Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2015 | Nov. 13, 2015 | |
Document And Entity Information | ||
Entity Registrant Name | DEBT RESOLVE INC | |
Entity Central Index Key | 1,106,645 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2015 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Is Entity a Well-known Seasoned Issuer? | No | |
Is Entity a Voluntary Filer? | No | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 104,612,082 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2,015 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 |
Current assets: | ||
Cash | $ 179,414 | $ 55,605 |
Accounts receivable, net | 1,527,200 | 28,732 |
Prepaid expenses | 46,248 | 32,743 |
Total current assets | 1,752,862 | 117,080 |
Total assets | 1,752,862 | 117,080 |
Current liabilities: | ||
Accounts payable and accrued liabilities | 3,277,203 | 3,388,245 |
Due to shareholders | 241,241 | 458,796 |
Deferred revenue | 1,198,605 | 25,343 |
Notes payable, current portion | 240,367 | 427,867 |
Notes payable-related party, net of unamortized discount of $6,678 and $-0- as of September 30, 2015 and December 31, 2014, respectively | 684,043 | 298,221 |
Convertible Short-term notes, net of deferred debt discount of $25,631 and $-0- as of September 30, 2015 and December 31, 2014, respectively | 1,772,370 | 228,500 |
Lines of credit, related parties | 548,921 | 151,000 |
Derivative liabilities | 1,442,369 | 336,582 |
Total current liabilities | 9,405,119 | 5,314,554 |
Long term debt: | ||
Note payable, long term portion | 250,000 | 0 |
Notes payable, related party, net of unamortized debt discount of $10,007 and $25,011 as of June 30, 2015 and December 31, 2014, respectively | 236,639 | 404,989 |
Convertible long-term notes, net of deferred debt discount of $75,655 and $79,919 as of September 30, 2015 and December 31, 2014, respectively | 484,345 | 1,749,581 |
Total liabilities | 10,376,103 | 7,469,124 |
Stockholders' deficiency: | ||
Series A Convertible Preferred stock, $0.001 par value; 5,000,000 shares designated; 642,500 and 595,000 shares issued and outstanding as of September 30, 2015 and December 31, 2014, respectively | 643 | 595 |
Common stock, $0.001 par value, 200,000,000 shares authorized; 98,187,082 issued and outstanding as of September 30, 2015 and December 31, 2014 | 98,187 | 98,187 |
Additional paid in capital | 66,615,341 | 66,620,813 |
Accumulated deficit | (75,347,391) | (74,029,266) |
Stockholders' deficiency attributable to Debt Resolve, Inc. | (8,633,220) | (7,309,671) |
Non-controlling interest | 9,979 | (42,373) |
Total stockholders' deficiency | (8,623,241) | (7,352,044) |
Total liabilities and stockholders' deficiency | $ 1,752,862 | $ 117,080 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 |
Current liabilities: | ||
Notes payable, related party, net of unamortized debt discount | $ 6,678 | $ 0 |
Convertible Short-term notes, net of deferred debt discount | 25,631 | 0 |
Long term debt: | ||
Notes payable, related party, net of unamortized debt discount | 8,361 | 25,011 |
Convertible long-term notes, net of deferred debt discount | $ 75,655 | $ 79,919 |
Stockholders' deficiency: | ||
Preferred stock par value | $ 0.001 | $ 0.001 |
Preferred stock shares authorized | 10,000,000 | 10,000,000 |
Series A Convertible Preferred stock par value | $ 0.001 | $ 0.001 |
Series A Convertible Preferred stock shares designated | 5,000,000 | 5,000,000 |
Series A Convertible Preferred stock shares issued | 642,500 | 595,000 |
Series A Convertible Preferred stock shares outstanding | 642,500 | 595,000 |
Common stock par value | $ 0.001 | $ 0.001 |
Common stock shares authorized | 200,000,000 | 200,000,000 |
Common stock shares issued | 98,187,082 | 98,187,082 |
Common stock shares outstanding | 98,187,082 | 98,187,082 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Condensed Consolidated Statements Of Operations | ||||
Revenues: | $ 2,242,686 | $ 24,745 | $ 4,152,453 | $ 109,816 |
Costs and expenses: | ||||
Payroll, payroll taxes, penalties and related expenses | 640,334 | 297,543 | 1,462,792 | 589,478 |
Selling, general and administrative expenses | 1,081,679 | 98,108 | 2,508,041 | 420,687 |
Total costs and expenses | 1,722,013 | 395,651 | 3,970,833 | 1,010,165 |
Income (loss) from operations | 520,673 | (370,906) | 181,620 | (900,349) |
Other income (expense): | ||||
(Loss) gain on change in fair value of derivative liabilities | $ (1,238,479) | $ 119,001 | (897,648) | 426,339 |
Gain on settlement of debt | 650,319 | 320 | ||
Interest expense | $ (485,198) | $ (93,442) | (1,133,999) | (262,660) |
Amortization of debt discounts | (24,089) | (14,441) | (66,065) | (28,920) |
Total other income (expense) | (1,747,766) | 11,118 | (1,447,393) | 135,079 |
Net loss before provision for income taxes | $ (1,227,093) | $ (359,788) | $ (1,265,773) | $ (765,270) |
Income tax (benefit) | ||||
Net loss | $ (1,227,093) | $ (359,788) | $ (1,265,773) | $ (765,270) |
Net income attributable to non-controlling interest | (204,610) | (52,352) | ||
NET LOSS ATTRIBUTABLE TO DEBT RESOLVE, INC. | $ (1,431,703) | $ (359,788) | $ (1,318,125) | $ (765,270) |
Net loss per common share -basic and diluted | $ (0.01) | $ 0 | $ (0.01) | $ (0.01) |
Weighted average number of common shares outstanding, basic and diluted | 98,187,082 | 98,175,811 | 98,187,082 | 98,150,545 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDER'S EQUITY - 9 months ended Sep. 30, 2015 - USD ($) | Preferred Stock | Common Stock | Additional Paid In Capital | Accumulated Deficit | Non-controlling Interest | Total |
Beginning Balance, Shares at Dec. 31, 2014 | 595,000 | 98,187,082 | ||||
Beginning Balance, Amount at Dec. 31, 2014 | $ 595 | $ 98,187 | $ 66,620,813 | $ (74,029,266) | $ (42,373) | $ (7,352,044) |
Preferred shares issued for payment of services | 47,500 | |||||
Preferred shares issued for payment of services, Amount | $ 48 | 2,802 | 2,850 | |||
Beneficial conversion feature related to convertible notes | 77,458 | 77,458 | ||||
Fair value of vesting options issued to employees for services | 11,250 | 11,250 | ||||
Fair value of common stock warrants issued for services | 100,276 | 100,276 | ||||
Fair value of preferred stock warrants issued for services | 10,881 | 10,881 | ||||
Net reclassification of common stock equivalents issued in excess of aggregate authorized availability | (208,139) | (208,139) | ||||
Net loss | (1,318,125) | 52,352 | (1,265,773) | |||
Ending Balance, Shares at Sep. 30, 2015 | 642,500 | 98,187,082 | ||||
Ending Balance, Amount at Sep. 30, 2015 | $ 643 | $ 98,187 | $ 66,615,341 | $ (75,347,390) | $ 9,979 | $ (8,623,241) |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (1,265,773) | $ (765,270) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Amortization of debt discounts | 66,065 | $ 28,920 |
Bad debts | 142,974 | |
Stock based compensation | 125,257 | $ 297,790 |
Loss (gain) on change in fair value of derivative liabilities | 897,648 | $ (426,339) |
Gain on settlement of debt | (650,319) | |
Changes in operating assets and liabilities: | ||
Accounts receivable | (1,641,442) | $ 6,248 |
Prepaid expenses | $ (13,505) | 29,393 |
Security deposit | 1,000 | |
Accounts payable and accrued liabilities | $ 326,642 | 164,263 |
Due to shareholders | (4,921) | (3,535) |
Deferred revenue | 1,173,262 | 5,166 |
Net cash used in operating activities | $ (844,112) | $ (662,364) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from short term notes | $ 100,000 | |
Proceeds from short term notes, related party | 485,421 | $ (10,000) |
Repayment of short term notes | (37,500) | (56,250) |
Proceeds from long term notes | 350,000 | 525,000 |
Proceeds from long term notes, related party | 70,000 | 250,000 |
Net cash provided by financing activities | 967,921 | 708,750 |
Net increase in cash and cash equivalents | 123,809 | 46,386 |
Cash at beginning of period | 55,605 | 7,212 |
Cash at end of period | 179,414 | 53,598 |
Supplemental Disclosures of Cash Flow Information: | ||
Cash paid during period for interest | $ 21,800 | $ 5,790 |
Cash paid during period for taxes | ||
Non-cash financing and investing transactions: | ||
Beneficial conversion feature on convertible notes | $ 77,458 | $ 121,781 |
Common stock issued in settlement of note payable and accrued interest | $ 5,925 |
BASIS AND BUSINESS PRESENTATION
BASIS AND BUSINESS PRESENTATION | 9 Months Ended |
Sep. 30, 2015 | |
Notes to Financial Statements | |
NOTE 1 - BASIS AND BUSINESS PRESENTATION | Debt Resolve, Inc. (the "Company") was incorporated under the laws of the State of Delaware on April 21, 1997. The Company offers its service as a Software-as-a-Service (SaaS) model, enabling clients to introduce this collection or payment software option with no modifications to their existing collections computer systems. Its products capitalize on using the Internet as a tool for communication, resolution, settlement and payment of delinquent or defaulted consumer debt and as part of a complete accounts receivable management solution for consumer creditors. In December 2014, the Company, jointly with LSH, LLC, organized Progress Advocates LLC, a Delaware limited liability company for the purpose to provide services in the student loan document preparation industry with ownership interests of 51% and 49% for the Company and LSH, LLC, respectively. The Company operates as one operating segment. Basis of Presentation These unaudited condensed financial statements have been prepared in accordance with the instructions to the Form 10-Q and Article 10 of Regulation S-X, and therefore, do not include all the information necessary for a fair presentation of financial position, results of operations and cash flows in conformity with generally accepted accounting principles. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for fair presentation have been included. Operating results for the three and nine months ended September 30, 2015 are not necessarily indicative of the results that may be expected for the fiscal year ended December 31, 2015. The unaudited condensed financial statements should be read in conjunction with the consolidated December 31, 2014 financial statements and footnotes thereto included in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission (the "SEC"). The consolidated financial statements include the accounts of the Company and its majority-owned subsidiary. All significant inter-company transactions and balances have been eliminated in consolidation. The non-controlling interest represents the minority owners' share of its net operating results. |
