Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2019 | Nov. 11, 2019 | |
Lease Agreement Term | ||
Entity Registrant Name | VerifyMe, Inc. | |
Entity Central Index Key | 0001104038 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2019 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Reporting Status Current | Yes | |
Entity File Number | 000-31927 | |
Entity Interactive Data Current | Yes | |
Entity Incorporation, State or Country Code | NY | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 111,215,166 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2019 |
Balance Sheets (Unaudited)
Balance Sheets (Unaudited) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 671,011 | $ 1,673,201 |
Accounts Receivable | 51,415 | 30,373 |
Deposits on Equipment | 163,090 | |
Prepaid expenses and other current assets | 29,981 | 25,781 |
Inventory | 37,962 | 41,982 |
TOTAL CURRENT ASSETS | 953,459 | 1,771,337 |
INTANGIBLE ASSETS | ||
Patents and Trademarks, net of accumulated amortization of $275,591 and $258,294 as of September 30, 2019 and December 31, 2018 | 228,705 | 209,049 |
Capitalized Software Costs | 141,656 | 70,231 |
TOTAL ASSETS | 1,323,820 | 2,050,617 |
CURRENT LIABILITIES | ||
Convertible Debt, net of unamortized debt discount | 228,478 | |
Derivative Liability | 207,534 | |
Accounts payable and other accrued expenses | 354,766 | 411,211 |
Accrued Payroll | 106,438 | 69,041 |
TOTAL CURRENT LIABILITIES | 897,216 | 480,252 |
STOCKHOLDERS' EQUITY | ||
Common stock of $.001 par value; 675,000,000 authorized; 111,252,373 and 102,553,706 issued, 110,901,833 and 102,203,166 shares outstanding as of September 30, 2019 and December 31, 2018 | 110,902 | 102,203 |
Additional paid in capital | 61,578,151 | 60,844,796 |
Treasury stock as cost (350,540 shares at September 30, 2019 and December 31, 2018) | (113,389) | (113,389) |
Accumulated deficit | (61,149,060) | (59,263,550) |
STOCKHOLDERS' EQUITY | 426,604 | 1,570,365 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | 1,323,820 | 2,050,617 |
Series A Convertible Preferred Stock [Member] | ||
STOCKHOLDERS' EQUITY | ||
Convertible Preferred Stock | 305 | |
STOCKHOLDERS' EQUITY | 305 | |
Series B Convertible Preferred Stock [Member] | ||
STOCKHOLDERS' EQUITY | ||
Convertible Preferred Stock | ||
STOCKHOLDERS' EQUITY |
Balance Sheets (Unaudited) (Par
Balance Sheets (Unaudited) (Parenthetical) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Accumulated amortization, patent and trademarks | $ 275,591 | $ 258,294 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, authorized | 675,000,000 | 675,000,000 |
Common stock, issued | 111,252,373 | 102,553,706 |
Common stock, outstanding | 110,901,833 | 102,203,166 |
Treasury stock, shares | 350,540 | 350,540 |
Series A Convertible Preferred Stock [Member] | ||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, authorized | 37,564,767 | 37,564,767 |
Preferred stock, issued | 0 | 304,778 |
Preferred stock, outstanding | 0 | 304,778 |
Series B Convertible Preferred Stock [Member] | ||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, authorized | 85 | 85 |
Preferred stock, issued | 0.85 | 0.85 |
Preferred stock, outstanding | 0.85 | 0.85 |
Statements of Operations (Unaud
Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | ||
NET REVENUE | |||||
Sales | $ 56,225 | $ 28,273 | $ 143,158 | $ 35,072 | |
COST OF SALES | 8,471 | 12,281 | 30,323 | 14,281 | |
GROSS PROFIT | 47,754 | 15,992 | 112,835 | 20,791 | |
OPERATING EXPENSES | |||||
General and administrative | [1] | 350,851 | 357,665 | 1,001,728 | 1,378,999 |
Legal and accounting | 41,977 | 64,897 | 172,676 | 362,371 | |
Payroll expenses | [1] | 167,807 | 77,664 | 374,382 | 269,518 |
Research and development | 804 | 73,843 | 7,055 | 102,272 | |
Sales and marketing | [1] | 148,416 | 9,150 | 400,717 | 17,217 |
Total Operating Expenses | 709,855 | 583,219 | 1,956,558 | 2,130,377 | |
LOSS BEFORE OTHER INCOME (EXPENSE) | (662,101) | (567,227) | (1,843,723) | (2,109,586) | |
OTHER (EXPENSE) INCOME | |||||
Interest income (expenses), net | [1] | (8,338) | 1,084 | (5,678) | 1,367 |
Change in fair value of embedded derivative | (36,109) | (36,109) | |||
Gain on derecognition of note payable and accrued interest | 86,667 | 86,667 | |||
Settlement agreement with shareholders | (779,000) | ||||
Gain on accounts payable forgiveness | 402,248 | ||||
TOTAL OTHER INCOME (EXPENSE) | (44,447) | 87,751 | (41,787) | (288,718) | |
NET LOSS | $ (706,548) | $ (479,476) | $ (1,885,510) | $ (2,398,304) | |
LOSS PER SHARE | |||||
BASIC (in dollars per share) | $ (0.01) | $ 0 | $ (0.02) | $ (0.03) | |
DILUTED (in dollars per share) | $ (0.01) | $ 0 | $ (0.02) | $ (0.03) | |
WEIGHTED AVERAGE COMMON SHARE OUTSTANDING | |||||
BASIC (in shares) | 98,137,735 | 101,186,416 | 98,209,139 | 91,453,702 | |
DILUTED (in shares) | 98,137,735 | 101,186,416 | 98,209,139 | 91,453,702 | |
[1] | Includes share-based compensation of $322,641 and $671,649 for the three and nine months ended September 30, 2019 and $204,227 and $709,940 for the three and nine months ended September 30, 2018. |
Statements of Cash Flows (Unaud
Statements of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net loss | $ (1,885,510) | $ (2,398,304) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Stock based compensation | 103,167 | 44,120 |
Fair value of options and warrants issued in exchange for services | 399,828 | 270,339 |
Fair value of restricted stock and restricted stock units issued in exchange for services | 168,654 | 395,481 |
Gain on accounts payable forgiveness | (402,248) | |
Share-based payment for settlement agreement with shareholders | 279,000 | |
Gain on derecognition of note payable and accrued interest | (86,667) | |
Amortization of debt discount | 8,696 | |
Change in Fair Value of Embedded Derivative | 36,109 | |
Amortization and depreciation | 17,297 | 15,928 |
Changes in operating assets and liabilities: | ||
Accounts Receivable | (21,042) | (28,462) |
Deposit on Equipment | (163,090) | |
Inventory | 4,020 | (35,102) |
Prepaid expenses and other current assets | (4,200) | |
Accounts payable and accrued expenses | (19,048) | (41,550) |
Net cash used in operating activities | (1,355,119) | (1,987,465) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Purchase of Patents | (36,953) | (16,690) |
Capitalized Software Costs | (71,425) | (30,223) |
Net cash used in investing activities | (108,378) | (46,913) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Proceeds from convertible debt, net of costs | 461,307 | |
Proceeds from exercise of warrants | 2,311,438 | |
Proceeds from sale of common stock | 1,154,211 | |
Net cash provided by financing activities | 461,307 | 3,465,649 |
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS | (1,002,190) | 1,431,271 |
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD | 1,673,201 | 693,001 |
CASH AND CASH EQUIVALENTS - END OF PERIOD | 671,011 | 2,124,272 |
Cash paid during the period for: | ||
Interest | ||
Income taxes | ||
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES | ||
Common Stock issued in relation to convertible debt | 70,100 | |
Recognition of embedded derivative liability | 171,425 | |
Cashless Exercise of Stock Options | 4,028 | |
Cashless Exercise of Warrants | 72 | 176 |
Common Stock and Warrants Issued for Common Stock Payable | 122,478 | |
Series A Convertible Preferred Stock [Member] | ||
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net loss | ||
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES | ||
Convertible Preferred Stock converted to common stock | 6,096 | 400 |
Series B Convertible Preferred Stock [Member] | ||
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net loss | ||
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES | ||
Convertible Preferred Stock converted to common stock | $ 599 |
Statement of Stockholders' Equi
Statement of Stockholders' Equity (Deficit) (Unaudited) - USD ($) | Common Stock [Member] | Additional Paid-In Capital [Member] | Treasury Stock [Member] | Accumulated Deficit [Member] | Series A Convertible Preferred Stock [Member] | Series B Convertible Preferred Stock [Member] | Total |
Balance at beginning at Dec. 31, 2017 | $ 53,522 | $ 56,198,126 | $ (113,389) | $ (56,331,088) | $ 325 | $ (192,504) | |
Balance at beginning (in shares) at Dec. 31, 2017 | 53,523,332 | 324,778 | 0.92 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Conversion of Series A Convertible Preferred Stock | $ 400 | (380) | $ (20) | ||||
Conversion of Series A Convertible Preferred Stock (in shares) | 400,000 | (20,000) | |||||
Conversion of Series B Convertible Preferred Stock | $ 599 | (599) | |||||
Conversion of Series B Convertible Preferred Stock (in shares) | 599,362 | (0.07) | |||||
Sale of common stock | $ 15,906 | 1,138,305 | 1,154,211 | ||||
Sale of common stock (in shares) | 15,906,168 | ||||||
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 | ||||||
Exercise of Warrants | $ 22,608 | 2,288,830 | 2,311,438 | ||||
Exercise of Warrants (in shares) | 22,607,845 | ||||||
Common stock and warrants issued for services | $ 170 | 43,950 | 44,120 | ||||
Common stock and warrants issued for services (in shares) | 169,500 | ||||||
Cashless Exercise of Stock Options | $ 4,028 | (4,028) | |||||
Cashless Exercise of Stock Options (in shares) | 4,027,778 | ||||||
Fair value of stock option | 270,339 | 270,339 | |||||
Restricted Stock awards and Restricted Stock Units | $ 2,213 | 393,268 | 395,481 | ||||
Restricted Stock awards and Restricted Stock Units (in shares) | 2,212,500 | ||||||
Net loss | (2,398,304) | (2,398,304) | |||||
Balance at ending at Sep. 30, 2018 | $ 102,196 | 60,726,539 | (113,389) | (58,729,392) | $ 305 | 1,986,259 | |
Balance at ending (in shares) at Sep. 30, 2018 | 102,196,168 | 304,778 | 0.85 | ||||
Balance at beginning at Jun. 30, 2018 | $ 101,165 | 60,305,122 | (113,389) | (58,249,916) | 2,043,287 | ||
Balance at beginning (in shares) at Jun. 30, 2018 | 101,165,202 | 0.85 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Conversion of Series B Convertible Preferred Stock | |||||||
