converted (in shares) | 375,000 | 1,537,500 | |||
Conversion of shares of preferred stock to common stock (in shares) | 4,392,858 | ||||
Dividends | $ 473,604 | ||||
Accretion of deemed distribution | $ 473,604 | ||||
SeriesCConvertiblePreferredStockMember | |||||
Conversion of preferred stock, shares | 2.857 | ||||
Percentage of outstanding shares | 87.00% | ||||
SeriesCConvertiblePreferredStockMember | Board of Director [Member] | |||||
Number of shares issued | 230,000 | ||||
SeriesCConvertiblePreferredStockMember | Common Stock [Member] | |||||
Conversion of stock, shares converted (in shares) | 6,175,000 | 6,175,000 | |||
SeriesCConvertiblePreferredStockMember | Warrant [Member] | |||||
Conversion of stock, shares converted (in shares) | 3,087,500 | 3,087,500 | |||
Series D Convertible Preferred Stock [Member] | |||||
Conversion of stock, shares converted (in shares) | 166,750 | ||||
Conversion of shares of preferred stock to common stock (in shares) | 496,429 | ||||
Dividends | $ 123,274 | ||||
Accretion of deemed distribution | $ 123,274 | ||||
Series D Convertible Preferred Stock [Member] | Common Stock [Member] | |||||
Conversion of stock, shares converted (in shares) | 1,985,716 | ||||
Series D Convertible Preferred Stock [Member] | Warrant [Member] | |||||
Conversion of stock, shares converted (in shares) | 496,429 |
STOCKHOLDERS' EQUITY (Details N
STOCKHOLDERS' EQUITY (Details Narrative) - USD ($) | Oct. 31, 2018 | Aug. 31, 2018 | Jul. 31, 2018 | Jul. 27, 2018 | Mar. 31, 2018 | Aug. 09, 2017 | Apr. 30, 2018 | Jan. 31, 2018 | Dec. 31, 2018 | Dec. 31, 2017 |
Common stock issued | 102,553,706 | 53,873,872 | ||||||||
Proceeds from issuance of convertible stock | $ 2,312,005 | |||||||||
Exercise price (in dollars per share) | $ 0.15 | |||||||||
Share-based payment for settlement agreement with shareholders | $ 331,912 | |||||||||
Net proceeds from isssurance of common stock | $ 1,153,645 | 1,327,925 | ||||||||
Common stock closing price | $ 12,000 | |||||||||
Shares issued during period (in shares) | 16,513,311 | 120,000 | ||||||||
Incurred amount | $ 1,153,645 | $ 1,360,250 | ||||||||
Exercised total share price | 22,809,908 | |||||||||
Compensation expense | $ 111,105 | 60,075 | ||||||||
Stock based compensation | 44,120 | $ 139,808 | ||||||||
Stock Based Compensation, Shares | 2,050,372 | |||||||||
Legal cost | 416,772 | $ 246,520 | ||||||||
Compensation expenses for non employee directors | $ 36,855 | |||||||||
Private Placement [Member] | ||||||||||
Proceeds From Issuance of Private Placement | $ 2,100,000 | |||||||||
Number of share cancelled | 607,143 | |||||||||
Third Party [Member] | ||||||||||
Share-based payment for settlement agreement with shareholders | $ 279,000 | |||||||||
Related Party [Member] | ||||||||||
Share-based payment for settlement agreement with shareholders | $ 139,500 | |||||||||
Common Stock [Member] | ||||||||||
Common stock sold | 503,432 | |||||||||
Common stock sold, value | $ 503 | |||||||||
Restricted stock awards granted | 2,212,500 | 2,175,000 | ||||||||
Shares issued during period (in shares) | 15,906,168 | 19,451,575 | ||||||||
Incurred amount | $ 15,906 | $ 19,452 | ||||||||
Stock Based Compensation, Shares | 2,050,372 | |||||||||
Common Stock [Member] | Common stock and warrant [Member] | ||||||||||
Common stock sold | 715,000 | |||||||||
Warrant term | 5 years | |||||||||
Board of Director [Member] | ||||||||||
Exercise price (in dollars per share) | $ 0.15 | |||||||||
Issuance of shares cashless exercise of options related to services | 4,027,778 | |||||||||
Board of Director [Member] | Common stock and warrant [Member] | ||||||||||