SIGNIFICANT ACCOUNTING POLICIES
SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2015 | |
Notes to Financial Statements | |
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES | A summary of the significant accounting policies applied in the presentation of the accompanying unaudited condensed financial statements follows: Revenue Recognition In recognition of the principles expressed in Accounting Standards Codification subtopic 605-10, Revenue should not be recognized until it is realized or realizable and earned, and given the element of doubt associated with collectability of an agreed settlement on past due debt, the Company postpones recognition of all contingent revenue until the client receives payment from the debtor. As is required by SAB 104, revenues are considered to have been earned when the Company has substantially accomplished the agreed-upon deliverables to be entitled to payment by the client. For most current active clients, these deliverables consist of the successful collection of past due debts using the Company's system and/or, for clients under a flat fee arrangement, the successful availability of the Company's system to its customers. Revenues for the preparation of student loan documentation are earned when the Company has substantially accomplished the agreed-upon deliverables to be entitled to payment by the client. For most current active clients, these deliverables consist of the completed, delivered and accepted student loan package. The Company may sell its products separately or in various bundles that include multiple elements such as upfront fees, monitoring and other services. The Company also earns revenue from collection agencies, collection law firms and lenders that implemented our online system. The Company's current contracts provide for revenue based on a percentage of the amount of debt collected, a fee for accounts loaded into the Debt Resolve Service or through a flat monthly fee. Revenues for set-up fees, percentage contingent collection fees, fixed settlement fees, monthly fees, etc. are accounted for as Multiple-Element Arrangements under ASC 605-10 which incorporates Accounting Standards Codification subtopic 605-25, Multiple-Element Arrangements ("ASC 605-25"). ASC 605-25 addresses accounting for arrangements that may involve the delivery or performance of multiple products, services and/or rights to use assets. The Company defers any revenue for which the product or service has not been delivered or is subject to refund until such time that the Company and the customer jointly determine that the product has been delivered or no refund will be required. At September 30, 2015 and December 31, 2014, the Company had deferred revenues of $1,198,605 and $25,343, respectively Estimates The preparation of the unaudited condensed consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. Concentrations and Credit Risk The Company extends credit to large, mid-size and small companies for the use of its software solutions. At September 30, 2015, this included three clients along with customers in the student loan industry. At December 31, 2014, one client represented receivables of $10,000 (35%). The Company did not have an accounts receivable concentration at September 30, 2015. As of September 30, 2015 and December 31, 2014, no allowance for doubtful accounts has been recognized. The Company had two clients accounting for 11.32% and 67.89%; (total of 79.21%) of total revenues for the three months ended September 30, 2014, respectively, and had three clients accounting for 14.40%, 39.14% and 27.19%; (total of 80.73%) of total revenues for the nine months ended September 30, 2014. The Company did not have a revenue concentration for the three and nine months ended September 30, 2015. Net Income (Loss) per Share The Company follows Accounting Standards Codification subtopic 260-10, Earnings Per Share ("ASC 260-10") specifying the computation, presentation and disclosure requirements of earnings per share information. Basic loss per share has been calculated based upon the weighted average number of common shares outstanding. Stock options and warrants have been excluded as common stock equivalents in the diluted loss per share on the computation for the three and nine months ended September 30, 2015 and 2014 because their effect is anti-dilutive. Fully diluted shares outstanding were 147,167,082 for the three and nine months ended September 30, 2015. Fully diluted shares outstanding were 127,580,811 and 127,555,545 for the three and nine month period ended September 30, 2014, respectively. Reclassification Certain reclassifications have been made to prior period's data to conform to the current period's presentation. These reclassifications had no effect on reported income or losses. Stock-based compensation The Company measures the cost of services received in exchange for an award of equity instruments based on the fair value of the award. For employees and directors, the fair value of the award is measured on the grant date and for non-employees, the fair value of the award is generally re-measured on vesting dates and interim financial reporting dates until the service period is complete. The fair value amount is then recognized over the period during which services are required to be provided in exchange for the award, usually the vesting period. Total employee and non-employee stock-based compensation expense for the three and nine months ended September 30, 2015 amounted to $107,052 and $125,257, respectively and for the three and nine months ended September 30, 2014 amounted to $196,877 and $297,790, respectively. Defined Contribution (401k) Plan The Company maintains a defined contribution (401k) plan for our employees. The plan provides for a company match in the amount of 100% of the first 3% of pre-tax salary contributed and 50% of the next 3% of pre-tax salary contributed. Due to the severe cash limitations that the Company has experienced, the match was suspended from mid-2008 to the present and will only be re-instated when business conditions warrant. Derivative Liability The Company accounts for derivatives in accordance with ASC 815, which establishes accounting and reporting standards for derivative instruments and hedging activities, including certain derivative instruments embedded in other financial instruments or contracts and requires recognition of all derivatives on the balance sheet at fair value, regardless of hedging relationship designation. Accounting for changes in fair value of the derivative instruments depends on whether the derivatives qualify as hedge relationships and the types of relationships designated are based on the exposures hedged. At September 30, 2015 and December 31, 2014, the Company did not have any derivative instruments that were designated as hedges. See Note 10 for discussion of the Company's derivative liabilities. Recent accounting pronouncements There are various updates recently issued, most of which represented technical corrections to the accounting literature or application to specific industries and are not expected to a have a material impact on the Company's financial position, results of operations or cash flows. |
LIQUIDITY
LIQUIDITY | 9 Months Ended |
Sep. 30, 2015 | |
Notes to Financial Statements | |
NOTE 3 - LIQUIDITY | The accompanying unaudited condensed financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As shown in the accompanying unaudited condensed financial statements, the Company incurred a net loss of $1,318,125 for the nine months ended September 30, 2015. Additionally, the Company has negative working capital (total current liabilities exceeded total current assets) of $7,652,257 as of September 30, 2015. These factors among others raise substantial doubt about the Company's ability to continue as a going concern. September 30, 2015 marked the second consecutive quarter that the Company has reported an operating profit. While distributions from the Company's majority owned joint venture have improved liquidity, the Company continues to raise additional funds through private debt offerings to meet short term needs. In addition, the Company is undertaking further steps as part of a plan to improve operations with the goal of sustaining our operations for the next twelve months and beyond and to address its lack of liquidity by raising additional funds, either in the form of debt or equity or some combination thereof. However, there can be no assurance that the Company can successfully accomplish these steps and or business plans, and it is uncertain that the Company will achieve a profitable level of operations and be able to obtain additional financing. The Company's continued existence is dependent upon management's ability to develop profitable operations and resolve its liquidity problems. There can be no assurance that any additional financings will be available to the Company on satisfactory terms and conditions, if at all. In the event that the Company is unable to continue as a going concern, it may elect or be required to seek protection from its creditors by filing a voluntary petition in bankruptcy or may be subject to an involuntary petition in bankruptcy. The accompanying unaudited condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result should the Company be unable to continue as a going concern. |
ACCOUNTS RECEIVABLE
ACCOUNTS RECEIVABLE | 9 Months Ended |
Sep. 30, 2015 | |
Notes to Financial Statements | |