Conversion of Series B Convertible Preferred Stock (in shares) | 0 | ||||||
Sale of common stock | $ (607) | 607 | |||||
Sale of common stock (in shares) | (607,143) | ||||||
Exercise of Warrants | $ 1,638 | 216,583 | 218,221 | ||||
Exercise of Warrants (in shares) | 1,638,109 | ||||||
Common stock and warrants issued for services | $ 2 | 2 | |||||
Common stock and warrants issued for services (in shares) | |||||||
Fair value of stock option | $ 44,151 | 44,151 | |||||
Restricted Stock awards and Restricted Stock Units | 160,076 | 160,076 | |||||
Restricted Stock awards and Restricted Stock Units (in shares) | |||||||
Net loss | (479,476) | (479,476) | |||||
Balance at ending at Sep. 30, 2018 | $ 102,196 | 60,726,539 | (113,389) | (58,729,392) | $ 305 | 1,986,259 | |
Balance at ending (in shares) at Sep. 30, 2018 | 102,196,168 | 304,778 | 0.85 | ||||
Balance at beginning at Dec. 31, 2018 | $ 102,203 | 60,844,796 | (113,389) | (59,263,550) | $ 305 | 1,570,365 | |
Balance at beginning (in shares) at Dec. 31, 2018 | 102,203,166 | 304,778 | 0.85 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Conversion of Series A Convertible Preferred Stock | $ 6,096 | (5,791) | $ (305) | ||||
Conversion of Series A Convertible Preferred Stock (in shares) | 6,095,569 | (304,778) | |||||
Common stock issued for services | $ 771 | 102,396 | 103,167 | ||||
Common stock issued for services (in shares) | 771,324 | ||||||
Common stock issued in relation to Bridge Financing | $ 1,000 | 69,100 | 70,100 | ||||
Common stock issued in relation to Bridge Financing (in shares) | 1,000,000 | ||||||
Cashless Exercise of Warrants | $ 72 | (72) | |||||
Cashless Exercise of Warrants (in shares) | 71,774 | ||||||
Fair value of stock option | 399,828 | 399,828 | |||||
Restricted Stock awards and Restricted Stock Units | $ 760 | 167,894 | 168,654 | ||||
Restricted Stock awards and Restricted Stock Units (in shares) | 760,000 | ||||||
Net loss | (1,885,510) | (1,885,510) | |||||
Balance at ending at Sep. 30, 2019 | $ 110,902 | 61,578,151 | (113,389) | (61,149,060) | 426,604 | ||
Balance at ending (in shares) at Sep. 30, 2019 | 110,901,833 | 0.85 | |||||
Balance at beginning at Jun. 30, 2019 | $ 109,322 | 61,186,990 | (113,389) | (60,442,512) | 740,411 | ||
Balance at beginning (in shares) at Jun. 30, 2019 | 109,321,833 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Common stock issued for services | $ 700 | 87,467 | 88,167 | ||||
Common stock issued for services (in shares) | 700,000 | ||||||
Common stock issued in relation to Bridge Financing | $ 1,000 | 69,100 | 70,100 | ||||
Common stock issued in relation to Bridge Financing (in shares) | 1,000,000 | ||||||
Fair value of stock option | 150,040 | 150,040 | |||||
Restricted Stock awards and Restricted Stock Units | $ (120) | 84,554 | 84,434 | ||||
Restricted Stock awards and Restricted Stock Units (in shares) | (120,000) | ||||||
Net loss | (706,548) | (706,548) | |||||
Balance at ending at Sep. 30, 2019 | $ 110,902 | $ 61,578,151 | $ (113,389) | $ (61,149,060) | $ 426,604 | ||
Balance at ending (in shares) at Sep. 30, 2019 | 110,901,833 | 0.85 |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of the Business The Company was incorporated in the State of Nevada on November 10, 1999. The Company is based in Rochester, New York and its common stock, par value $0.001 per share, is traded on the over-the-counter market and quoted on the OTCQB. The Company is a developmental stage technology solutions provider specializing in brand protection functions such as counterfeit prevention, authentication, serialization, track and trace features for labels, packaging and products. Leveraging our covert luminescent pigment, RainbowSecure®, which we began commercializing in 2018, we also developed the patent pending VeriPAS™ software system in 2018, which covertly and overtly serializes products to track a product’s “life cycle” for brand owners. We believe VeriPAS™ is the only invisible covert serialization and authentication solution deployed through variable digital printing on HP Indigo printing systems with a smartphone tracking and authentication system. VeriPAS™ is capable of fluorescing, decoding, and verifying invisible RainbowSecure® codes in the field – designed to allow investigators to quickly and efficiently authenticate product throughout the distribution chain, including warehouses, ports of entry, retail locations, and product purchased over the internet for inspection and investigative actions. This technology is coupled with a secure cloud based track and trace software engine which allows brands and investigators to see where products originate and where they are deployed with geo location mapping and intelligent programable alerts. Brand owners access the VeriPAS™ software over the internet. Brand owners can then set rules of engagement, establish marketing programs for customer engagement and control, and monitor and protect their products “life cycle.” We have not yet derived any revenue from our VeriPAS™ software system and have derived minimal revenue from the sale of our RainbowSecure® technology. The accompanying unaudited interim financial statements (the “Interim Statements”) have been prepared pursuant to the rules and regulations for reporting on Form 10-Q. Accordingly, certain information and disclosures required by U. S. generally accepted accounting principles (“GAAP”) for complete financial statements are not included herein. The Interim Statements should be read in conjunction with the financial statements and notes thereto included in the Company’s latest Annual Report on Form 10-K for the year ended December 31, 2018 as filed with the Securities and Exchange Commission (the “SEC”) on April 1, 2019. The accompanying Interim Statements are unaudited; however, in the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The interim results for the three and nine months ended September 30, 2019 are not necessarily indicative of the results to be expected for the year ending December 31, 2019 or for any future interim periods. The Company’s activities are subject to significant risks and uncertainties, including the need to secure additional funding for working capital and to further develop the Company’s intellectual property. Basis of Presentation The accompanying financial statements are presented in accordance with GAAP. Revenue Recognition The Company accounts for revenues according to Accounting Standards Codification (“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 obligations are satisfied. During the three and nine months ended September 30, 2019, the Company’s revenues consisted of revenue primarily generated from customer’s printing labels utilizing the Company’s technology. Equity-linked Financial Instruments Certain of the Company’s debt instruments include embedded derivatives that require bifurcation from the host contract under the provisions of ASC 815, Derivatives and Hedging. Under this guidance, the Company recognizes the embedded derivatives at fair value and records a gain or loss resulting from the change in fair values at the end of each reporting period. In connection with issuance of the Debentures, described in Note 4 – Convertible Debt, after March 17, 2020, the Company could become contingently obligated to issue shares potentially in excess of its authorized share limit. Consequently, the ability to settle these obligations with shares would be unavailable causing these and other share-settled obligations to potentially be settled in cash. The Company applies a sequencing policy regarding share settlement wherein equity-linked financial instruments with the earliest issuance date would be settled first. Thus, all equity-linked financial instruments, which are convertible or exercisable into common stock, issued concurrent or subsequent to the Debentures are classified as derivative liabilities, with the exception of instruments related to employee share-based compensation. Sequencing As of September 19, 2019, the Company adopted a sequencing policy whereby all equity-linked instruments issued prior to the closing of the $600,000 secured Convertible Debentures on September 19, 2019 may be classified as equity and all future equity-linked instruments may be classified as a derivative liability with the exception of instruments related to share-based compensation issued to employees or directors. 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 periods 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 each of the three and nine months ended September 30, 2019 and 2018, 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 each of the three and nine months ended September 30, 2019, there were approximately 56,699,000 anti-dilutive shares consisting of 20,114,000 shares issuable upon exercise of options, 21,963,000 shares issuable upon exercise of warrants, 7,222,000 shares issuable upon conversion of preferred stock and 4,400,000 shares issuable upon conversion of convertible debentures. For the three and nine months ended September 30, 2018, there were approximately 41,237,000 anti-dilutive shares consisting of 18,014,000 shares issuable upon exercise of options, 9,909,000 shares issuable upon exercise of warrants and 13,314,000 shares issuable upon conversion of preferred stock. 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 raising additional capital through incurrence of debt and the sale of our common stock and other equity securities. On September 19, 2019, the Company received net proceeds of $461,307 from the Bridge Financing, described below in Note 4 – Convertible Debt. 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 the future public offerings of our securities. However, management cannot provide any assurances that the Company will be successful in accomplishing any of its plans. As a result of the Bridge Financing, the Company’s existing cash resources are sufficient to sustain our operations through December 2019. The Company needs to raise additional funds in the future in order to remain operational past that date. Recently Adopted Accounting Pronouncements Effective January 1, 2019, the Company adopted ASU No. 2018-07, Compensation – Stock Based Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting (“ASU 2018-07”), which aligns accounting for share-based payments issued to nonemployees to that of employees under the existing guidance of Topic 718, with certain exceptions. This update supersedes previous guidance for equity-based payments to nonemployees under Subtopic 505-50, Equity – Equity-Based Payments to Non-Employees. The adoption of ASU 2018-07 did not have a material impact on the Company’s financial statements. Effective January 1, 2019, the Company adopted ASU No. 2016-02 – “Lease (Topic 842)” and the series of related Accounting Standards Updates that followed (collectively referred to as “Topic 842”) using the modified retrospective approach. The adoption of Topic 842 did not have a material impact on the Company’s financial statements. |