Gross proceeds from isssurance of common stock | 1,153,645 | |||||||||
Board of Director [Member] | Private Placement [Member] | ||||||||||
Proceeds From Issuance of Private Placement | $ 2,100,000 | $ 530,777 | ||||||||
Board of Director [Member] | Settlement Agreement [Member] | ||||||||||
Common stock issued | 500,000 | |||||||||
Exercise price (in dollars per share) | $ 0.40 | |||||||||
Amount of Settlement paid | $ 500,000 | |||||||||
Share-based payment for settlement agreement with shareholders | $ 139,500 | |||||||||
Board of Director [Member] | Common Stock [Member] | ||||||||||
Number of common stock called by warrants (in shares) | 3,700,000 | |||||||||
Common stock sold | 20,791,023 | |||||||||
Proceeds from issuance of convertible stock | $ 12,054,576 | |||||||||
Restricted stock awards granted | 300,000 | 300,000 | ||||||||
Compensation expense | $ 160,500 | |||||||||
Board of Director [Member] | Common Stock [Member] | Common stock and warrant [Member] | ||||||||||
Shares issued during period (in shares) | 16,513,311 | |||||||||
Two Members Of Board [Member] | ||||||||||
Common stock sold | 503,432 | |||||||||
Common stock sold, value | $ 479,901 | |||||||||
Director [Member] | ||||||||||
Restricted stock of vested, shares | 450,000 | |||||||||
Stock based compensation | $ 22,308 | |||||||||
Stock Based Compensation, Shares | 371,800 | |||||||||
Consulting service agreement [Member] | ||||||||||
Shares issued during period (in shares) | 49,500 | |||||||||
Incurred amount | $ 44,120 | |||||||||
Restricted Stock Units (RSUs) [Member] | Consulting service agreement [Member] | ||||||||||
Restricted stock units, Expense | $ 8,625 | $ 6,750 | ||||||||
Restricted stock of vested, shares | 37,500 | 75,000 | ||||||||
Restricted stock of vested, amount | 8,625 | 6,750 | ||||||||
Restricted Stock Awards [Member] | ||||||||||
Restricted stock units, Expense | $ 446,265 | $ 60,075 | ||||||||
Warrant [Member] | ||||||||||
Exercise price (in dollars per share) | $ 0.15 | |||||||||
Shares issued during period (in shares) | 16,513,311 | |||||||||
Warrant [Member] | Common stock and warrant [Member] | ||||||||||
Common stock sold | 715,000 | |||||||||
Warrant term | 5 years | |||||||||
Warrant [Member] | Private Placement [Member] | ||||||||||
Gross proceeds from isssurance of common stock | $ 1,154,211 | |||||||||
Warrant [Member] | Two directors [Member] | ||||||||||
Exercise price (in dollars per share) | $ 0.15 | |||||||||
Warrant [Member] | Board of Director [Member] | ||||||||||
Common stock sold | 20,787,784 | |||||||||
Proceeds from issuance of convertible stock | $ 1,205,458 | |||||||||
Exercise price (in dollars per share) | $ 0.15 | $ 0.10 | $ 0.15 | |||||||
Net proceeds from isssurance of common stock | $ 2,079,345 | |||||||||
Shares issued during period (in shares) | 20,787,784 | |||||||||
Exercised total share price | 1,439,524 | |||||||||
Exercised total price | $ 215,929 | |||||||||
Number of cashless exercise of warrants | 11,678 | 366,047 | ||||||||
Number of disposed share | 4,680 | 190,386 | ||||||||
Number of issuance share | 6,998 | 175,661 | ||||||||
Warrant [Member] | Board of Director [Member] | Common stock and warrant [Member] | ||||||||||
Common stock sold | 7,590,111 | |||||||||
Shares issued during period (in shares) | 16,513,311 | |||||||||
Warrant [Member] | Officer [Member] | ||||||||||
Proceeds from issuance of convertible stock | $ 15,731 | |||||||||
Warrants exercisable Price | $ 0.15 | |||||||||
Stock issued | 104,876 | |||||||||
Warrant [Member] | Consulting service agreement [Member] | Two directors [Member] | ||||||||||
Common stock issued | 1,605,175 | |||||||||