NOTE 4 - ACCOUNTS RECEIVABLE | Accounts receivable are receivables generated from sales to customers and progress billings on performance type contracts. Amounts included in accounts receivable are deemed to be collectible within the Company's operating cycle. Management provides an allowance for doubtful accounts based on the Company's historical losses, specific customer circumstances, and general economic conditions. Periodically, management reviews accounts receivable and adjusts the allowance based on current circumstances and charges off uncollectible receivables when all attempts to collect have been exhausted and the prospects for recovery are remote. The Company's majority owned subsidiary, Progress Advocates LLC entered into a factoring agreement on a recourse basis. The recourse agreement provides for the Company to receive an advance of between 30% - 96% of any accounts receivable that it factors with 62% - 0% held in reserve. The average amount received from these recourse agreements was 50.9% and the average amount reserved was 42.1%. The factoring agreement also provides for discount fees of 4% - 8% of the face value of any accounts receivable factored, plus additional charges for other transaction fees. The agreement may be terminated by either party at any time and will continue unless either party formally cancels. |
ACCOUNTS PAYABLE AND ACCRUED LI
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES | 9 Months Ended |
Sep. 30, 2015 | |
Notes to Financial Statements | |
NOTE 5 - ACCOUNTS PAYABLE AND ACCRUED LIABILITIES | Accounts payable and accrued liabilities as of September 30, 2015 and December 31, 2014 are comprised of the following: September 30, 2015 December 31, 2014 Accounts payable $ 565,370 $ 1,025,919 Accrued interest 1,809,609 1,473,686 Payroll and related accruals, net of advance to employees 902,224 888,640 Total $ 3,277,203 $ 3,388,245 |
NOTES PAYABLE
NOTES PAYABLE | 9 Months Ended |
Sep. 30, 2015 | |
Notes to Financial Statements | |
NOTE 6 - NOTES PAYABLE | As of September 30, 2015 and December 31, 2014, short term notes are as follows: September 30, 2015 December 31, 2014 Bank loans $ - $ 50,000 Note payable, dated June 1, 2015 50,000 - Note payable, dated August 28, 2015 50,000 - Investor notes payable, 12% per annum 377,867 377,867 Total 490,367 427,867 Less current portion 240,367 427,867 Long term portion $ 250,000 $ -0- On June 1, 2015, the Company issued an unsecured note payable for $50,000 due October 1, 2016 with interest at 12% per annum, paid monthly beginning June 2015 and principal payments beginning October 2015. On August 28, 2015, the Company issued an unsecured note payable for $50,000 due February 28, 2016 with interest at 10% per annum, paid monthly beginning October 2015 and principal payments beginning February 2016. In 2015, a note holder representing $200,000 of these notes, entered into a agreement whereby their obligation was extended till October 22, 2016. The terms of the agreement included a payment of accrued interest of $4,000. The remaining notes are in default. |
NOTES PAYABLE, RELATED PARTIES
NOTES PAYABLE, RELATED PARTIES | 9 Months Ended |
Sep. 30, 2015 | |
Notes to Financial Statements | |
NOTE 7 - NOTES PAYABLE, RELATED PARTIES | As of September 30, 2015 and December 31, 2014, notes payable, related parties are as follows: September 30, 2015 December 31, 2014 Convertible note payable dated July 22, 2010, in default $ 15,000 $ 15,000 Note payable dated January 14, 2011, in default 6,000 6,000 Note payable dated April 14, 2011, in default 25,000 25,000 Note payable dated April 15, 2011, in default 25,000 25,000 Note payable dated January 18, 2012, in default 5,000 5,000 Note payable dated January 20, 2012, in default 5,000 5,000 Note payable dated May 21, 2012, in default 15,000 15,000 Note payable dated May 30, 2012, in default 20,000 20,000 Series A Convertible note, in default 20,000 20,000 Convertible notes payable, dated July 6, 2012, in default 30,000 30,000 Convertible note payable, dated July 10, 2012, in default 15,000 15,000 Note payable, dated September 14, 2012, in default 6,000 6,000 Convertible note payable, dated September 7, 2012, in default 43,000 43,000 Convertible note payable, dated October 4, 2012, in default 50,000 50,000 Convertible note payable, dated September 5, 2013 10,000 10,000 Convertible note payable, dated September 16, 2013 3,000 3,000 Note payable dated September 17, 2013, in default 5,221 5,221 Note payable, dated October 24, 2013 30,000 30,000 Note payable, dated November 7, 2013 40,000 40,000 Note payable. dated December 6, 2013 5,000 5,000 Note payable, dated December 18, 2013 30,000 30,000 Note payable, dated January 9, 2014 25,000 25,000 Convertible note payable, dated February 28, 2014, net of unamortized debt discount of $5,283and $14,833, respectively 194,717 185,167 Convertible note payable, dated April 24, 2014, net of unamortized debt discount of $1,395 and $3,235, respectively 23,605 21,765 Convertible note payable, dated November 7, 2014, net of unamortized debt discount of $2,244 and $3,761, respectively 22,756 21,239 Convertible notes payable, dated December 4, 2014, net of unamortized debt discount of $1,948 and $3,182, respectively 48,052 46,818 Note payable, dated January 25, 2015 25,000 - Convertible note payable, dated March 3, 2015, net of unamortized debt discount of $3,281 46,719 - Convertible note payable, dated May 12, 2015, net of unamortized debt discount of $888 19,112 - Note payable, dated June 18, 2015 25,000 - Note payable, dated July 13, 2015 12,500 - Note payable, dated August 5, 2015 25,000 - Note payable, dated August 19, 2015 50,000 Total 920,682 703,210 Less current portion 684,043 298,221 Long term portion $ 236,639 $ 404,989 On January 25, 2015, a stockholder and Board member loaned $25,000 (unsecured) to the Company due April 25, 2016 with interest at 10% per annum. On June 18, 2015, a stockholder and Board member loaned $25,000 (unsecured) to the Company due April 21, 2016 with interest at 10% per annum On July 13, 2015, a stockholder and Board member loaned $12,500 (unsecured) to the Company due July 12, 2016 with interest at 12% per annum. On August 5, 2015, a stockholder and Board member loaned $25,000 (unsecured) to the Company due January 1, 2016 with interest at 10% per annum with interest paid monthly for August and September 2015 and principal and interest payable from October through December 2015. On August 19, 2015, a stockholder and Board member loaned $50,000 (unsecured) to the Company due February 19, 2016 with interest at 10% per annum. On March 3, 2015, the Company issued a $50,000 secured convertible note that matures on March 3, 2017. The note bears interest at a rate of 10% and can be convertible into shares of the Company's common stock, at a conversion rate of $0.05 per share. Interest will also be converted into common stock at the conversion rate of $0.05 per share. In connection with the issuance of the convertible note, the Company issued an aggregate of 750,000 warrants to purchase the Company's common stock at $0.15 per share over three years. On May 12, 2015, the Company issued a $20,000 secured convertible note that matures on May 12, 2017. The note bears interest at a rate of 10% and can be convertible into shares of the Company's common stock, at a conversion rate of $0.05 per share. Interest will also be converted into common stock at the conversion rate of $0.05 per share. In connection with the issuance of the convertible note, the Company issued an aggregate of 300,000 warrants to purchase the Company's common stock at $0.15 per share over three years. In accordance with ASC 470-20, the Company recognized the value attributable to the warrants and the conversion feature in the aggregate amount of $5,713 to additional paid in capital and a discount against the notes. The Company valued the warrants in accordance with ASC 470-20 using the Black-Scholes pricing model and the following assumptions: contractual terms of 3 years, a risk free interest rate of 1.00% to 1.09%, a dividend yield of 0%, and volatility of 305.76% to 317.93%. The debt discount attributed to the value of the warrants and conversion feature issued is amortized over the note's maturity period (two years) as interest expense. For the three and nine months ended September 30, 2015, the Company amortized $5,484 and $15,484 of debt discount to operations as interest expense. For the three and nine months ended September 30, 2014, the Company amortized $3,839 and $8,558 of debt discount to operations as interest expense. Total unpaid accrued interest on the notes payable to related parties as of September 30, 2015 and December 31, 2014 was $222,436 and $143,526, respectively. During the nine months ended September 30, 2015 and 2014, the Company recorded interest expense of $79,088 and $53,362, respectively, in connection with the notes payable to related parties. |
LINE OF CREDIT- RELATED PARTY
LINE OF CREDIT- RELATED PARTY | 9 Months Ended |
Sep. 30, 2015 | |
Notes to Financial Statements | |
NOTE 8 - LINE OF CREDIT- RELATED PARTY | On January 25, 2015, the Company issued an unsecured promissory note to certain members of the Company's board of directors who provided the Company a line of credit up to $400,000 for working capital over a term of four years with an annualized interest rate of 5.25%. The promissory note is due 30 days upon written demand however, the Company is obligated to make monthly payments of principal and interest necessary to meet the minimal monthly principal and interest payments required by the bank on loans the lenders obtained to provide the financing. As of September 30, 2015, the outstanding balance on this loan was $397,921. On September 24, 2009, the Company entered into an unsecured short term loan with a stockholder for $150,000 to be used to discharge the bridge loans of another investor. Borrowings under the loan bear interest at 12% per annum, with interest accrued and payable on maturity. The Note was due on November 24, 2009 and is still outstanding. In conjunction with this line of credit, the Company also issued a warrant to purchase 150,000 shares of common stock at an exercise price of $0.15 per share with an expiration date of September 24, 2014. On April 6, 2010, a partial repayment of $25,000 of principal was paid. Also, as a result of the delinquent repayment of the note, a penalty of $69,000 was incurred on April 15, 2010. On August 17, 2010, a partial payment of $50,000 of principal was made on the line of credit. Unpaid accrued interest on this loan as of September 30, 2015 and December 31, 2014 was $114,672 and $101,119, respectively. As of September 30, 2015 and December 31, 2014, the outstanding balance on this loan was $151,000. Since the loan matured on November 24, 2009, it is currently in default. During the nine months ended September 30, 2015 and 2014, the Company recorded $13,553 and $13,553, respectively, as interest expense. |