INTANGIBLE ASSETS
INTANGIBLE ASSETS | 9 Months Ended |
Sep. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
INTANGIBLE ASSETS | NOTE 2 – INTANGIBLE ASSETS Patents and Trademarks The current patent and trademark portfolios consist of 10 granted U.S. patents and 1 granted European patent validated in 4 countries, 4 pending US and foreign patent applications, 4 registered U.S. trademarks, 1 registered EU foreign registration, and 8 pending U.S. 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. During the nine months ended September 30, 2019 and 2018, the Company capitalized $36,953 and $16,690, respectively, of patent and trademarks costs. Amortization expense for patents and trademarks was $5,662 and $5,034 for the three months ended September 30, 2019 and 2018, respectively, and $17,297 and $15,928 for the nine months ended September 30, 2019 and 2018, respectively. 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 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 costs begins once the product is available to the market. Capitalized software 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 changes in circumstances indicate that the carrying amount of such assets may not be recoverable. The Company had capitalized software costs of $141,656 and $70,231 as of September 30, 2019 and December 31, 2018, respectively. The Company has not incurred a depreciation charge because the software was not available for use as of September 30, 2019. The Company expects the software to be available for use in the fourth quarter of 2019. |
CONVERTIBLE PREFERRED STOCK
CONVERTIBLE PREFERRED STOCK | 9 Months Ended |
Sep. 30, 2019 | |
Preferred Stock, Number of Shares, Par Value and Other Disclosures [Abstract] | |
CONVERTIBLE PREFERRED STOCK | NOTE 3 – CONVERTIBLE PREFERRED STOCK The Company is authorized to issue Series A Convertible Preferred Stock, par value of $0.001 per share (the “Series A”) and Series B Convertible Preferred Stock, par value of $0.001 per share (the “Series B”). As of September 30, 2019, there were no shares of Series A outstanding and 0.85 of a share of Series B outstanding. Each share of Series A and Series B has limited voting rights, is entitled to participate with the common stock on liquidation and holders of Series A and Series B are subject to beneficial ownership limitations. Series A Convertible Preferred Stock During the nine months ended September 30, 2019, 304,778 shares of Series A were converted into 6,095,569 shares of the Company’s common stock. Series B Convertible Preferred Stock During the nine months ended September 30, 2018, 0.07 of a share of Series B was converted into 599,362 shares of the Company’s common stock. |
CONVERTIBLE DEBT
CONVERTIBLE DEBT | 9 Months Ended |
Sep. 30, 2019 | |
Debt Disclosure [Abstract] | |
CONVERTIBLE DEBT | NOTE 4 – CONVERTIBLE DEBT September 30, 2019 Convertible Debentures, due September 18, 2020: Principal value $ 600,000 Debt discount (371,522 ) Carrying value of convertible notes 228,478 Total short-term carrying value of Convertible Debentures $ 228,478 Embedded Derivative Liability: Fair value of derivative liability, December 31, 2018 $ - Fair value of derivative liability at issuance recorded as debt Discount 171,425 Change in fair value of derivative liability 36,109 Fair value of derivative liability, September 30, 2019 $ 207,534 On September 19, 2019, we completed the closing of $600,000 of secured Convertible Debentures (the “Debentures”) for gross proceeds of $540,000 after original issue discounts. As of September 18, 2019 (the “Effective Date”), we entered into two substantially identical securities purchase agreements (the “Securities Purchase Agreements”) with two purchasers (the “Purchasers”), which provided for the issuance of up to an aggregate of $1.2 million in principal amount of Debentures (the “Bridge Financing”) of which the first tranche of $600,000 has been issued. The Securities Purchase Agreements provided for the issuance of the Debentures due one year from the dates of issuance in two $600,000 tranches: the first tranche as described above, and the second tranche, at the discretion of the Purchasers and us, to occur any time after November 17, 2019. If, at any time after November 17, 2019, the Purchasers elect not to consummate the closing of the second tranche, then we may raise up to $600,000 from additional investors (including our affiliates) who will have a security interest on a pari passu In connection with the Bridge Financing, each of the Purchasers received commitment fees of $5,000 and 500,000 restricted shares (the “Commitment Shares”) of our common stock. The placement agent for the Debentures received a cash fee of 8% of the gross proceeds received at each closing and is entitled to receive warrants for 5% of the total number of securities received by the holders upon the conversion of the Debentures, or upon the conversion value of the Debentures if the Debentures are cash settled. These warrants will be exercisable at a price per share equal to 110% of the price of the securities paid by the Purchasers and will expire in five years. The first tranche of the Debentures will mature on September 18, 2020, and may be redeemed by us prior to the maturity date as described below. All unpaid principal due and payable on the maturity date will be paid in the form of common stock. Any principal or interest that is due under each of the Debentures, which is not paid by the respective maturity date, will bear interest at the rate of 18% per annum until it is satisfied in full. The Debentures are senior secured obligations secured pursuant to the terms of security agreements dated as of September 18, 2019 (the “Security Agreements”) by all of the Company’s assets. Each Purchaser is entitled, at any time, to convert all or any portion of the outstanding principal amount of its Debenture(s) plus any accrued interest into restricted shares of common stock. If we consummate a public offering within 180 calendar days of the Effective Date, then the conversion price will be the lesser of (a) $0.15 or (b) 70% multiplied of the price per share of the common stock we issue in the public offering (the “QPI Discounted Price”), subject to further adjustment as provided in the Debenture as well as subject in each case to equitable adjustments resulting from any stock splits, stock dividends, recapitalizations or similar events. Further, if we consummate a public offering of common stock which results in us receiving gross proceeds of at least $5 million within 180 calendar days of the Effective Date then we are obligated to repay the outstanding amounts owed under the Debentures, to the extent they are not converted and including the applicable redemption premium then in effect, within three days of consummation of such an offering. If any portion of the Debentures are outstanding on the 181st calendar day after the Effective Date, then the conversion price shall equal the lesser of (a) $0.15, (b) the QPI Discounted Price, or (c) 70% of the lowest volume-weighted average price (as reported by Bloomberg LP) of the common stock on any trading day during the 20 trading days immediately preceding the date of conversion of the Debenture (provided, further, that if either we are not DWAC operational at the time of conversion, the common stock is traded on the OTC Pink at the time of conversion, or the conversion price is less than $0.01 per share, then 70% will automatically adjust to 60%). The Debentures are subject to a “conversion blocker” such that the each of the Purchasers cannot convert the Debentures to the extent that the conversion would result in the Purchaser and its affiliates holding more than 4.99% of the outstanding common stock (which the Purchaser can increase to 9.99% upon at least 61 days prior written notice to us). So long as no event of default has occurred and is continuing under the Debentures, we may at our option call for redemption all or part of the Debentures prior to the maturity date, upon not more than two calendar days written notice, for an amount equal to: (i) if the redemption date is 90 calendar days or less from the date of issuance of the Debentures, 110% of the sum of the principal amount; (ii) if the redemption date is greater than or equal to 91 calendar days from the date of issuance of the Debentures and less than or equal to 150 calendar days from the date of issuance of the Debentures, 120% of the sum of the principal amount; (iii) if the redemption date is greater than or equal to 151 calendar days from the date of issuance of the Debentures and less than or equal to 180 calendar days from the date of issuance of the Debentures, 125% of the sum of the principal amount; and (iv) if either (1) the Debentures are in default but the holder consents to the redemption notwithstanding such default or (2) the redemption date is greater than or equal to 181 calendar days from the date of issuance of the Debentures, 130% of the sum of the principal amount. The Debentures