Exercise price (in dollars per share) | $ 0.15 | |||||||||
Warrant term | 5 years | |||||||||
Stock and warrants issued during period, value | $ 285,807 | |||||||||
Restricted Stock [Member] | ||||||||||
Unrecognized compensation cost | $ 0 | $ 84,105 | ||||||||
Restricted Stock [Member] | Two Director [Member] | ||||||||||
Restricted stock awards granted | 600,000 | |||||||||
Unrecognized compensation cost | $ 0 | |||||||||
Restricted Stock [Member] | Director and Chief Executive Officer [Member] | ||||||||||
Restricted stock of vested, shares | 150,000 | |||||||||
Restricted stock awards granted | 1,425,000 | |||||||||
Restricted stock awards granted term | 1 year | |||||||||
Unrecognized compensation cost | $ 161,311 | |||||||||
Employee Stock Option [Member] | Warrant [Member] | Chief Executive Officer [Member] | ||||||||||
Exercise price (in dollars per share) | $ 0.01 | |||||||||
Net proceeds from isssurance of common stock | $ 1,000 | |||||||||
Shares issued during period (in shares) | 100,000 | |||||||||
Incurred amount | $ 1,000 | |||||||||
Employee Stock Option [Member] | Board of Director [Member] | ||||||||||
Issuance of shares cashless exercise of options related to services | 5,000,000 | |||||||||
Number of disposed share | 972,222 | |||||||||
Sale of units [Member] | ||||||||||
Number of common stock called by warrants (in shares) | 19,451,575 | |||||||||
Exercise price (in dollars per share) | $ 0.15 | |||||||||
Warrant term | 5 years | |||||||||
Gross proceeds from isssurance of common stock | $ 1,360,250 | |||||||||
Net proceeds from isssurance of common stock | $ 1,327,925 | |||||||||
Shares issued during period (in shares) | 715,000 | |||||||||
Number of warrant issued | 71,500 | |||||||||
Legal cost | $ 32,325 | |||||||||
Sale of units [Member] | Directors of Board and relatives of directors of Board [Member] | ||||||||||
Gross proceeds from isssurance of common stock | $ 609,250 | |||||||||
Shares issued during period (in shares) | 8,712,275 | |||||||||
Number of warrant issued | 8,712,275 |
STOCK OPTIONS, RESTRICTED STO_3
STOCK OPTIONS, RESTRICTED STOCK AND WARRANTS (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||
Risk Free Interest Rate | 2.30% | 1.90% |
Expected Volatility | 200.50% | 199.20% |
Expected Life (in years) | 5 years | 5 years |
Dividend Yield | 0.00% | 0.00% |
Weighted average estimated fair value of options during the period | $ 0.17 | $ 0.07 |
STOCK OPTIONS, RESTRICTED STO_4
STOCK OPTIONS, RESTRICTED STOCK AND WARRANTS (Details 1) - USD ($) | Nov. 30, 2018 | Nov. 18, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | |
Number of Shares: | |||||
Granted | 600,000 | 600,000 | 19,950,000 | ||
Weighted Average Exercise Price: | |||||
Granted | $ 0.37 | ||||
Aggregate Intrinsic Value: | |||||
Balance as of December 31, 2018 | $ 0 | ||||
Stock Options [Member] | |||||
Number of Shares: | |||||
Balance, beginning | 22,013,529 | 3,282,647 | |||
Granted | 1,600,000 | 19,950,000 | |||
Exercised | (5,000,000) | ||||
Forfeited/cancelled | (1,219,117) | ||||
Balance, ending | 18,613,529 | 22,013,529 | |||
Excercisable | 16,596,863 | ||||
Weighted Average Exercise Price: | |||||
Balance, beginning | $ 0.11 | $ 0.52 | |||
Granted | 0.27 | 0.07 | |||
Exercised | 0.07 | ||||
Forfeited/cancelled | 0.48 | ||||
Balance, ending | 0.14 | $ 0.11 | |||
Exercisable | $ 0.13 | ||||
Weighted Average Remaining Contractual Term: | |||||
Balance as of December 31, 2018 | 3 years 10 months 24 days | ||||
Exercisable as of December 31, 2018 | 3 years 10 months 24 days | ||||
Aggregate Intrinsic Value: | |||||
Exercisable as of December 31, 2018 | [1] | $ 2,113 | |||