CONVERTIBLE NOTES
CONVERTIBLE NOTES | 9 Months Ended |
Sep. 30, 2015 | |
Notes to Financial Statements | |
NOTE 9 - CONVERTIBLE NOTES | Convertible notes of non-related party investors are comprised of the following: September 30, December 31, 2015 2014 Series A Convertible Notes $ 817,000 $ 817,000 Series B Convertible Notes 225,000 225,000 Series C Convertible Notes 245,000 245,000 Series D Convertible Notes 21,000 21,000 Bridge 2014 Convertible Notes, net of unamortized debt discount of $37,653 and $79,919, respectively 712,347 670,081 Bridge 2015 Convertible Notes, net of unamortized debt discount of $63,632 236,368 - Total 2,256,715 1,978,081 Less: Current portion (1,772,370 ) (228,500 ) Long term portion $ 484,345 $ 1,749,581 In 2015, the Company issued an aggregate of $300,000 in secured convertible notes that mature two years from the date of issuance (from February 2017 through September 2017). The notes bear interest at a rate of 10% and can be convertible into shares of the Company's common stock, at a conversion rate of $0.05 per share. Interest will also be converted into common stock at the conversion rate of $0.05 per share. In connection with the issuance of the convertible notes, the Company issued an aggregate of 4,250,000 warrants to purchase the Company's common stock at $0.15 per share over three years. In accordance with ASC 470-20, the Company recognized the value attributable to the warrants and the conversion feature in the amount of $77,459 to additional paid in capital and a discount against the notes. The Company valued the warrants in accordance with ASC 470-20 using the Black-Scholes pricing model and the following assumptions: contractual terms of 3 years, an average risk free interest rate from 0.63% to 1.13%, a dividend yield of 0%, and volatility of 307.16% to 351.577%. The debt discount attributed to the value of the warrants and conversion feature issued is amortized over the note's maturity period (two years) as interest expense. For the three and nine months ended September 30, 2015, the Company amortized $18,603 and $50,581 of debt discount to current period operations as interest expense. For the three and nine months ended September 30, 2014, the Company amortized $10,603 and $20,077 of debt discount to current period operations as interest expense. Certain convertible note holders, representing an aggregate of $1,079,500 of these notes, entered into agreements in December 2014 through March 2015 whereby their obligations were extended for a period of 18 months from the date of execution of the agreement. The terms of the agreement included a payment of accrued interest of $500 for every $25,000 of outstanding principal. All other terms (including any amendments or earlier extensions) of the notes remain the same. The remaining convertible notes are in default. |
DERIVATIVE LIABILITIES
DERIVATIVE LIABILITIES | 9 Months Ended |
Sep. 30, 2015 | |
Notes to Financial Statements | |
NOTE 10 - DERIVATIVE LIABILITIES | Excessive committed shares On September 30, 2015, in connection with the previously issued stock options and warrants, the Company had the possibility of exceeding their common shares authorized when considering the number of possible shares that may be issuable to satisfy settlement provisions of these agreements after consideration of all existing instruments that could be settled in shares. This resulted in a derivative liability as a result of the Company having a potential to settle the obligation to issue these excess shares. The accounting treatment of derivative financial instruments required that the Company reclassify the derivative from equity to a liability at their fair values as of the date possible issuable shares exceeded the authorized level and at fair value as of each subsequent balance sheet date. The Company recognizes its derivative liabilities as level 3 and values its derivatives using the methods discussed below. While the Company believes that its valuation methods are appropriate and consistent with other market participants, it recognizes that the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date. The primary assumptions that would significantly affect the fair values using the methods discussed are that of volatility and market price of the underlying common stock of the Company. At September 30, 2015, the Company has estimated that there were 143,445,434 possible common shares that may be issuable to satisfy settlement provisions related to convertible debt, convertible preferred stock, warrants and stock options. At September 30, 2015, the Company has estimated the inclusion of possible common share equivalents exceeded the authorized common shares of 200,000,000 by approximately 41,632,516. At September 30, 2015, the fair value of the derivative liabilities of $95,005 was determined using the Black Scholes Option Pricing model with the following assumptions: dividend yield: 0%; volatility: 326.70%; risk free rate: 0.11% to 0.64%; and expected life: 0.46 to 2.24 years. As of September 30, 2015 and December 31, 2014, the Company did not have any derivative instruments that were designated as hedges. The derivative liability as of September 30, 2015, in the amount of $1,442,369 has a level 3 classification. The following table provides a summary of changes in fair value of the Company's Level 3 financial liabilities as of September 30, 2015: Excess Share Derivative Balance, December 31, 2014 $ 336,582 Total (gains) losses Transfers in of Level 3 upon exceeding in authorized shares 208,139 Mark-to-market at September 30, 2015: 897,648 Balance, September 30, 2015 $ 1,442,369 Net loss for the period included in earnings relating to the liabilities held at September 30, 2015 $ (897,648 ) Fluctuations in the Company's stock price are a primary driver for the changes in the derivative valuations during each reporting period. The Company's stock price increased by 436% from December 31, 2014 to September 30, 2015. As the stock price increases for each of the related derivative instruments, the value to the holder of the instrument generally increases, therefore decreasing the liability on the Company's balance sheet. Additionally, stock price volatility is one of the significant unobservable inputs used in the fair value measurement of each of the Company's derivative instruments. |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 9 Months Ended |
Sep. 30, 2015 | |
Notes to Financial Statements | |
Note 11 - STOCKHOLDERS' EQUITY | Preferred Stock At September 30, 2015 and December 31, 2014, the Company has authorized 10,000,000 shares of Series A convertible preferred stock, par value $0.0001, of which 642,500 and 595,000 are issued and outstanding as of September 30, 2015 and December 31, 2014, respectively. The Series A convertible preferred stock which has rank senior to common and all other preferred stock of the corporation and equal or junior to any preferred stock that may be issued in regard to liquidation; not entitled to dividends and is convertible, at the holders' option, at 10 shares of common stock for each share of Series A preferred stock. On July 7, 2015, the Company issued 47,500 shares of its Series A Convertible Stock as payment for services rendered valued at $2,850. Common stock At September 30, 2015 and December 31, 2014, the Company has authorized 200,000,000 shares of common stock, par value $0.001, of which 98,187,082 are issued and outstanding as of September 30, 2015 and December 31, 2014. |
WARRANTS AND OPTIONS
WARRANTS AND OPTIONS | 9 Months Ended |
Sep. 30, 2015 | |
Notes to Financial Statements | |
NOTE 12 - WARRANTS AND OPTIONS | Common stock warrants The following table summarizes warrants outstanding and related prices for the shares of the Company's common stock issued to shareholders at September 30, 2015: Exercise Price Number Outstanding Warrants Outstanding Weighted Average Remaining Contractual Life (years) Weighted Average Exercise price Number Exercisable Warrants Exercisable Weighted Average Exercise Price $ 0.01 to 0.10 38,925,000 3.25 $ 0.10 38,925,000 $ 0.10 0.11 to 0.20 16,150,000 1.94 0.15 16,150,000 0.15 0.21 to 0.30 18,663,000 1.12 0.25 18,663,000 0.25 Total 73,738,000 2.43 $ 0.15 73,738,000 $ 0.15 Transactions involving the Company's warrant issuance are summarized as follows: Number of Shares Weighted Average Price Per Share Outstanding at December 31, 2013 91,736,274 $ 0.22 Issued 10,500,000 0.15 Exercised - Expired (11,374,590 ) (0.35 ) Outstanding at December 31, 2014 90,861,684 0.20 Issued 5,300,000 0.15 Exercised - - Expired (22,423,684 ) (0.24 ) Outstanding at September 30, 2015 73,738,000 $ 0.15 In conjunction with the issuance of convertible notes, during the nine months ended September 30, 2015, the Company issued an aggregate of warrants to purchase 5,300,000 shares of common stock with an exercise price of $0.15 per share expiring three years from the date of issuance. Please see Notes 7 and 9. On August 12, 2015, the Company repriced to $0.10 and extended for the three years an aggregate of 11,925,000 expiring warrants previously issued to Board Members. The change in fair value of the extended warrants were valued using the Black Sholes