include an adjustment provision that, subject to certain exceptions, reduces, at the Purchaser’s option, the conversion price if we issue common stock or common stock equivalents (including in variable rate transactions) at a price lower than the then-current conversion price of the Debentures. Any reverse stock split of our outstanding shares will also result in an adjustment of the conversion price of the Debentures. The Securities Purchase Agreements contain customary representations, warranties and covenants. In addition, pursuant to the Securities Purchase Agreements, the Purchasers were granted piggy-back registration rights such that, from September 18, 2019 until the earlier of March 18, 2021 or the date the Debentures have been converted and/or repaid in the entirety, if we contemplate making an offering of our common stock or securities convertible into our common stock registered for sale under the Securities Act of 1933, as amended, or propose to file a registration statement covering any of our securities (other than a registration statement filed by us within 45 days of the signing closing date with the placement agent in the Bridge Financing acting as the underwriter), then each of the Purchasers will have the right to include all or a pro rata share of its Commitment Shares, the common stock issuable upon conversion of the Debentures (the “Conversion Shares”), and, to the extent applicable, any other shares of capital stock or other securities of ours that are issued upon exchange of Conversion Shares and/or restricted stock held by the Purchaser (collectively, the “Purchaser’s Securities”). The conversion option, the QPI put and the put exercisable upon certain financing events are embedded derivatives that are collectively bifurcated at fair value, with subsequent changes in fair value recognized in the Statement of Operations. The fair value estimate is a Level 3 measurement as defined by ASC Topic 820, Fair Value Measurements and Disclosures, as it is based on significant inputs not observable in the market. The Company estimated the fair value of the monthly payment provision using a Monte Carlo Simulation, with 10,000 trials, with the following key inputs: September 30, 2019 Stock price $0.08-$0.10 Terms (years) 0.97-1.00 Volatility 153.9%-158.2% Risk-free rate 1.75%-1.87% Probability of QPI 50% The Company recorded a total of $380,218 debt discount upon the closing of Convertible Debt, including the $171,425 fair value of the embedded derivative liability, $70,100 fair value of the common stock issued, $78,693 of direct transaction costs incurred, and $60,000 original issue discount. The Debt discount is amortized to interest expense over the term of the loan. Amortization of the debt discount associated with the Debentures was $8,696 for the three-month and nine-month periods ended September 30, 2019 and was included in interest expense in the accompanying Statements of Operations. |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 9 Months Ended |
Sep. 30, 2019 | |
Equity [Abstract] | |
STOCKHOLDERS' EQUITY | NOTE 5 – STOCKHOLDERS’ EQUITY For each of the three and nine months ended September 30, 2019, the Company expensed $0 relative to restricted stock units. For the three and nine months ended September 30, 2018 the Company expensed $0 and $8,625, respectively, relative to restricted stock units. During the nine months ended September 30, 2019, the Company granted a total of 1,200,000 restricted stock awards to five directors of the Company for their services. The restricted stock awards vest in equal quarterly installments over a one-year period. On February 27, 2019, three directors resigned from the Company’s Board of Directors, effective March 1, 2019. This resulted in a cancellation of 320,000 shares related to the portion of the unvested restricted stock awards these directors had received. On September 18, 2019 a director resigned from the Company’s Board of Directors, effective immediately, resulting in a cancellation of 120,000 related to the portion of unvested restricted stock awards this director had received. On March 15, 2019, we engaged an advisor to provide consulting services under an Investor Relations and Advisory Agreement (the "Agreement"). Pursuant to the Agreement, we agreed to pay in advance of services a monthly fee of $5,000 in shares of restricted common stock to the consulting firm for consulting services. The number of shares to be issued will be calculated based on the closing price of our common shares on the 1st or preceding day of each month, if the 1st were to fall on a weekend or holiday. However, if the stock were to trade below $0.15, the calculation would be based on $0.15. The shares shall not have registration rights, and the shares may be sold subject to Rule 144. During the nine months ended September 30, 2019, the Company issued 171,324 shares of restricted common stock for a total expense of $26,167 related to these services. The Company expensed $84,434 and $168,654 in costs related to restricted stock awards for the three and nine months ended September 30, 2019, respectively. For the three and nine months ended September 30, 2018, the Company expensed $160,077 and $386,856, respectively, relative to restricted common stock. On May 29, 2019, a former director completed a cashless exercise of 200,000 warrants and was issued 71,774 shares of the Company’s common stock. See Note 6 – Stock Options, Restricted Stock and Warrants. During the nine months ended September 30, 2019, the Company issued 600,000 shares of restricted common stock for a total expense of $77,000related to consulting services. During the nine months ended September 30, 2018, the Company issued 169,500 shares of restricted common stock for a total expense of $44,120 related to consulting services. On September 19, 2019, in connection with the Bridge Financing, the Company issued a total of 1,000,000 restricted shares of common stock with a fair value of $70,100. See Note 4 – Convertible Debt. During the nine months ended September 30, 2018, 37,500 restricted stock units vested in relation to a consulting services agreement and a total of $8,625 was expensed. During the nine months ended September 30, 2018, the Company granted a total of 600,000 shares of restricted common stock awards to two directors of the Company, each receiving 300,000 shares of restricted common stock upon 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 three months ended September 30, 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, that vested quarterly over a one-year period. In 2017, the Company authorized a private placement with a maximum offering amount of $2,100,000 allowing investors to purchase units consisting of 715,000 shares of common stock and 715,000 five-year warrants exercisable at $0.15 per share. In January 2018 the Company’s Board of Directors increased the size of the private placement. During the nine months ended September 30, 2018, the Company raised gross proceeds of $1,154,211 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 purchases by directors and relatives of the directors of the Company. In January 2018, the Chairman of the Board of Directors, made a cashless exercise of 5,000,000 options related to services rendered in 2017, resulting in the issuance of 4,027,778 shares of common stock. See Note 6 – Stock Options, Restricted Stock and Warrants. 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 the latter of 30 days after the receipt of all Investment Letters, as defined below, in connection with the Settlement Shares, as defined below, or September 30, 2018. For the nine months ended September 30, 2018, 20,764,860 shares of warrants were exercised and a total of 20,764,860 shares of common stock were issued for gross proceeds of $2,076,486. Included in the above amounts are gross proceeds of $1,205,458 from directors which resulted in 12,054,576 warrants converted into the issuance of 12,054,576 common stock. The offer to exercise $0.15 warrants at $0.10 per share expired on September 30, 2018 and the Company did not extend the offer. 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 at that time, 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 a fund controlled by Paul Klapper and an additional party, and (ii) issued a total of 1,000,000 shares of the Company’s common stock to the fund and the third party (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 (or an affiliate) and the third party, 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 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. On March 28, 2018, the Company accelerated the vesting of 150,000 shares of restricted common stock owned by Mr. Klapper. 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 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. 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. See Note 6 - Stock Options, Restricted Stock and Warrants. |
STOCK OPTIONS, RESTRICTED STOCK
STOCK OPTIONS, RESTRICTED STOCK AND WARRANTS | 9 Months Ended |
Sep. 30, 2019 | |
Share-based Payment Arrangement [Abstract] | |