[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, 2018 and 2017, the aggregate intrinsic value of options exercised under the Company's stock option plans was $2,113,368 and $3,480,567, respectively. |
STOCK OPTIONS, RESTRICTED STO_5
STOCK OPTIONS, RESTRICTED STOCK AND WARRANTS (Details 2) - $ / shares | Nov. 30, 2018 | Nov. 18, 2018 | Dec. 31, 2018 | Dec. 31, 2017 |
Number of Shares | ||||
Granted | 600,000 | 600,000 | 19,950,000 | |
Nonvested Stock Options [Member] | ||||
Number of Shares | ||||
Balance, Beginning | 2,666,667 | |||
Granted | 1,600,000 | 19,950,000 | ||
Vested | (2,250,001) | (16,833,333) | ||
Cancelled/forfeited/expired | (450,000) | |||
Balance, Ending | 2,016,666 | 2,666,667 | ||
Weighted-Average Grant Date Fair Value | ||||
Balance, Beginning | $ 0.06 | |||
Granted | 0.27 | 0.07 | ||
Vested | 0.10 | 0.07 | ||
Cancelled/forfeited/expired | 0.08 | |||
Balance, Ending | $ 0.18 | $ 0.06 |
STOCK OPTIONS, RESTRICTED STO_6
STOCK OPTIONS, RESTRICTED STOCK AND WARRANTS (Details 3) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | ||
Number of Shares: | |||
Balance, beginning | 32,292,580 | 9,216,451 | |
Issued | 18,727,769 | 33,080,629 | |
Exercised | (22,809,908) | ||
Expired | (1,019,608) | ||
Cancelled/Forfeited | (4,950,000) | (10,004,500) | |
Balance, ending | 22,240,833 | 32,292,580 | |
Exercisable as of December 31, 2018 | 22,240,833 | ||
Weighted Average Exercise Price: | |||
Balance, beginning | $ 0.30 | $ 1.82 | |
Issued | 0.15 | 0.20 | |
Exercised | 0.11 | ||
Expired | 0.07 | ||
Forfeited/canceled | 0.40 | 0.40 | |
Outstanding, ending | 0.31 | $ 0.30 | |
Exercisable as of December 31, 2018 | $ 0.31 | ||
Weighted- Average Remaining Contractual Term: | |||
Balance as of December 31, 2018 | 3 years 8 months 12 days | ||
Exercisable as of December 31, 2018 | 3 years 8 months 12 days | ||
Aggregate Intrinsic Value: | |||
Exercisable as of December 31, 2018 | [1] | $ 1,858 | |
Closing stock price | $ 0.22 | ||
[1] | The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying warrants and the closing stock price of $0.22 for our common stock on December 31, 2018. |
STOCK OPTIONS, RESTRICTED STO_7
STOCK OPTIONS, RESTRICTED STOCK AND WARRANTS (Details Narrative) - USD ($) | Feb. 28, 2019 | Nov. 30, 2018 | Nov. 18, 2018 | Oct. 31, 2018 | Aug. 31, 2018 | Jul. 31, 2018 | Feb. 28, 2017 | Apr. 30, 2018 | Jan. 31, 2018 | Jun. 30, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Jul. 27, 2018 | Mar. 31, 2018 | Dec. 17, 2003 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||
Option, expense | $ 329,193 | $ 1,295,741 | |||||||||||||
Granted | 600,000 | 600,000 | 19,950,000 | ||||||||||||
Weighted average exercise price, granted | $ 0.37 | ||||||||||||||
Shares issued during period value | $ 1,153,645 | $ 1,360,250 | |||||||||||||
Shares issued during period (in shares) | 16,513,311 | 120,000 | |||||||||||||
Exercise price (in dollars per share) | $ 0.15 | ||||||||||||||
Weighted average exercise price | $ 0.37 | ||||||||||||||
Weighted avarage contractual term | 5 years | 5 years | |||||||||||||
Weighted avarage grant contractual term | 5 years | ||||||||||||||
Stock options expected to vest, weighted average | 3 years 10 months 24 days | ||||||||||||||
Unrecognized compensation cost | $ 198,438 | ||||||||||||||
Aggregate intrinsic value of options exercised | $ 2,113,368 | $ 3,480,567 | |||||||||||||
Common stock issued | 102,553,706 | 53,873,872 | |||||||||||||
Aggregate intrensic value | $ 0 | ||||||||||||||
Warrants issued in conjunction with related party notes payable | $ 113,586 | ||||||||||||||
Proceeds from issuance of common stock | 1,153,645 | 1,327,925 | |||||||||||||