option pricing method with the following assumptions: dividend yield $-0-, volatility of underlying common stock of 349.90%, risk free rate of 1.88% and expected life of 3.00 years. The determined estimated fair value of $100,276 was charged to operations during the nine months ended September 30, 2015. Preferred stock warrants The following table summarizes warrants outstanding and related prices for the shares of the Company's Series A convertible preferred stock issued at September 30, 2015: Exercise Price Number Outstanding Warrants Outstanding Weighted Average Remaining Contractual Life (years) Weighted Average Exercise price Number Exercisable Warrants Exercisable Weighted Average Exercise Price $ 0.50 1,620,000 4.08 $ 0.50 370,000 $ 0.50 1.00 68,000 1.91 1.00 68,000 1.00 1.50 300,500 1.77 1.50 300,500 1.50 Total 1,988,500 3.66 $ 0.67 738,500 $ 0.95 Transactions involving the Company's warrant issuance are summarized as follows: Number of Shares Weighted Average Price Per Share Outstanding at December 31, 2013 - $ - Issued 1,914,500 0.66 Exercised Expired Outstanding at December 31, 2014 1,914,500 0.66 Issued 169,000 1.20 Exercised - - Canceled (95,000 ) 1.00 Outstanding at September 30, 2015 1,988,500 $ 0.67 During the nine months ended September 30, 2015, the Company issued an aggregate 169,000 Series A convertible preferred stock warrants in connection with services provided of which 95,000 were subsequently canceled. The warrants are exercisable for three to five years from the date of issuance at an exercise prices from $0.50 to $1.50 per preferred share. The warrants were valued using the Black Sholes option pricing method with the following assumptions: dividend yield $-0-, volatility of underlying common stock of 306.06% to 328.03%, risk free rate of 0.59% to 1.01% and expected life of 3.00 to 5.00 years. The determined estimated fair value of $10,881 was charged to operations during the nine months ended September 30, 2015. Options The following table summarizes options outstanding and related prices for the shares of the Company's common stock issued at September 30, 2015: Exercise Price Number Outstanding Option Outstanding Options Average Remaining Contractual Life (years) Weighted Average Exercise price Number Exercisable Options Exercisable Weighted Average Exercise price $ 0.015 3,000,000 5.42 $ 0.015 1,000,000 $ 0.015 0.02 250,000 5.35 0.02 250,000 0.02 0.06 3,000,000 2.67 0.06 3,000,000 0.06 0.09 250,000 3.18 0.09 250,000 0.09 0.095 500,000 3.30 0.095 500,000 0.095 0.10 650,000 2.44 0.10 650,000 0.10 0.13 500,000 1.59 0.13 500,000 0.13 0.17 4,500,000 1.52 0.17 4,500,000 0.17 0.19 1,000,000 0.85 0.19 1,000,000 0.19 0.22 175,000 1.50 0.22 175,000 0.22 5.00 1,517,434 0.90 5.00 1,517,434 5.00 Total 15,342,434 2.59 $ 0.59 13,342,434 $ 0.67 Transactions involving the Company's option issuance are summarized as follows: Number of Shares Weighted Average Price Per Share Outstanding at December 31, 2013 14,198,434 $ 0.86 Issued 3,250,000 0.015 Exercised - - Expired (403,000 ) (3.14 ) Outstanding at December 31, 2014 17,045,434 0.64 Issued - - Exercised -- -- Expired (1,703,000 ) (1.19 ) Outstanding at September 30, 2015 15,342,434 $ 0.59 Total stock-based compensation expense for options for the nine months ended September 30, 2015 and 2014 amounted to $11,250 and $13,750, respectively. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2015 | |
Notes to Financial Statements | |
NOTE 13 - COMMITMENTS AND CONTINGENCIES | Payroll and Payroll taxes Due to a lack of capital, the Company has been unable to pay all of the compensation owed to its employees. In addition, in 2011, 2012 and the first quarter of 2013, the Company did not pay certain federal and state payroll tax obligations due for employees' compensation, and they have become delinquent. As a result, the Company has included in accrued expenses an amount of approximately $99,861 that represents an estimate that could be expected upon settlement of these payroll taxes with the respective taxing authorities. In April, 2015, an agreement was reached with the IRS that details an agreed upon amount owed and a 17 month payment plan for same. In addition, the Company has contacted the state involved and anticipates settlement discussions in the near future. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 9 Months Ended |
Sep. 30, 2015 | |
Notes to Financial Statements | |
NOTE 14 - RELATED PARTY TRANSACTIONS | During the nine months ended September 30, 2015 and 2014, certain Company directors personally guarantee the Company's notes payable and its' bank loan (Note 6). Also, certain directors and officers made short-term or longer term loans as discussed in Note 7 and 8. Total interest expense in connection with notes payable to related parties and related party lines of credit amounted $92,641 and $66,915 for the nine months ended September 30, 2015 and 2014, respectively |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2015 | |
Notes to Financial Statements | |
SUBSEQUENT EVENTS | In October 2015, the Company issued an aggregate of 6,425,000 shares of its common stock in exchange for conversion of 642,500 shares of Series A Convertible preferred stock. |
SIGNIFICANT ACCOUNTING POLICI22
SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2015 | |
Significant Accounting Policies Policies | |
Revenue Recognition | In recognition of the principles expressed in Accounting Standards Codification subtopic 605-10, Revenue should not be recognized until it is realized or realizable and earned, and given the element of doubt associated with collectability of an agreed settlement on past due debt, the Company postpones recognition of all contingent revenue until the client receives payment from the debtor. As is required by SAB 104, revenues are considered to have been earned when the Company has substantially accomplished the agreed-upon deliverables to be entitled to payment by the client. For most current active clients, these deliverables consist of the successful collection of past due debts using the Company's system and/or, for clients under a flat fee arrangement, the successful availability of the Company's system to its customers. Revenues for the preparation of student loan documentation are earned when the Company has substantially accomplished the agreed-upon deliverables to be entitled to payment by the client. For most current active clients, these deliverables consist of the completed, delivered and accepted student loan package. The Company may sell its products separately or in various bundles that include multiple elements such as upfront fees, monitoring and other services. The Company also earns revenue from collection agencies, collection law firms and lenders that implemented our online system. The Company's current contracts provide for revenue based on a percentage of the amount of debt collected, a fee for accounts loaded into the Debt Resolve Service or through a flat monthly fee. Revenues for set-up fees, percentage contingent collection fees, fixed settlement fees, monthly fees, etc. are accounted for as Multiple-Element Arrangements under ASC 605-10 which incorporates Accounting Standards Codification subtopic 605-25, Multiple-Element Arrangements ("ASC 605-25"). ASC 605-25 addresses accounting for arrangements that may involve the delivery or performance of multiple products, services and/or rights to use assets. The Company defers any revenue for which the product or service has not been delivered or is subject to refund until such time that the Company and the customer jointly determine that the product has been delivered or no refund will be required. At September 30, 2015 and December 31, 2014, the Company had deferred revenues of $1,198,605 and $25,343, respectively |
Estimates | The preparation of the unaudited condensed consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. |
Concentrations of Credit Risk | The Company extends credit to large, mid-size and small companies for the use of its software solutions. At September 30, 2015, this included three clients along with customers in the student loan industry. At December 31, 2014, one client represented receivables of $10,000 (35%). The Company did not have an accounts receivable concentration at September 30, 2015. As of September 30, 2015 and December 31, 2014, no allowance for doubtful accounts has been recognized. The Company had two clients accounting for 11.32% and 67.89%; (total of 79.21%) of total revenues for the three months ended September 30, 2014, respectively, and had three clients accounting for 14.40%, 39.14% and 27.19%; (total of 80.73%) of total revenues for the nine months ended September 30, 2014. The Company did not have a revenue concentration for the three and nine months ended September 30, 2015. |
Net Income (Loss) per Share | The Company follows Accounting Standards Codification subtopic 260-10, Earnings Per Share ("ASC 260-10") specifying the computation, presentation and disclosure requirements of earnings per share information. Basic loss per share has been calculated based upon the weighted average number of common shares outstanding. Stock options and warrants have been excluded as common stock equivalents in the diluted loss per share on the computation for the three and nine months ended September 30, 2015 and 2014 because their effect is anti-dilutive. Fully diluted shares outstanding were 147,167,082 for the three and nine months ended September 30, 2015. Fully diluted shares outstanding were 127,580,811 and 127,555,545 for the three and nine month period ended September 30, 2014, respectively. |
Reclassification | Certain reclassifications have been made to prior period's data to conform to the current period's presentation. These reclassifications had no effect on reported income or losses. |