STOCK OPTIONS, RESTRICTED STOCK AND WARRANTS | NOTE 6 – STOCK OPTIONS, RESTRICTED STOCK AND WARRANTS During 2013, the Company adopted, and the shareholders approved, an incentive compensation plan (the “2013 Plan”) which served as the successor incentive compensation plan to a 2003 Stock Option Plan covering (i) 20,000,000 new shares of our common stock, plus (ii) the number of shares of our common stock subject to outstanding grants under the 2003 Plan as of the date of the 2013 Annual Meeting, plus (iii) the number of shares of our common stock remaining available for issuance under the 2003 Plan. Outstanding options for 7,990,000 shares of common stock have been issued under the 2013 Plan and the 2013 Plan will no longer be used for future grants. On November 14, 2017, the Company’s Board of Directors adopted and in 2018 our shareholders ratified the 2017 Equity Incentive Plan (the “2017 Plan”) which provides for the issuance of awards covering 13,000,000 shares of common stock under the Plan. The 2017 Plan provides that directors, officers, employees, and consultants of the Company will be eligible to receive equity incentives under the 2017 Plan at the discretion of the Board of Directors or the Compensation Committee of the Board of Directors (the “Compensation Committee”). The Compensation Committee may adopt rules and regulations to carry out the terms of the 2017 Plan. The Plan terminates on November 14, 2027 unless sooner terminated. The 2017 Plan is administered by the 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 2017 Plan. In connection with incentive stock options issuable under the 2017 Plan, 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). 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 first 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. During the nine months ended September 30, 2019 and 2018, the Company expensed $399,828 and $270,339, respectively, with respect to options. The following table presents the weighted-average assumptions used to estimate the fair value of the stock options granted during the nine months ended September 30, 2019: Risk Free Interest Rate 2.03 % Expected Volatility 433.91 % Expected Life (in years) 5.0 Dividend Yield 0 % Weighted average estimated fair value of options during the period $ 0.25 Options Outstanding Weighted - Average Aggregate Remaining Intrinsic Weighted- Contractual Value Number of Average Term (in 000’s) Shares Exercise Price (in years) (1) Balance as of December 31, 2018 18,613,529 $ 0.14 Granted 1,500,000 0.18 Balance September 30, 2019 20,113,529 $ 0.14 Exercisable at September 30, 2019 19,005,197 $ 0.14 3.2 $ 488 (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. The following table summarizes the activities for the Company’s unvested stock options for the nine months ended September 30, 2019: Unvested Options Weighted - Average Number of Unvested Grant Date Options Exercise Price Balance December 31, 2018 2,016,666 $ 0.18 Granted 1,500,000 0.18 Vested (2,408,334 ) 0.16 Balance September 30, 2019 1,108,332 $ 0.21 During the nine months ended September 30, 2019, the Company amended the Consulting Agreement it has with its Chief Operating Officer and granted him options to purchase 1,000,000 shares of common stock with an exercise price of $0.195 that vest annually in equal increments over a two-year period. Additionally, during the nine months ended September 30, 2019, the Company amended the Chief Operating Officer’s consulting agreement to provide, among other things, for a monthly consulting fee of $14,500 for services provided and to extend the term of the consulting agreement to March 1, 2021. In August 2019, the Company entered into an amendment (the “Amendment”) to the Employment Agreement, dated August 15, 2017, with Patrick White, the Chief Executive Officer of the Company (the “Employment Agreement”), which Employment Agreement automatically renewed on July 16, 2019, effective on August 15, 2019. Pursuant to the Amendment, the term was reduced to one year and Mr. White agreed to defer receipt of sums due him to improve the Company’s liquidity. Mr. White was due to receive $100,000 on August 15, 2019 representing deferred salary (the “Deferral Amount”) that he had previously agreed to defer over the two years of the initial term of his Employment Agreement. In the Amendment, Mr. White agreed to extend receipt of the Deferral Amount until August 15, 2020. In addition, he agreed to continue deferring 25% of his base salary over the one-year term until August 15, 2020. In connection with entering into the Amendment, the Company granted Mr. White 500,000 five-year fully vested incentive stock options under the Company’s 2017 Equity Incentive Plan exercisable at $0.14 per share. The following table summarizes the activities for the Company’s warrants for the nine months ended September 30, 2019: Warrants Outstanding Number of Weighted- Average Exercise Price Weighted - Average Remaining Contractual Term in years) Aggregate Intrinsic Value (in 000's) (1) Balance, December 31, 2018 22,240,833 $ 0.31 Exercised (200,000 ) 0.15 Expired (78,225 ) 0.26 Balance, September 30, 2019 21,962,608 $ 0.32 Exercisable at September 30, 2019 21,962,608 $ 0.32 3.0 $ - (1) The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying warrants and the closing stock price of $0.10 for our common stock on September 30, 2019. In May 2019, a former director made a cashless exercise of 200,000 warrants, whereby the warrant holder disposed of 128,226 shares of common stock to the Company as part of this exercise, amounting to an issuance of 71,774 shares of common stock. |
CONCENTRATIONS
CONCENTRATIONS | 9 Months Ended |
Sep. 30, 2019 | |
Risks and Uncertainties [Abstract] | |
CONCENTRATIONS | NOTE 7 – CONCENTRATIONS Revenue For the three and nine months ended September 30, 2019, one customer represented 90% and 93% of revenues, respectively. Accounts Receivable As of September 30, 2019, one customer represented 20% of accounts receivable and one customer represented 76% of accounts receivable. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2019 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 8 – SUBSEQUENT EVENTS In October 2019, the Company issued 33,333 shares of restricted common stock in relation to investor relation services. In November 2019, the Company issued 280,000 shares of restricted common stock in relation to consulting services. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Nature of the Business | Nature of the Business The Company was incorporated in the State of Nevada on November 10, 1999. The Company is based in Rochester, New York and its common stock, par value $0.001 per share, is traded on the over-the-counter market and quoted on the OTCQB. The Company is a developmental stage technology solutions provider specializing in brand protection functions such as counterfeit prevention, authentication, serialization, track and trace features for labels, packaging and products. Leveraging our covert luminescent pigment, RainbowSecure®, which we began commercializing in 2018, we also developed the patent pending VeriPAS™ software system in 2018, which covertly and overtly serializes products to track a product’s “life cycle” for brand owners. We believe VeriPAS™ is the only invisible covert serialization and authentication solution deployed through variable digital printing on HP Indigo printing systems with a smartphone tracking and authentication system. VeriPAS™ is capable of fluorescing, decoding, and verifying invisible RainbowSecure® codes in the field – designed to allow investigators to quickly and efficiently authenticate product throughout the distribution chain, including warehouses, ports of entry, retail locations, and product purchased over the internet for inspection and investigative actions. This technology is coupled with a secure cloud based track and trace software engine which allows brands and investigators to see where products originate and where they are deployed with geo location mapping and intelligent programable alerts. Brand owners access the VeriPAS™ software over the internet. Brand owners can then set rules of engagement, establish marketing programs for customer engagement and control, and monitor and protect their products “life cycle.” We have not yet derived any revenue from our VeriPAS™ software system and have derived minimal revenue from the sale of our RainbowSecure® technology. The accompanying unaudited interim financial statements (the “Interim Statements”) have been prepared pursuant to the rules and regulations for reporting on Form 10-Q. Accordingly, certain information and disclosures required by U. S. generally accepted accounting principles (“GAAP”) for complete financial statements are not included herein. The Interim Statements should be read in conjunction with the financial statements and notes thereto included in the Company’s latest Annual Report on Form 10-K for the year ended December 31, 2018 as filed with the Securities and Exchange Commission (the “SEC”) on April 1, 2019. The accompanying Interim Statements are unaudited; however, in the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The interim results for the three and nine months ended September 30, 2019 are not necessarily indicative of the results to be expected for the year ending December 31, 2019 or for any future interim periods. The Company’s activities are subject to significant risks and uncertainties, including the need to secure additional funding for working capital and to further develop the Company’s intellectual property. |
Basis of Presentation | Basis of Presentation The accompanying financial statements are presented in accordance with GAAP. |
Revenue Recognition | Revenue Recognition The Company accounts for revenues according to Accounting Standards Codification (“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 obligations are satisfied. During the three and nine months ended September 30, 2019, the Company’s revenues consisted of revenue primarily generated from customer’s printing labels utilizing the Company’s technology. |
Equity-linked Financial Instruments | Equity-linked Financial Instruments Certain of the Company’s debt instruments include embedded derivatives that require bifurcation from the host contract under the provisions of ASC 815, Derivatives and Hedging. Under this guidance, the Company recognizes the embedded derivatives at fair value and records a gain or loss resulting from the change in fair values at the end of each reporting period. In connection with issuance of the Debentures, described in Note 4 – Convertible Debt, after March 17, 2020, the Company could become contingently obligated to issue shares potentially in excess of its authorized share limit. Consequently, the ability to settle these obligations with shares would be unavailable causing these and other share-settled obligations to potentially be settled in cash. The Company applies a sequencing policy regarding share settlement wherein equity-linked financial instruments with the earliest issuance date would be settled first. Thus, all equity-linked financial instruments, which are convertible or exercisable into common stock, issued concurrent or subsequent to the Debentures are classified as derivative liabilities, with the exception of instruments related to employee share-based compensation. |