Common Stock [Member] | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||
Shares issued during period value | $ 15,906 | $ 19,452 | |||||||||||||
Shares issued during period (in shares) | 15,906,168 | 19,451,575 | |||||||||||||
Shares issued in conversion of debt | 1,749,683 | ||||||||||||||
Number of warrants exercised | 4,027,778 | ||||||||||||||
Additional Paid-In Capital [Member] | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||
Shares issued during period value | $ 1,137,739 | $ 1,340,798 | |||||||||||||
Warrants issued in conjunction with related party notes payable | $ 113,586 | ||||||||||||||
Series C Convertible Preferred Stock [Member] | Common Stock [Member] | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||
Preferred stock converted in to common stock | 6,175,000 | 6,175,000 | |||||||||||||
Series D Convertible Preferred Stock [Member] | Common Stock [Member] | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||
Preferred stock converted in to common stock | 1,985,716 | ||||||||||||||
Board of Director [Member] | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||
Issuance of shares cashless exercise of options related to services | 4,027,778 | ||||||||||||||
Exercise price (in dollars per share) | $ 0.15 | ||||||||||||||
Board of Director [Member] | Common Stock [Member] | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||
Number of common stock called by warrants (in shares) | 3,700,000 | ||||||||||||||
Chairman of Board [Member] | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||
Vested | 10,000,000 | ||||||||||||||
Disposed shares related to services | 972,222 | ||||||||||||||
Shares issued during period (in shares) | 4,027,778 | ||||||||||||||
Director [Member] | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||
Vested | 450,000 | ||||||||||||||
Chief Executive Officer [Member] | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||
Vested | 5,000,000 | ||||||||||||||
Shares issued during period (in shares) | 7,000,000 | ||||||||||||||
Chief Executive Officer [Member] | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||
Vested | 2,000,000 | ||||||||||||||
Weighted avarage contractual term | 2 years | ||||||||||||||
Director [Member] | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||
Vested | 2,000,000 | ||||||||||||||
Weighted avarage contractual term | 6 months | ||||||||||||||
Consultant [Member] | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||
Number of options issued | 500,000 | ||||||||||||||
Employee [Member] | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||
Forfeited warrants | 769,117 | ||||||||||||||
Weighted avarage contractual term | 6 months | ||||||||||||||
Number of options issued | 500,000 | ||||||||||||||
Director [Member] | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||
Forfeited warrants | 450,000 | ||||||||||||||
Chief Executive Officer [Member] | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||
Weighted avarage contractual term | 1 year | ||||||||||||||
Number of options issued | 100,000 | ||||||||||||||
Director [Member] | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||
Number of warrant issued | 1,976,975 | ||||||||||||||
Mr. Klapper [Member] | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||
Shares issued in conversion of debt | 1,749,683 | ||||||||||||||
Exercise price (in dollars per share) | $ 0.15 | ||||||||||||||
Stock Options [Member] | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||
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). | ||||||||||||||
Granted | 1,600,000 | 19,950,000 | |||||||||||||
Weighted average exercise price, granted | $ 0.27 | $ 0.07 | |||||||||||||