Stock-based compensation | The Company measures the cost of services received in exchange for an award of equity instruments based on the fair value of the award. For employees and directors, the fair value of the award is measured on the grant date and for non-employees, the fair value of the award is generally re-measured on vesting dates and interim financial reporting dates until the service period is complete. The fair value amount is then recognized over the period during which services are required to be provided in exchange for the award, usually the vesting period. Total employee and non-employee stock-based compensation expense for the three and nine months ended September 30, 2015 amounted to $107,052 and $125,257, respectively and for the three and nine months ended September 30, 2014 amounted to $196,877 and $297,790, respectively. |
Defined Contribution (401k) Plan | The Company maintains a defined contribution (401k) plan for our employees. The plan provides for a company match in the amount of 100% of the first 3% of pre-tax salary contributed and 50% of the next 3% of pre-tax salary contributed. Due to the severe cash limitations that the Company has experienced, the match was suspended from mid-2008 to the present and will only be re-instated when business conditions warrant. |
Derivative Liability | The Company accounts for derivatives in accordance with ASC 815, which establishes accounting and reporting standards for derivative instruments and hedging activities, including certain derivative instruments embedded in other financial instruments or contracts and requires recognition of all derivatives on the balance sheet at fair value, regardless of hedging relationship designation. Accounting for changes in fair value of the derivative instruments depends on whether the derivatives qualify as hedge relationships and the types of relationships designated are based on the exposures hedged. At September 30, 2015 and December 31, 2014, the Company did not have any derivative instruments that were designated as hedges. See Note 10 for discussion of the Company's derivative liabilities. |
Recent accounting pronouncements | There are various updates recently issued, most of which represented technical corrections to the accounting literature or application to specific industries and are not expected to a have a material impact on the Company's financial position, results of operations or cash flows. |
ACCOUNTS PAYABLE AND ACCRUED 23
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Accounts Payable And Accrued Liabilities Tables | |
Accounts payable and accrued liabilities | Accounts payable and accrued liabilities as of September 30, 2015 and December 31, 2014 are comprised of the following: September 30, 2015 December 31, 2014 Accounts payable $ 565,370 $ 1,025,919 Accrued interest 1,809,609 1,473,686 Payroll and related accruals, net of advance to employees 902,224 888,640 Total $ 3,277,203 $ 3,388,245 |
NOTES PAYABLE (Tables)
NOTES PAYABLE (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Notes Payable Tables | |
Short term notes | As of September 30, 2015 and December 31, 2014, short term notes are as follows: September 30, 2015 December 31, 2014 Bank loans $ - $ 50,000 Note payable, dated June 1, 2015 50,000 - Note payable, dated August 28, 2015 50,000 - Investor notes payable, 12% per annum 377,867 377,867 Total 490,367 427,867 Less current portion 240,367 427,867 Long term portion $ 250,000 $ -0- |
NOTES PAYABLE, RELATED PARTIES
NOTES PAYABLE, RELATED PARTIES (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Notes Payable Related Parties Tables | |
Notes payable, related parties | As of September 30, 2015 and December 31, 2014, notes payable, related parties are as follows: September 30, 2015 December 31, 2014 Convertible note payable dated July 22, 2010, in default $ 15,000 $ 15,000 Note payable dated January 14, 2011, in default 6,000 6,000 Note payable dated April 14, 2011, in default 25,000 25,000 Note payable dated April 15, 2011, in default 25,000 25,000 Note payable dated January 18, 2012, in default 5,000 5,000 Note payable dated January 20, 2012, in default 5,000 5,000 Note payable dated May 21, 2012, in default 15,000 15,000 Note payable dated May 30, 2012, in default 20,000 20,000 Series A Convertible note, in default 20,000 20,000 Convertible notes payable, dated July 6, 2012, in default 30,000 30,000 Convertible note payable, dated July 10, 2012, in default 15,000 15,000 Note payable, dated September 14, 2012, in default 6,000 6,000 Convertible note payable, dated September 7, 2012, in default 43,000 43,000 Convertible note payable, dated October 4, 2012, in default 50,000 50,000 Convertible note payable, dated September 5, 2013 10,000 10,000 Convertible note payable, dated September 16, 2013 3,000 3,000 Note payable dated September 17, 2013, in default 5,221 5,221 Note payable, dated October 24, 2013 30,000 30,000 Note payable, dated November 7, 2013 40,000 40,000 Note payable. dated December 6, 2013 5,000 5,000 Note payable, dated December 18, 2013 30,000 30,000 Note payable, dated January 9, 2014 25,000 25,000 Convertible note payable, dated February 28, 2014, net of unamortized debt discount of $5,283and $14,833, respectively 194,717 185,167 Convertible note payable, dated April 24, 2014, net of unamortized debt discount of $1,395 and $3,235, respectively 23,605 21,765 Convertible note payable, dated November 7, 2014, net of unamortized debt discount of $2,244 and $3,761, respectively 22,756 21,239 Convertible notes payable, dated December 4, 2014, net of unamortized debt discount of $1,948 and $3,182, respectively 48,052 46,818 Note payable, dated January 25, 2015 25,000 - Convertible note payable, dated March 3, 2015, net of unamortized debt discount of $3,281 46,719 - Convertible note payable, dated May 12, 2015, net of unamortized debt discount of $888 19,112 - Note payable, dated June 18, 2015 25,000 - Note payable, dated July 13, 2015 12,500 - Note payable, dated August 5, 2015 25,000 - Note payable, dated August 19, 2015 50,000 Total 920,682 703,210 Less current portion 684,043 298,221 Long term portion $ 236,639 $ 404,989 |
CONVERTIBLE NOTES (Tables)
CONVERTIBLE NOTES (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Convertible Notes Tables | |
Convertible notes | Convertible notes of non-related party investors are comprised of the following: September 30, December 31, 2015 2014 Series A Convertible Notes $ 817,000 $ 817,000 Series B Convertible Notes 225,000 225,000 Series C Convertible Notes 245,000 245,000 Series D Convertible Notes 21,000 21,000 Bridge 2014 Convertible Notes, net of unamortized debt discount of $37,653 and $79,919, respectively 712,347 670,081 Bridge 2015 Convertible Notes, net of unamortized debt discount of $63,632 236,368 - Total 2,256,715 1,978,081 Less: Current portion (1,772,370 ) (228,500 ) Long term portion $ 484,345 $ 1,749,581 |
DERIVATIVE LIABILITIES (Tables)
DERIVATIVE LIABILITIES (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Derivative Liabilities Tables | |
DERIVATIVE LIABILITIES | The following table provides a summary of changes in fair value of the Company's Level 3 financial liabilities as of September 30, 2015: Excess Share Derivative Balance, December 31, 2014 $ 336,582 Total (gains) losses Transfers in of Level 3 upon exceeding in authorized shares 208,139 Mark-to-market at September 30, 2015: 897,648 Balance, September 30, 2015 $ 1,442,369 Net loss for the period included in earnings relating to the liabilities held at September 30, 2015 $ (897,648 ) |
WARRANTS AND OPTIONS (Tables)
WARRANTS AND OPTIONS (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Derivative Liabilities Tables | |
Warrant | The following table summarizes warrants outstanding and related prices for the shares of the Company's common stock issued to shareholders at September 30, 2015: Exercise Price Number Outstanding Warrants Outstanding Weighted Average Remaining Contractual Life (years) Weighted Average Exercise price Number Exercisable Warrants Exercisable Weighted Average Exercise Price $ 0.01 to 0.10 38,925,000 3.25 $ 0.10 38,925,000 $ 0.10 0.11 to 0.20 16,150,000 1.94 0.15 16,150,000 0.15 0.21 to 0.30 18,663,000 1.12 0.25 18,663,000 0.25 Total 73,738,000 2.43 $ 0.15 73,738,000 $ 0.15 |
Warrant issuance | Transactions involving the Company's warrant issuance are summarized as follows: Number of Shares Weighted Average Price Per Share Outstanding at December 31, 2013 91,736,274 $ 0.22 Issued 10,500,000 0.15 Exercised - Expired (11,374,590 ) (0.35 ) Outstanding at December 31, 2014 90,861,684 0.20 Issued 5,300,000 0.15 Exercised - - Expired (22,423,684 ) (0.24 ) Outstanding at September 30, 2015 73,738,000 $ 0.15 |
Preferred stock warrants | The following table summarizes warrants outstanding and related prices for the shares of the Company's Series A convertible preferred stock issued at September 30, 2015: Exercise Price Number Outstanding Warrants Outstanding Weighted Average Remaining Contractual Life (years) Weighted Average Exercise price Number Exercisable Warrants Exercisable Weighted Average Exercise Price $ 0.50 1,620,000 4.08 $ 0.50 370,000 $ 0.50 1.00 68,000 1.91 1.00 68,000 1.00 1.50 300,500 1.77 1.50 300,500 1.50 Total 1,988,500 3.66 $ 0.67 738,500 $ 0.95 |
Preferred stock warrants issuance | Transactions involving the Company's warrant issuance are summarized as follows: Number of Shares Weighted Average Price Per Share Outstanding at December 31, 2013 - $ - Issued 1,914,500 0.66 Exercised Expired Outstanding at December 31, 2014 1,914,500 0.66 Issued 169,000 1.20 Exercised - - Canceled (95,000 ) 1.00 Outstanding at September 30, 2015 1,988,500 $ 0.67 |
Employee Options | The following table summarizes options outstanding and related prices for the shares of the Company's common stock issued at September 30, 2015: Exercise Price Number Outstanding Option Outstanding Options Average Remaining Contractual Life (years) Weighted Average Exercise price Number Exercisable Options Exercisable Weighted Average Exercise price $ 0.015 3,000,000 5.42 $ 0.015 1,000,000 $ 0.015 0.02 250,000 5.35 0.02 250,000 0.02 0.06 3,000,000 2.67 0.06 3,000,000 0.06 0.09 250,000 3.18 0.09 250,000 0.09 0.095 500,000 3.30 0.095 500,000 0.095 0.10 650,000 2.44 0.10 650,000 0.10 0.13 500,000 1.59 0.13 500,000 0.13 0.17 4,500,000 1.52 0.17 4,500,000 0.17 0.19 1,000,000 0.85 0.19 1,000,000 0.19 0.22 175,000 1.50 0.22 175,000 0.22 5.00 1,517,434 0.90 5.00 1,517,434 5.00 Total 15,342,434 2.59 $ 0.59 13,342,434 $ 0.67 |