Sequencing | Sequencing As of September 19, 2019, the Company adopted a sequencing policy whereby all future equity-linked instruments may be classified as a derivative liability with the exception of instruments related to share-based compensation issued to employees or directors. |
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 periods 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 each of the three and nine months ended September 30, 2019 and 2018, 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 each of the three and nine months ended September 30, 2019, there were approximately 56,699,000 anti-dilutive shares consisting of 20,114,000 shares issuable upon exercise of options, 21,963,000 shares issuable upon exercise of warrants, 7,222,000 shares issuable upon conversion of preferred stock and 4,400,000 shares issuable upon conversion of convertible debentures. For the three and nine months ended September 30, 2018, there were approximately 41,237,000 anti-dilutive shares consisting of 18,014,000 shares issuable upon exercise of options, 9,909,000 shares issuable upon exercise of warrants and 13,314,000 shares issuable upon conversion of preferred stock. |
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 and raising additional capital through incurrence of debt and the sale of our common stock and other equity securities. On September 19, 2019, the Company received net proceeds of $461,307 from the Bridge Financing, described below in Note 4 – Convertible Debt. 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 the future public offerings of our securities. However, management cannot provide any assurances that the Company will be successful in accomplishing any of its plans. As a result of the Bridge Financing, the Company’s existing cash resources are sufficient to sustain our operations through December 2019. The Company needs to raise additional funds in the future in order to remain operational past that date. |
Recently Adopted Accounting Pronouncements | Recently Adopted Accounting Pronouncements Effective January 1, 2019, the Company adopted ASU No. 2018-07, Compensation – Stock Based Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting (“ASU 2018-07”), which aligns accounting for share-based payments issued to nonemployees to that of employees under the existing guidance of Topic 718, with certain exceptions. This update supersedes previous guidance for equity-based payments to nonemployees under Subtopic 505-50, Equity – Equity-Based Payments to Non-Employees. The adoption of ASU 2018-07 did not have a material impact on the Company’s financial statements. |
CONVERTIBLE DEBT (Tables)
CONVERTIBLE DEBT (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Debt Disclosure [Abstract] | |
Schedule of convertible debt. | September 30, 2019 Convertible Debentures, due September 18, 2020: Principal value $ 600,000 Debt discount (371,522 ) Carrying value of convertible notes 228,478 Total short-term carrying value of Convertible Debentures $ 228,478 Embedded Derivative Liability: Fair value of derivative liability, December 31, 2018 $ - Fair value of derivative liability at issuance recorded as debt Discount 171,425 Change in fair value of derivative liability 36,109 Fair value of derivative liability, September 30, 2019 $ 207,534 |
Schedule of estimated the fair value | The Company estimated the fair value of the monthly payment provision using a Monte Carlo Simulation, with 10,000 trials, with the following key inputs: September 30, 2019 Stock price $0.08-$0.10 Terms (years) 0.97-1.00 Volatility 153.9%-158.2% Risk-free rate 1.75%-1.87% Probability of QPI 50% |
STOCK OPTIONS, RESTRICTED STO_2
STOCK OPTIONS, RESTRICTED STOCK AND WARRANTS (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of weighted-average assumptions | The following table presents the weighted-average assumptions used to estimate the fair value of the stock options granted during the nine months ended September 30, 2019: Risk Free Interest Rate 2.03 % Expected Volatility 433.91 % Expected Life (in years) 5.0 Dividend Yield 0 % Weighted average estimated fair value of options during the period $ 0.25 |
Schedule of stock option activity | Options Outstanding Weighted - Average Aggregate Remaining Intrinsic Weighted- Contractual Value Number of Average Term (in 000’s) Shares Exercise Price (in years) (1) Balance as of December 31, 2018 18,613,529 $ 0.14 Granted 1,500,000 0.18 Balance September 30, 2019 20,113,529 $ 0.14 Exercisable at September 30, 2019 19,005,197 $ 0.14 3.2 $ 488 (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. |
Schedule of summary for the activities of unvested stock options | The following table summarizes the activities for the Company’s unvested stock options for the nine months ended September 30, 2019: Unvested Options Weighted - Average Number of Unvested Grant Date Options Exercise Price Balance December 31, 2018 2,016,666 $ 0.18 Granted 1,500,000 0.18 Vested (2,408,334 ) 0.16 Balance September 30, 2019 1,108,332 $ 0.21 |
Schedule of warrant activity | The following table summarizes the activities for the Company’s warrants for the nine months ended September 30, 2019: Warrants Outstanding Number of Weighted- Average Exercise Price Weighted - Average Remaining Contractual Term in years) Aggregate Intrinsic Value (in 000's) (1) Balance, December 31, 2018 22,240,833 $ 0.31 Exercised (200,000 ) 0.15 Expired (78,225 ) 0.26 Balance, September 30, 2019 21,962,608 $ 0.32 Exercisable at September 30, 2019 21,962,608 $ 0.32 3.0 $ - (1) The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying warrants and the closing stock price of $0.10 for our common stock on September 30, 2019. |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | Sep. 19, 2019 | Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||
Common stock, par value | $ 0.001 | $ 0.001 | $ 0.001 | |||
Anti-dilutive common stock equivalents, excluded from the calculation of earnings per share | 56,699,000 | 41,237,000 | 56,699,000 | 41,237,000 | ||
Receivable of net proceeds | $ 1,154,211 | |||||
Secured Convertible Debentures | $ 600,000 | |||||
Bridge Financing [Member] | ||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||
Receivable of net proceeds | $ 461,307 | |||||
Employee Stock Option [Member] | ||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||
Anti-dilutive common stock equivalents, excluded from the calculation of earnings per share | 20,114,000 | 18,014,000 | 20,114,000 | 18,014,000 | ||
Warrant [Member] | ||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||
Anti-dilutive common stock equivalents, excluded from the calculation of earnings per share | 21,963,000 | 9,909,000 | 21,963,000 | 9,909,000 | ||
Preferred Share Agreements [Member] | ||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||
Anti-dilutive common stock equivalents, excluded from the calculation of earnings per share | 7,222,000 | 13,314,000 | 7,222,000 | 13,314,000 | ||
Convertible Debentures [Member] | ||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||
Anti-dilutive common stock equivalents, excluded from the calculation of earnings per share | 4,400,000 | 4,400,000 |
INTANGIBLE ASSETS (Details Narr
INTANGIBLE ASSETS (Details Narrative) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2019USD ($)Number | Sep. 30, 2018USD ($) | Sep. 30, 2019USD ($)Number | Sep. 30, 2018USD ($) | Dec. 31, 2018USD ($) | |
Finite-Lived Intangible Assets [Line Items] | |||||
Capitalized software costs | $ | $ 141,656 | $ 70,231 | |||
Patents [Member] | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Number of patents granted | 10 | 10 | |||
Number of pending patents | 4 | 4 | |||
Number of trademarks | 4 | 4 | |||
Number of pending trademarks | 8 | 8 | |||
Amortization method | Straight-line basis | ||||
Patents [Member] | Foreign [Member] | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Number of trademarks | 1 | 1 | |||
Patents [Member] | Europe [Member] | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Number of patents granted | 1 | 1 | |||
Patents [Member] | Minimum [Member] | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Estimated lives of intangible assets | 17 years | ||||
Patents [Member] | Maximum [Member] | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Estimated lives of intangible assets | 19 years | ||||
Trademarks [Member] | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Amortization method | Straight-line basis | ||||
Patents And Trademark [Member] | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Capitalized patent costs and trademarks | $ | $ 36,953 | $ 16,690 | |||
Amortization expense | $ | $ 5,662 | $ 5,034 | $ 17,297 | $ 15,928 |
CONVERTIBLE PREFERRED STOCK (De
CONVERTIBLE PREFERRED STOCK (Details Narrative) - $ / shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Preferred stock, voting rights | Each share of Series A and Series B has limited voting rights, is entitled to participate with the common stock on liquidation and holders of Series A and Series B are subject to beneficial ownership limitations. | |||
Series A Convertible Preferred Stock [Member] | ||||
Convertible preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 | ||
Convertible preferred stock, outstanding (in shares) | 0 | 304,778 | ||
Conversion of stock, shares converted (in shares) | 304,778 | 20,000 | ||
Conversion of stock, shares converted (in shares) | ||||
Conversion of shares of preferred stock to common stock (in shares) | 6,095,569 | 400,000 | ||
Series B Convertible Preferred Stock [Member] | ||||
Convertible preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 | ||