Forfeited warrants | 1,219,117 | ||||||||||||||
Number of warrants exercised | 5,000,000 | ||||||||||||||
Stock Options [Member] | Board of Director [Member] | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||
Issuance of shares cashless exercise of options related to services | 5,000,000 | ||||||||||||||
Number of disposed share | 972,222 | ||||||||||||||
Stock Options [Member] | Chief Executive Officer [Member] | Warrant [Member] | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||
Shares issued during period value | $ 1,000 | ||||||||||||||
Shares issued during period (in shares) | 100,000 | ||||||||||||||
Exercise price (in dollars per share) | $ 0.01 | ||||||||||||||
Number of warrants exercised | 100,000 | ||||||||||||||
Proceeds from issuance of common stock | $ 1,000 | ||||||||||||||
Stock Options [Member] | Consulting Agreement [Member] | Chief Operating Officer [Member] | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||
Vested | 500,000 | ||||||||||||||
Granted | 1,000,000 | ||||||||||||||
Exercise price (in dollars per share) | $ 0.2102 | ||||||||||||||
Stock Options [Member] | Consulting Agreement [Member] | Chief Operating Officer [Member] | Subsequent Event [Member] | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||
Vested | 500,000 | ||||||||||||||
Warrant [Member] | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||
Shares issued during period (in shares) | 16,513,311 | ||||||||||||||
Shares issued in conversion of debt | 1,749,683 | ||||||||||||||
Exercise price (in dollars per share) | $ 0.15 | ||||||||||||||
Number of warrants exercised | 1,250,000 | ||||||||||||||
Warrant [Member] | Series C Convertible Preferred Stock [Member] | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||
Preferred stock converted in to common stock | 3,087,500 | 3,087,500 | |||||||||||||
Warrant [Member] | Series D Convertible Preferred Stock [Member] | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||
Preferred stock converted in to common stock | 667,000 | ||||||||||||||
Warrant [Member] | Board of Director [Member] | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||
Shares issued during period (in shares) | 20,787,784 | ||||||||||||||
Shares issued in conversion of debt | 1,749,683 | ||||||||||||||
Exercise price (in dollars per share) | $ 0.15 | $ 0.15 | $ 0.10 | ||||||||||||
Number of warrants exercised | 20,787,784 | ||||||||||||||
Number of cashless exercise of warrants | 11,678 | 366,047 | |||||||||||||
Number of disposed share | 4,680 | 190,386 | |||||||||||||
Number of issuance share | 6,998 | 175,661 | |||||||||||||
Proceeds from issuance of common stock | $ 2,079,345 | ||||||||||||||
Warrant [Member] | Member of Board [Member] | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||
Shares issued during period value | $ 215,929 | $ 15,731 | |||||||||||||
Shares issued during period (in shares) | 1,439,524 | 104,876 | |||||||||||||
Exercise price (in dollars per share) | $ 0.15 | $ 0.15 | |||||||||||||
Number of warrants exercised | 104,876 | ||||||||||||||
Warrant [Member] | Director [Member] | Notes Payable [Member] | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||
Exercise price (in dollars per share) | $ 0.40 | ||||||||||||||
Preferred stock converted in to common stock | 1,000,000 | ||||||||||||||
Warrant [Member] | Director [Member] | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||
Exercise price (in dollars per share) | $ 0.15 | ||||||||||||||
Warrant [Member] | Mr. Klapper [Member] | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||
Shares issued in conversion of debt | 1,749,683 | ||||||||||||||