Employee option issuance | Transactions involving the Company's option issuance are summarized as follows: Number of Shares Weighted Average Price Per Share Outstanding at December 31, 2013 14,198,434 $ 0.86 Issued 3,250,000 0.015 Exercised - - Expired (403,000 ) (3.14 ) Outstanding at December 31, 2014 17,045,434 0.64 Issued - - Exercised -- -- Expired (1,703,000 ) (1.19 ) Outstanding at September 30, 2015 15,342,434 $ 0.59 |
SIGNIFICANT ACCOUNTING POLICI29
SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | |
Total revenue concentration percentage | 79.21% | 80.73% | |||
Deferred revenue | $ 1,198,605 | $ 1,198,605 | $ 25,343 | ||
Diluted shares outstanding | 145,692,082 | 127,580,811 | 145,692,082 | 127,555,545 | |
Stock-based compensation expense | $ 107,052 | $ 196,877 | $ 125,257 | $ 297,790 | |
Client one | |||||
Accounts receivable | $ 10,000 | ||||
Accounts receivable concentration percentage | 35.00% | ||||
Total revenue concentration percentage | 11.32% | 14.40% | |||
Client two | |||||
Total revenue concentration percentage | 67.89% | 39.14% | |||
Client three | |||||
Total revenue concentration percentage | 27.19% |
LIQUIDITY (Details Narrative)
LIQUIDITY (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Liquidity Details Narrative | ||||
Net loss | $ (1,431,703) | $ (359,788) | $ (1,318,125) | $ (765,270) |
Working capital | $ (7,652,257) | $ (7,652,257) |
ACCOUNTS PAYABLE AND ACCRUED 31
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES (Details) - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 |
Accounts Payable And Accrued Liabilities Details | ||
Accounts payable | $ 565,370 | $ 1,025,919 |
Accrued interest | 1,809,609 | 1,473,686 |
Payroll and related accruals, net of advance to employees | 902,224 | 888,640 |
Total | $ 3,277,203 | $ 3,388,245 |
NOTES PAYABLE (Details)
NOTES PAYABLE (Details) - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 |
Notes Payable Details | ||
Bank loans | $ 50,000 | |
Note payable, dated June 1, 2015 | $ 50,000 | |
Note payable, dated August 28, 2015 | 50,000 | |
Investor notes payable, 12% per annum | 377,867 | $ 377,867 |
Total | 490,367 | 427,867 |
Less current portion | 240,367 | 427,867 |
Long term portion | $ 250,000 | $ 0 |
NOTES PAYABLE, RELATED PARTIE33
NOTES PAYABLE, RELATED PARTIES (Details) - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 |
Notes Payable | $ 920,682 | $ 703,210 |
Less current portion | 684,043 | 298,221 |
Long term portion | 236,639 | 404,989 |
Convertible note payable dated July 22, 2010 [Member] | ||
Notes Payable | 15,000 | 15,000 |
Note payable dated January 14, 2011 [Member] | ||
Notes Payable | 6,000 | 6,000 |
Note payable dated April 14, 2011 [Member] | ||
Notes Payable | 25,000 | 25,000 |
Note payable dated April 15, 2011 [Member] | ||
Notes Payable | 25,000 | 25,000 |
Note payable dated January 18, 2012 [Member] | ||
Notes Payable | 5,000 | 5,000 |
Note payable dated January 20, 2012 [Member] | ||
Notes Payable | 5,000 | 5,000 |
Note payable dated May 21, 2012 [Member] | ||
Notes Payable | 15,000 | 15,000 |
Note payable dated May 30, 2012 [Member] | ||
Notes Payable | 20,000 | 20,000 |
Series A Convertible note [Member] | ||
Notes Payable | 20,000 | 20,000 |
Convertible notes payable, dated July 6, 2012 [Member] | ||
Notes Payable | 30,000 | 30,000 |
Convertible note payable, dated July 10, 2012 [Member] | ||
Notes Payable | 15,000 | 15,000 |
Note payable, dated September 14, 2012 [Member] | ||
Notes Payable | 6,000 | 6,000 |
Convertible note payable, dated September 7, 2012 [Member] | ||
Notes Payable | 43,000 | 43,000 |
Convertible note payable, dated October 4, 2012 [Member] | ||
Notes Payable | 50,000 | 50,000 |
Convertible note payable, dated September 5, 2013 [Member] | ||
Notes Payable | 10,000 | 10,000 |
Convertible note payable, dated September 16, 2013 [Member] | ||
Notes Payable | 3,000 | 3,000 |
Note payable dated September 17, 2013 [Member] | ||
Notes Payable | 5,221 | 5,221 |
Note payable, dated October 24, 2013 [Member] | ||
Notes Payable | 30,000 | 30,000 |
Note payable, dated November 7, 2013 [Member] | ||
Notes Payable | 40,000 | 40,000 |
Note payable. dated December 6, 2013 [Member] | ||
Notes Payable | 5,000 | 5,000 |
Note payable, dated December 18, 2013 [Member] | ||
Notes Payable | 30,000 | 30,000 |
Note payable, dated January 9, 2014 [Member] | ||
Notes Payable | 25,000 | 25,000 |
Convertible note payable, dated February 28, 2014 [Member] | ||
Notes Payable | 194,717 | 185,167 |
Convertible note payable, dated April 24, 2014 [Member] | ||
Notes Payable | 23,605 | 21,765 |
Convertible note payable, dated November 7, 2014 [Member] | ||
Notes Payable | 22,756 | 21,239 |
Convertible notes payable, dated December 4, 2014 [Member] | ||
Notes Payable | 48,052 | $ 46,818 |
Note payable, dated January 25, 2015 [Member] | ||
Notes Payable | 25,000 | |
Convertible note payable, dated March 3, 2015 [Member] | ||
Notes Payable | 46,719 | |
Convertible note payable, May 12, 2015 [Member] | ||
Notes Payable | 19,112 | |
Note payable, dated June 18, 2015 [Member] | ||
Notes Payable | 25,000 | |
Note payable, dated July 13, 2015 [Member] | ||
Notes Payable | 12,500 | |
Note payable, dated August 5, 2015 [Member] | ||
Notes Payable | 25,000 | |
Note payable, dated August 19, 2015 [Member] | ||
Notes Payable | $ 50,000 |
NOTES PAYABLE, RELATED PARTIE34
NOTES PAYABLE, RELATED PARTIES (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | |
Notes Payable Related Parties Details Narrative | |||||
Amortized debt discount | $ 5,484 | $ 3,839 | $ 15,484 | $ 8,558 | |
Unpaid accrued interest | $ 222,436 | 222,436 | $ 143,526 | ||
Interest expense, related parties | $ 79,088 | $ 53,362 |
LINE OF CREDIT- RELATED PARTY (
LINE OF CREDIT- RELATED PARTY (Details Narrative) - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2015 | Dec. 31, 2014 | |
September 24, 2009 [Member] | ||
Outstanding balance on loan | $ 151,000 | $ 151,000 |
Unpaid accrued interest on line of credit | 114,672 | 101,119 |
Interest expense | 13,553 | $ 13,553 |
January 25, 2015 [Member] | ||
Outstanding balance on loan | $ 397,921 |
CONVERTIBLE NOTES (Details)
CONVERTIBLE NOTES (Details) - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 | Sep. 30, 2014 |
CONVERTIBLE NOTES | |||
Convertible Notes | $ 2,256,715 | $ 1,978,081 | |
Less: Current portion | (1,772,370) | (228,500) | |
Long term portion | 484,345 | 1,749,581 | |
Series A Convertible Notes [Member] | |||
CONVERTIBLE NOTES | |||
Convertible Notes | 817,000 | $ 817,000 | |
Series B Convertible Notes [Member] | |||
CONVERTIBLE NOTES | |||
Convertible Notes | 225,000 | 225,000 | |
Series C Convertible Notes [Member] | |||
CONVERTIBLE NOTES | |||
Convertible Notes | 245,000 | 245,000 | |
Series D Convertible Notes [Member] | |||
CONVERTIBLE NOTES | |||
Convertible Notes | 21,000 | 21,000 | |
Bridge Convertible 2014 Notes [Member] | |||
CONVERTIBLE NOTES | |||
Convertible Notes | 712,347 | $ 670,081 | |
Bridge Convertible 2015 Notes [Member] | |||
CONVERTIBLE NOTES | |||
Convertible Notes | $ 236,368 |
CONVERTIBLE NOTES (Details Narr
CONVERTIBLE NOTES (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Convertible Notes Details Narrative | ||||
Amortization of the debt discount convertible notes | $ 18,603 | $ 10,603 | $ 50,581 | $ 20,077 |
DERIVATIVE LIABILITIES (Details
DERIVATIVE LIABILITIES (Details) | 9 Months Ended |
Sep. 30, 2015USD ($) | |
Derivative Liabilities Details | |
Beginning Balance | $ 336,582 |
Total (gains) losses: | |
Transfers in of Level 3 upon exceeding in authorized shares | 208,139 |
Mark-to-market | 897,648 |
Ending Balance | 1,442,369 |
Net Gain for the period included in earnings relating to the liabilities held | $ (897,648) |
DERIVATIVE LIABILITIES (Detai39
DERIVATIVE LIABILITIES (Details Narrative) - USD ($) | 9 Months Ended | |
Sep. 30, 2015 | Dec. 31, 2014 | |
Convertible preferred stock, warrants and stock options | 143,445,434 | |
Common stock shares authorized | 200,000,000 | 200,000,000 |
Fair value of derivative liabilities | $ 95,005 | |
Derivative liabilities | $ 1,442,369 | $ 336,582 |
Stock price increase/(decrease) | 436.00% | |
Minimum [Member] | ||
Volatility | 306.06% | |
Risk free rate | 0.59% | |
Expected life | 3 years | |
Maximum [Member] | ||
Volatility | 328.03% | |
Risk free rate | 1.01% | |
Expected life | 5 years | |
Black Scholes Option Pricing Model [Member] | ||
Dividend yield | 0.00% | |
Volatility | 326.70% | |
Black Scholes Option Pricing Model [Member] | Minimum [Member] | ||
Risk free rate | 0.11% | |
Expected life | 5 months 16 days | |
Black Scholes Option Pricing Model [Member] | Maximum [Member] | ||
Risk free rate | 0.64% | |
Expected life | 2 years 2 months 27 days |
STOCKHOLDERS' EQUITY (Details N
STOCKHOLDERS' EQUITY (Details Narrative) - $ / shares | Sep. 30, 2015 | Dec. 31, 2014 |
Stockholders Equity Details Narrative | ||
Preferred stock par value | $ 0.001 | $ 0.001 |
Preferred stock shares authorized | 10,000,000 | 10,000,000 |
Series A Convertible Preferred stock shares issued | 642,500 | 595,000 |
Series A Convertible Preferred stock shares outstanding | 642,500 | 595,000 |
Common stock par value | $ 0.001 | $ 0.001 |
Common stock shares authorized | 200,000,000 | 200,000,000 |
Common stock shares issued | 98,187,082 | 98,187,082 |
Common stock shares outstanding | 98,187,082 | 98,187,082 |
WARRANTS AND OPTIONS (Details)
WARRANTS AND OPTIONS (Details) - $ / shares | 9 Months Ended | |
Sep. 30, 2015 | Dec. 31, 2014 | |
Number Outstanding | 15,342,434 | 17,045,434 |
Weighted Average Exercise price | $ 0.59 | $ 0.64 |
Number Exercisable | 13,342,434 | |
Warrants Exercisable Weighted Average Exercise Price | $ 0.67 | |
0.01 to 0.10 [Member] | ||
Number Outstanding | 38,925,000 | |
Warrants Outstanding Weighted Average Remaining Contractual Life (years) | 3 years 3 months | |