Convertible preferred stock, outstanding (in shares) | 0.85 | 0.85 | ||
Conversion of stock, shares converted (in shares) | ||||
Conversion of stock, shares converted (in shares) | 0.07 | |||
Conversion of shares of preferred stock to common stock (in shares) | 599,362 |
CONVERTIBLE DEBT (Details 1)
CONVERTIBLE DEBT (Details 1) - USD ($) | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2019 | Dec. 31, 2018 | |
Debt Disclosure [Abstract] | |||
Debt discount | $ (371,522) | $ (371,522) | |
Carrying value of convertible notes | 228,478 | 228,478 | |
Total short-term carrying value of convertible notes | 228,478 | 228,478 | |
Embedded Derivative Liability: | |||
Fair value of derivative liability | |||
Fair value of derivative liability at issuance recorded as debt Discount | 171,425 | ||
Change in fair value of derivative liability | (36,109) | (36,109) | |
Fair value of derivative liability | $ 207,534 | $ 207,534 |
CONVERTIBLE DEBT (Details 2)
CONVERTIBLE DEBT (Details 2) - Fair Value, Inputs, Level 3 [Member] | 9 Months Ended |
Sep. 30, 2019 | |
Stock Price [Member] | Minimum [Member] | |
Embedded Derivative Liability, Measurement Input | 0.08 |
Stock Price [Member] | Maximum [Member] | |
Embedded Derivative Liability, Measurement Input | 0.10 |
Volatility [Member] | Minimum [Member] | |
Embedded Derivative Liability, Measurement Input | 153.9 |
Volatility [Member] | Maximum [Member] | |
Embedded Derivative Liability, Measurement Input | 158.2 |
Risk-Free Rate [Member] | Minimum [Member] | |
Embedded Derivative Liability, Measurement Input | 1.75 |
Risk-Free Rate [Member] | Maximum [Member] | |
Embedded Derivative Liability, Measurement Input | 1.87 |
Probability of QPI [Member] | |
Embedded Derivative Liability, Measurement Input | 50 |
Terms [Member] | Minimum [Member] | |
Embedded Derivative, Term | 11 months 19 days |
Terms [Member] | Maximum [Member] | |
Embedded Derivative, Term | 1 year |
CONVERTIBLE DEBT (Details Narra
CONVERTIBLE DEBT (Details Narrative) - USD ($) | Sep. 19, 2019 | Sep. 30, 2019 | Sep. 30, 2019 | Sep. 30, 2018 |
Convertible debt | $ 600,000 | $ 380,218 | $ 380,218 | |
Debentures for gross proceeds | 540,000 | |||
Description of debt conversion | If any portion of the Debentures are outstanding on the 181st calendar day after the Effective Date, then the conversion price shall equal the lesser of (a) $0.15, (b) the QPI Discounted Price, or (c) 70% of the lowest volume-weighted average price (as reported by Bloomberg LP) of the common stock on any trading day during the 20 trading days immediately preceding the date of conversion of the Debenture (provided, further, that if either we are not DWAC operational at the time of conversion, the common stock is traded on the OTC Pink at the time of conversion, or the conversion price is less than $0.01 per share, then 70% will automatically adjust to 60%). | |||
Description of debt redemption | So long as no event of default has occurred and is continuing under the Debentures, we may at our option call for redemption all or part of the Debentures prior to the maturity date, upon not more than two calendar days written notice, for an amount equal to: (i) if the redemption date is 90 calendar days or less from the date of issuance of the Debentures, 110% of the sum of the principal amount; (ii) if the redemption date is greater than or equal to 91 calendar days from the date of issuance of the Debentures and less than or equal to 150 calendar days from the date of issuance of the Debentures, 120% of the sum of the principal amount; (iii) if the redemption date is greater than or equal to 151 calendar days from the date of issuance of the Debentures and less than or equal to 180 calendar days from the date of issuance of the Debentures, 125% of the sum of the principal amount; and (iv) if either (1) the Debentures are in default but the holder consents to the redemption notwithstanding such default or (2) the redemption date is greater than or equal to 181 calendar days from the date of issuance of the Debentures, 130% of the sum of the principal amount. | |||
Amortization of debt discount | $ 8,696 | |||
Fair value of embedded derivative liability | 171,425 | 171,425 | ||
Common stock issued in relation to Bridge Financing | 70,100 | 70,100 | ||
Transaction costs | 78,693 | 78,693 | ||
Original issue discount | $ 60,000 | |||
Public Offering [Member] | ||||
Description of debt | Each Purchaser is entitled, at any time, to convert all or any portion of the outstanding principal amount of its Debenture(s) plus any accrued interest into restricted shares of common stock. If we consummate a public offering within 180 calendar days of the Effective Date, then the conversion price will be the lesser of (a) $0.15 or (b) 70% multiplied of the price per share of the common stock we issue in the public offering (the “QPI Discounted Price”), subject to further adjustment as provided in the Debenture as well as subject in each case to equitable adjustments resulting from any stock splits, stock dividends, recapitalizations or similar events. Further, if we consummate a public offering of common stock which results in us receiving gross proceeds of at least $5 million within 180 calendar days of the Effective Date then we are obligated to repay the outstanding amounts owed under the Debentures, to the extent they are not converted and including the applicable redemption premium then in effect, within three days of consummation of such an offering. | |||
Securities Purchase Agreement [Member] | Two Purchasers [Member] | ||||
Principal amount | $ 1,200,000 | |||
Description of debt tranche issuer | The Purchasers elect not to consummate the closing of the second tranche, then we may raise up to $600,000 from additional investors (including our affiliates) who will have a security interest on a pari passu basis with the Purchasers in the first tranche, so long as such investors agree not to convert the securities received until the Purchasers in the first tranche have completely converted the Debentures or been fully repaid. | |||
Securities Purchase Agreement [Member] | Two Purchasers [Member] | First Tranche [Member] | ||||
Issuance of the debt tranche | $ 600,000 | |||
Maturity date | Sep. 18, 2020 | |||
Interest rate | 18.00% | |||
Securities Purchase Agreement [Member] | Two Purchasers [Member] | Second Tranche [Member] | ||||
Issuance of the debt tranche | $ 600,000 | |||
Securities Purchase Agreement [Member] | Bridge Financing [Member] | ||||
Commitment fee | $ 5,000 | $ 5,000 | ||
Description of fee | The placement agent for the Debentures received a cash fee of 8% of the gross proceeds received at each closing and is entitled to receive warrants for 5% of the total number of securities received by the holders upon the conversion of the Debentures, or upon the conversion value of the Debentures if the Debentures are cash settled. These warrants will be exercisable at a price per share equal to 110% of the price of the securities paid by the Purchasers and will expire in five years. | |||
Securities Purchase Agreement [Member] | Bridge Financing [Member] | Restricted Stock [Member] | ||||
Shares issued during period | 500,000 |
STOCKHOLDERS' EQUITY (Details N
STOCKHOLDERS' EQUITY (Details Narrative) - USD ($) | Sep. 19, 2019 | Sep. 18, 2019 | May 29, 2019 | Mar. 15, 2019 | Feb. 27, 2019 | Aug. 31, 2018 | Jul. 31, 2018 | Jul. 27, 2018 | Mar. 31, 2018 | Apr. 30, 2018 | Jan. 31, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2017 | Dec. 31, 2018 | Mar. 28, 2018 | Jan. 30, 2018 |
Warrants Issued | $ 1,154,211 | $ 1,154,211 | |||||||||||||||||
Warrant Exercise price (in dollars per share) | $ 0.15 | ||||||||||||||||||
Shares issued during period value | 1,154,211 | ||||||||||||||||||
Proceeds from issuance of convertible stock | $ 2,311,438 | ||||||||||||||||||
Common stock issued | 111,252,373 | 111,252,373 | 102,553,706 | ||||||||||||||||
Share-based payment for settlement agreement with shareholders | $ 279,000 | ||||||||||||||||||
Exercised total share price | 200,000 | ||||||||||||||||||
Private Placement [Member] | |||||||||||||||||||
Number of share cancelled | 607,143 | ||||||||||||||||||
Proceeds From Issuance of Private Placement | $ 2,100,000 | ||||||||||||||||||
Warrant term | 5 years | ||||||||||||||||||
Third Party [Member] | |||||||||||||||||||
Share-based payment for settlement agreement with shareholders | 139,500 | ||||||||||||||||||
Related Party [Member] | |||||||||||||||||||
Share-based payment for settlement agreement with shareholders | $ 139,500 | ||||||||||||||||||
Common Stock [Member] | |||||||||||||||||||
Restricted stock awards granted | (120,000) | 760,000 | 2,212,500 | ||||||||||||||||
Common stock sold | 715,000 | ||||||||||||||||||
Shares issued during period value | $ (607) | $ 15,906 | |||||||||||||||||
Shares issued during period | (607,143) | 15,906,168 | |||||||||||||||||
Common Stock [Member] | Bridge Financing [Member] | |||||||||||||||||||
Restricted stock units issued | 1,000,000 | ||||||||||||||||||
Restricted stock units fair value | $ 70,100 | ||||||||||||||||||
Board of Director [Member] | |||||||||||||||||||
Issuance of shares cashless exercise of options related to services | 200,000 | 4,027,778 | |||||||||||||||||
Proceeds from issuance of convertible stock | $ 2,076,486 | ||||||||||||||||||
Board of Director [Member] | Settlement Agreement [Member] | |||||||||||||||||||
Warrant Exercise price (in dollars per share) | $ 0.40 | ||||||||||||||||||
Common stock issued | 1,000,000 | ||||||||||||||||||
Amount of Settlement paid | $ 500,000 | ||||||||||||||||||
Number of common stock called by warrants (in shares) | 3,700,000 | ||||||||||||||||||
Board of Director [Member] | Private Placement [Member] | |||||||||||||||||||
Proceeds From Issuance of Private Placement | $ 530,777 | ||||||||||||||||||
Board of Director [Member] | Common Stock [Member] | |||||||||||||||||||
Restricted stock awards granted | 300,000 | ||||||||||||||||||
Common stock sold | 20,764,860 | ||||||||||||||||||