Sale of units [Member] | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||
Shares issued during period (in shares) | 715,000 | ||||||||||||||
Exercise price (in dollars per share) | $ 0.15 | ||||||||||||||
Number of common stock called by warrants (in shares) | 19,451,575 | ||||||||||||||
Number of warrant issued | 71,500 | ||||||||||||||
Proceeds from issuance of common stock | $ 1,327,925 | ||||||||||||||
Related party note payables [Member] | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||
Exercise price (in dollars per share) | $ 0.15 | $ 0.15 | |||||||||||||
Number of common stock called by warrants (in shares) | 4,402,079 | 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 | ||||||||||||||
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 | ||||||||||||||
Stock Option 2013 Plan [Member] | Stock Options, Restricted Stock and Units, and Other Stock-based Awards [Member] | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||
Number of shares authorized to be granted under plan | 20,000,000 |
DEBT FORGIVENESS (Details Narra
DEBT FORGIVENESS (Details Narrative) | 12 Months Ended |
Dec. 31, 2018USD ($) | |
Debt Disclosure [Abstract] | |
Gain on accounts payable forgiveness | $ 352,008 |
OPERATING LEASES (Details Narra
OPERATING LEASES (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Leases [Abstract] | ||
Total rent expense under leases | $ 12,395 | $ 12,674 |
MAJOR CUSTOMERS_VENDORS (Detail
MAJOR CUSTOMERS/VENDORS (Details Narrative) | 12 Months Ended | |
Dec. 31, 2018CustomersVendors | Dec. 31, 2017Vendors | |
Risks and Uncertainties [Abstract] | ||
Number of major customers accounting for 100% of annual sales | Customers | 4 | |
Number of major vendors accounting for 100% of pigment purchases | Vendors | 1 | 1 |
Number of major vendors accounting for 100% of canisters purchases | Vendors | 1 | 1 |
Number of major customers accounting for 100% of accounts receivable | Customers | 2 |
SUBSEQUENT EVENTS (Details Narr
SUBSEQUENT EVENTS (Details Narrative) - shares | Mar. 20, 2019 | Nov. 30, 2018 | Nov. 18, 2018 | Mar. 31, 2019 | Mar. 31, 2019 | Jan. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Subsequent Event [Line Items] | ||||||||
Number of shares granted | 600,000 | 600,000 | 19,950,000 | |||||
Series A Convertible Preferred Stock [Member] | ||||||||
Subsequent Event [Line Items] | ||||||||
Conversion of stock, shares converted (in shares) | 20,000 | 73,000 | ||||||
Conversion of shares of preferred stock to common stock (in shares) | (20,000) | (73,000) | ||||||
Subsequent Event [Member] | Three Director [Member] | ||||||||
Subsequent Event [Line Items] | ||||||||
Vesting period | 1 year | |||||||
Subsequent Event [Member] | Three Director [Member] | Restricted Stock [Member] | ||||||||
Subsequent Event [Line Items] | ||||||||
Number of shares granted | 240,000 | |||||||
Subsequent Event [Member] | Three Director [Member] | Restricted Stock Units (RSUs) [Member] | ||||||||
Subsequent Event [Line Items] | ||||||||
Number of shares granted | 240,000 | |||||||
Subsequent Event [Member] | Dr. Arthur Laffer [Member] | ||||||||
Subsequent Event [Line Items] | ||||||||
Vesting period | 1 year | |||||||
Subsequent Event [Member] | Dr. Arthur Laffer [Member] | Restricted Stock [Member] | ||||||||
Subsequent Event [Line Items] | ||||||||
Number of shares granted | 240,000 | |||||||
Subsequent Event [Member] | Series A Convertible Preferred Stock [Member] | ||||||||
Subsequent Event [Line Items] | ||||||||
Conversion of stock, shares converted (in shares) | 20,000 | 20,000 | ||||||
Conversion of shares of preferred stock to common stock (in shares) | 400,000 | 400,000 |