Weighted Average Exercise price | $ 0.10 | |
Number Exercisable | 38,925,000 | |
Warrants Exercisable Weighted Average Exercise Price | $ 0.10 | |
0.11 to 0.20 [Member] | ||
Number Outstanding | 16,150,000 | |
Warrants Outstanding Weighted Average Remaining Contractual Life (years) | 1 year 11 months 9 days | |
Weighted Average Exercise price | $ 0.15 | |
Number Exercisable | 16,150,000 | |
Warrants Exercisable Weighted Average Exercise Price | $ 0.15 | |
0.21 to 0.30 [Member] | ||
Number Outstanding | 18,663,000 | |
Warrants Outstanding Weighted Average Remaining Contractual Life (years) | 1 year 1 month 13 days | |
Weighted Average Exercise price | $ 0.25 | |
Number Exercisable | 18,663,000 | |
Warrants Exercisable Weighted Average Exercise Price | $ 0.25 | |
Warrants | ||
Number Outstanding | 73,738,000 | |
Warrants Outstanding Weighted Average Remaining Contractual Life (years) | 2 years 5 months 5 days | |
Weighted Average Exercise price | $ 0.15 | |
Number Exercisable | 73,738,000 | |
Warrants Exercisable Weighted Average Exercise Price | $ 0.15 |
WARRANTS AND OPTIONS (Details 1
WARRANTS AND OPTIONS (Details 1) - $ / shares | 9 Months Ended | 12 Months Ended |
Sep. 30, 2015 | Dec. 31, 2014 | |
Number of Shares | ||
Beginning Balance | 17,045,434 | |
Exercised | ||
Ending Balance | 15,342,434 | 17,045,434 |
Weighted Average Exercise Price | ||
Beginning Balance | $ 0.64 | |
Issued | ||
Exercised | ||
Expired | $ (1.19) | |
Ending Balance | $ 0.59 | $ 0.64 |
Warrant Issuance | ||
Number of Shares | ||
Beginning Balance | 90,861,684 | 91,736,274 |
Issued | 5,300,000 | 10,500,000 |
Exercised | ||
Expired | (22,423,684) | (11,374,590) |
Ending Balance | 73,738,000 | 90,861,684 |
Weighted Average Exercise Price | ||
Beginning Balance | $ 0.20 | $ 0.22 |
Issued | $ 0.15 | $ 0.15 |
Exercised | ||
Expired | $ (0.24) | $ (0.35) |
Ending Balance | $ 0.15 | $ 0.20 |
WARRANTS AND OPTIONS (Details 2
WARRANTS AND OPTIONS (Details 2) - $ / shares | 9 Months Ended | ||
Sep. 30, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Number Outstanding | 15,342,434 | 17,045,434 | |
Warrants Outstanding Weighted Average Remaining Contractual Life (years) | 2 years 7 months 2 days | ||
Weighted Average Exercise price | $ 0.59 | $ 0.64 | |
Number Exercisable | 13,342,434 | ||
Warrants Exercisable Weighted Average Exercise Price | $ 0.67 | ||
Preferred stock warrants [Member] | |||
Number Outstanding | 1,988,500 | 1,914,500 | |
Warrants Outstanding Weighted Average Remaining Contractual Life (years) | 3 years 7 months 28 days | ||
Weighted Average Exercise price | $ 0.67 | $ 0.66 | |
Number Exercisable | 738,500 | ||
Warrants Exercisable Weighted Average Exercise Price | $ 0.95 | ||
0.50 Preferred stock warrants [Member] | |||
Number Outstanding | 1,620,000 | ||
Warrants Outstanding Weighted Average Remaining Contractual Life (years) | 4 years 29 days | ||
Weighted Average Exercise price | $ 0.50 | ||
Number Exercisable | 370,000 | ||
Warrants Exercisable Weighted Average Exercise Price | $ 0.50 | ||
1.00 Preferred stock warrants [Member] | |||
Number Outstanding | 68,000 | ||
Warrants Outstanding Weighted Average Remaining Contractual Life (years) | 1 year 10 months 28 days | ||
Weighted Average Exercise price | $ 1 | ||
Number Exercisable | 68,000 | ||
Warrants Exercisable Weighted Average Exercise Price | $ 1 | ||
1.50 Preferred stock warrants [Member] | |||
Number Outstanding | 300,500 | ||
Warrants Outstanding Weighted Average Remaining Contractual Life (years) | 1 year 9 months 7 days | ||
Weighted Average Exercise price | $ 1.50 | ||
Number Exercisable | 300,500 | ||
Warrants Exercisable Weighted Average Exercise Price | $ 1.50 |
WARRANTS AND OPTIONS (Details 3
WARRANTS AND OPTIONS (Details 3) - $ / shares | 9 Months Ended | 12 Months Ended |
Sep. 30, 2015 | Dec. 31, 2014 | |
Number of Shares | ||
Beginning Balance | 17,045,434 | |
Issued | ||
Exercised | ||
Canceled | (95,000) | |
Ending Balance | 15,342,434 | 17,045,434 |
Weighted Average Exercise Price | ||
Beginning Balance | $ 0.64 | |
Issued | ||
Exercised | ||
Canceled | $ (1.19) | |
Ending Balance | $ 0.59 | $ 0.64 |
Preferred stock warrants [Member] | ||
Number of Shares | ||
Beginning Balance | 1,914,500 | |
Issued | 169,000 | 1,914,500 |
Exercised | ||
Canceled | (95,000) | |
Ending Balance | 1,988,500 | 1,914,500 |
Weighted Average Exercise Price | ||
Beginning Balance | $ 0.66 | |
Issued | $ 1.20 | $ 0.66 |
Exercised | ||
Canceled | $ 1 | |
Ending Balance | $ 0.67 | $ 0.66 |
WARRANTS AND OPTIONS (Details 4
WARRANTS AND OPTIONS (Details 4) - $ / shares | 9 Months Ended | |
Sep. 30, 2015 | Dec. 31, 2014 | |
Number Outstanding | 15,342,434 | 17,045,434 |
Warrants Outstanding Weighted Average Remaining Contractual Life (years) | 2 years 7 months 2 days | |
Weighted Average Exercise price | $ 0.59 | $ 0.64 |
Number Exercisable | 13,342,434 | |
Warrants Exercisable Weighted Average Exercise Price | $ 0.67 | |
0.015 Options [Member] | ||
Number Outstanding | 3,000,000 | |
Warrants Outstanding Weighted Average Remaining Contractual Life (years) | 5 years 5 months 1 day | |
Weighted Average Exercise price | $ 0.015 | |
Number Exercisable | 1,000,000 | |
Warrants Exercisable Weighted Average Exercise Price | $ 0.015 | |
0.02 Options [Member] | ||
Number Outstanding | 250,000 | |
Warrants Outstanding Weighted Average Remaining Contractual Life (years) | 5 years 4 months 6 days | |
Weighted Average Exercise price | $ 0.02 | |
Number Exercisable | 250,000 | |
Warrants Exercisable Weighted Average Exercise Price | $ 0.02 | |
0.06 Options [Member] | ||
Number Outstanding | 3,000,000 | |
Warrants Outstanding Weighted Average Remaining Contractual Life (years) | 2 years 8 months 1 day | |
Weighted Average Exercise price | $ 0.06 | |
Number Exercisable | 3,000,000 | |
Warrants Exercisable Weighted Average Exercise Price | $ 0.06 | |
0.09 Options [Member] | ||
Number Outstanding | 250,000 | |
Warrants Outstanding Weighted Average Remaining Contractual Life (years) | 3 years 2 months 5 days | |
Weighted Average Exercise price | $ 0.09 | |
Number Exercisable | 250,000 | |
Warrants Exercisable Weighted Average Exercise Price | $ 0.09 | |
0.095 Options [Member] | ||
Number Outstanding | 500,000 | |
Warrants Outstanding Weighted Average Remaining Contractual Life (years) | 3 years 3 months 18 days | |
Weighted Average Exercise price | $ 0.095 | |
Number Exercisable | 500,000 | |
Warrants Exercisable Weighted Average Exercise Price | $ 0.095 | |
0.10 Options [Member] | ||
Number Outstanding | 650,000 | |
Warrants Outstanding Weighted Average Remaining Contractual Life (years) | 2 years 5 months 9 days | |
Weighted Average Exercise price | $ 0.1 | |
Number Exercisable | 650,000 | |
Warrants Exercisable Weighted Average Exercise Price | $ 0.1 | |
0.13 Options [Member] | ||
Number Outstanding | 500,000 | |
Warrants Outstanding Weighted Average Remaining Contractual Life (years) | 1 year 7 months 2 days | |
Weighted Average Exercise price | $ 0.13 | |
Number Exercisable | 500,000 | |
Warrants Exercisable Weighted Average Exercise Price | $ 0.13 | |
0.17 Options [Member] | ||
Number Outstanding | 4,500,000 | |
Warrants Outstanding Weighted Average Remaining Contractual Life (years) | 1 year 6 months 7 days | |
Weighted Average Exercise price | $ 0.17 | |
Number Exercisable | 4,500,000 | |
Warrants Exercisable Weighted Average Exercise Price | $ 0.17 | |
0.19 Options [Member] | ||
Number Outstanding | 1,000,000 | |
Warrants Outstanding Weighted Average Remaining Contractual Life (years) | 10 months 6 days | |
Weighted Average Exercise price | $ 0.19 | |
Number Exercisable | 1,000,000 | |
Warrants Exercisable Weighted Average Exercise Price | $ 0.19 | |
0.22 Options [Member] | ||
Number Outstanding | 175,000 | |
Warrants Outstanding Weighted Average Remaining Contractual Life (years) | 1 year 6 months | |
Weighted Average Exercise price | $ 0.22 | |
Number Exercisable | 175,000 | |
Warrants Exercisable Weighted Average Exercise Price | $ 0.22 | |
5.00 Options [Member] | ||
Number Outstanding | 1,517,434 | |
Warrants Outstanding Weighted Average Remaining Contractual Life (years) | 10 months 24 days | |
Weighted Average Exercise price | $ 5 | |
Number Exercisable | 1,517,434 | |
Warrants Exercisable Weighted Average Exercise Price | $ 5 |
WARRANTS AND OPTIONS (Details 5
WARRANTS AND OPTIONS (Details 5) - $ / shares | 9 Months Ended | 12 Months Ended |
Sep. 30, 2015 | Dec. 31, 2014 | |
Number of Shares | ||
Beginning Balance | 17,045,434 | |
Issued | ||
Exercised | ||
Expired | (1,703,000) | |
Ending Balance | 15,342,434 | 17,045,434 |
Weighted Average Exercise Price | ||
Beginning Balance | $ 0.64 | |
Issued | ||
Exercised | ||
Expired | $ (1.19) | |
Ending Balance | $ 0.59 | $ 0.64 |
Options [Member] | ||
Number of Shares | ||
Beginning Balance | 17,045,434 | 14,198,434 |
Issued | 3,250,000 | |
Exercised | ||
Expired | (403,000) | |
Ending Balance | 17,045,434 | |
Weighted Average Exercise Price | ||
Beginning Balance | $ 0.64 | $ 0.86 |
Issued | $ 0.015 | |
Exercised | ||
Expired | $ (3.14) | |
Ending Balance | $ 0.64 |
WARRANTS AND OPTIONS (Details N
WARRANTS AND OPTIONS (Details Narrative) - USD ($) | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Company issued warrants | 5,300,000 | |
Exercise price | $ 0.15 | |
Expires from the date of issuance | 3 years | |
Estimated fair value charged | $ 100,276 | |
Issued Series A convertible preferred stock warrants | 169,000 | |
Estimated fair value recorded as compensation | $ 10,881 | |
Dividend yield | 0 | |
Compensation expense for options | $ 11,250 | $ 13,750 |
Series A convertible preferred stock warrants, canceled | (95,000) | |
Minimum [Member] | ||
Volatility | 306.06% | |
Risk free rate | 0.59% | |
Expected life | 3 years | |
Maximum [Member] | ||
Volatility | 328.03% | |
Risk free rate | 1.01% | |
Expected life | 5 years |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Related Party Transactions Details Narrative | ||
Interest expense in connection with notes payable to related parties and related party line of credits amount | $ 92,641 | $ 66,915 |