Shares issued during period | 71,774 | ||||||||||||||||||
Proceeds from issuance of convertible stock | $ 12,054,576 | ||||||||||||||||||
Shares issued to convert accounts payable | 1,749,683 | ||||||||||||||||||
Board of Director [Member] | Common Stock [Member] | Common stock and warrant [Member] | |||||||||||||||||||
Common stock sold | 7,590,111 | ||||||||||||||||||
Restricted Stock Units (RSUs) [Member] | |||||||||||||||||||
Restricted stock/Restricted stock units, Expense | $ 0 | $ 0 | $ 0 | $ 8,625 | |||||||||||||||
Restricted Stock Units (RSUs) [Member] | Investor Relations and Advisory Agreement [Member] | |||||||||||||||||||
Restricted stock/Restricted stock units, Expense | $ 26,167 | ||||||||||||||||||
Restricted stock units issued | 171,324 | ||||||||||||||||||
Monthly fee | $ 5,000 | ||||||||||||||||||
Description of closing price of common shares | The number of shares to be issued will be calculated based on the closing price of our common shares on the 1st or preceding day of each month, if the 1st were to fall on a weekend or holiday. However, if the stock were to trade below $0.15, the calculation would be based on $0.15, and never a lower price than that. | ||||||||||||||||||
Restricted Stock Units (RSUs) [Member] | Consulting Service Agreement [Member] | |||||||||||||||||||
Restricted stock/Restricted stock units, Expense | $ 77,000 | $ 44,120 | |||||||||||||||||
Restricted stock units issued | 600,000 | 169,500 | |||||||||||||||||
Restricted stock vested, shares | 37,500 | ||||||||||||||||||
Restricted stock vested, amount | 8,625 | ||||||||||||||||||
Restricted Stock [Member] | |||||||||||||||||||
Option vesting | 150,000 | ||||||||||||||||||
Restricted Stock [Member] | Five Director [Member] | |||||||||||||||||||
Restricted stock awards granted | 1,200,000 | ||||||||||||||||||
Restricted stock awards granted term | 1 year | ||||||||||||||||||
Restricted Stock [Member] | Three Director [Member] | |||||||||||||||||||
Number of share cancelled | 320,000 | ||||||||||||||||||
Restricted Stock [Member] | Consulting Service Agreement [Member] | |||||||||||||||||||
Restricted stock/Restricted stock units, Expense | $ 84,434 | $ 160,077 | $ 168,654 | $ 386,856 | |||||||||||||||
Restricted Stock [Member] | Two Director [Member] | |||||||||||||||||||
Restricted stock awards granted | 600,000 | ||||||||||||||||||
Restricted Stock [Member] | Director and Chief Executive Officer [Member] | |||||||||||||||||||
Restricted stock vested, shares | 150,000 | ||||||||||||||||||
Restricted stock awards granted | 1,425,000 | ||||||||||||||||||
Restricted stock awards granted term | 1 year | ||||||||||||||||||
Unvested Restricted Stock [Member] | Director [Member] | |||||||||||||||||||
Number of share cancelled | 120,000 | ||||||||||||||||||
Warrant [Member] | |||||||||||||||||||
Warrant term | 5 years | ||||||||||||||||||
Warrants Issued | $ 16,513,311 | $ 16,513,311 | $ 715,000 | ||||||||||||||||
Warrant Exercise price (in dollars per share) | $ 0.15 | $ 0.10 | |||||||||||||||||
Warrant [Member] | Board of Director [Member] | |||||||||||||||||||
Common stock sold | 20,764,860 | ||||||||||||||||||
Warrant Exercise price (in dollars per share) | $ 0.15 | $ 0.15 | |||||||||||||||||
Proceeds from issuance of convertible stock | $ 1,205,458 | ||||||||||||||||||
Shares issued to convert accounts payable | 1,749,683 | ||||||||||||||||||
Exercised total share price | 1,439,524 | ||||||||||||||||||
Exercised total price | $ 215,929 | ||||||||||||||||||
Number of cashless exercise of warrants | 366,047 | ||||||||||||||||||
Number of disposed share | 190,386 | ||||||||||||||||||
Number of issuance share | 175,661 | ||||||||||||||||||
Warrant [Member] | Board of Director [Member] | Common stock and warrant [Member] | |||||||||||||||||||
Restricted stock awards granted | 300,000 | ||||||||||||||||||
Common stock sold | 7,590,111 | ||||||||||||||||||
Warrant [Member] | Member of Board [Member] | |||||||||||||||||||
Shares issued during period value | $ 15,731 | ||||||||||||||||||
Shares issued during period | 104,876 | ||||||||||||||||||
Employee Stock Option [Member] | Warrant [Member] | Chief Executive Officer (Patrick White) [Member] | |||||||||||||||||||
Warrant Exercise price (in dollars per share) | $ 0.01 | ||||||||||||||||||
Shares issued during period value | $ 1,000 | ||||||||||||||||||
Shares issued during period | 100,000 | ||||||||||||||||||
Employee Stock Option [Member] | Board of Director [Member] | |||||||||||||||||||
Issuance of shares cashless exercise of options related to services | 5,000,000 |
STOCK OPTIONS, RESTRICTED STO_3
STOCK OPTIONS, RESTRICTED STOCK AND WARRANTS (Details) | 9 Months Ended |
Sep. 30, 2019$ / shares | |
Share-based Payment Arrangement [Abstract] | |
Risk Free Interest Rate | 2.03% |
Expected Volatility | 433.91% |
Expected Life (in years) | 5 years |
Dividend Yield | 0.00% |
Weighted average estimated fair value of options during the period | $ 0.25 |
STOCK OPTIONS, RESTRICTED STO_4
STOCK OPTIONS, RESTRICTED STOCK AND WARRANTS (Details 1) - Employee Stock Option [Member] | 9 Months Ended | |
Sep. 30, 2019USD ($)$ / sharesshares | ||
Number of Shares | ||
Balance, beginning | shares | 18,613,529 | |
Granted | shares | 1,500,000 | |
Balance, ending | shares | 20,113,529 | |
Exercisable | shares | 19,005,197 | |
Weighted Average Exercise Price | ||
Balance, beginning | $ / shares | $ 0.14 | |
Granted | $ / shares | 0.18 | |
Balance, ending | $ / shares | 0.14 | |
Exercisable | $ / shares | $ 0.14 | |
Weighted Average Remaining Contractual Term | ||
Exercisable | 3 years 2 months 12 days | |
Aggregate Intrinsic Value | ||
Exercisable | $ | $ 488 | [1] |
[1] | The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the quoted price of the Company's common stock for options that were in-the-money at each respective period. |
STOCK OPTIONS, RESTRICTED STO_5
STOCK OPTIONS, RESTRICTED STOCK AND WARRANTS (Details 2) - Nonvested Stock Options [Member] | 9 Months Ended | |
Sep. 30, 2019USD ($)$ / sharesshares | ||
Number of Unvested Options | ||
Balance, Beginning | shares | 2,016,666 | |
Granted | shares | 1,500,000 | |
Vested | shares | (2,408,334) | |
Balance, Ending | shares | 1,108,332 | |
Weighted-Average Grant Date Exercise Price | ||
Balance, Beginning | $ / shares | $ 0.18 | |
Granted | $ / shares | 0.18 | |
Vested | $ / shares | 0.16 | |
Balance, Ending | $ / shares | $ 0.21 | |
Aggregate Intrinsic Value | ||
Exercisable | $ | [1] | |
[1] | The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying warrants and the closing stock price of $0.10 for our common stock on September 30, 2019. |
STOCK OPTIONS, RESTRICTED STO_6
STOCK OPTIONS, RESTRICTED STOCK AND WARRANTS (Details 3) | 9 Months Ended |
Sep. 30, 2019USD ($)$ / sharesshares | |
Number of Shares | |
Balance, beginning | shares | 22,240,833 |
Exercised | shares | (200,000) |
Expired | shares | (78,225) |
Balance, ending | shares | 21,962,608 |
Exercisable | shares | 21,962,608 |
Weighted Average Exercise Price | |
Balance, beginning | $ 0.31 |
Exercised | 0.15 |
Expired | 0.26 |
Balance, ending | 0.32 |
Exercisable | $ 0.32 |
Weighted - Average Remaining Contractual Term | |
Exercisable | 3 years |
Aggregate Intrinsic Value: | |
Exercisable | $ | |
Closing stock price | $ 0.10 |
STOCK OPTIONS, RESTRICTED STO_7
STOCK OPTIONS, RESTRICTED STOCK AND WARRANTS (Details Narrative) - USD ($) | May 29, 2019 | Nov. 14, 2017 | May 31, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Option, expense | $ 399,828 | $ 270,339 | ||||
Common Stock [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Shares issued during period | (607,143) | 15,906,168 | ||||
Cashless exercise of warrants (in shares) | 71,774 | |||||
Chief Operating Officer [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Granted | 1,000,000 | |||||
Exercise price of unvested options (in dollars per share) | $ 0.195 | |||||
Term of unvested options | 2 years | |||||
Former Director [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Shares issued during period | 71,774 | |||||
Cashless exercise of warrants (in shares) | 200,000 | |||||
Former Director [Member] | Common Stock [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Cashless exercise of warrants (in shares) | 128,226 | |||||
Board of Director [Member] | Common Stock [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Shares issued during period | 71,774 | |||||
Chief Operating Officer [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Monthly fee | $ 14,500 | |||||
Equity Incentive Plan 2017 [Member] | Board of Director [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Shares issued during period | 13,000,000 | |||||
Stock Options, Restricted Stock and Units, and Other Stock-based Awards [Member] | Stock Option 2013 Plan [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Shares issued during period | 7,990,000 | |||||
Stock Options, Restricted Stock and Units, and Other Stock-based Awards [Member] | Stock Option 2003 Plan [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Number of shares authorized to be granted under plan | 20,000,000 | |||||
Employee Stock Option [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Exercise price, description | In connection with incentive stock options issuable under the 2017 Plan, 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 | 1,500,000 |
CONCENTRATIONS (Details Narrati
CONCENTRATIONS (Details Narrative) - One Customer [Member] | 3 Months Ended | 9 Months Ended |
Sep. 30, 2019 | Sep. 30, 2019 | |
Revenues [Member] | ||
Concentration risk, percentage | 90.00% | 93.00% |
Accounts Receivable [Member] | ||
Concentration risk, percentage | 20.00% | |
Accounts Receivable [Member] | ||
Concentration risk, percentage | 76.00% |
SUBSEQUENT EVENTS (Details Narr
SUBSEQUENT EVENTS (Details Narrative) - shares | 1 Months Ended | |
Nov. 30, 2019 | Oct. 31, 2019 | |
Restricted Stock [Member] | Investor Relation Services [Member] | Subsequent Event [Member] | ||
Subsequent Event [Line Items] | ||
Restricted stock awards issued | 280,000 | 33,333 |