Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2019 | May 15, 2019 | |
Document And Entity Information | ||
Entity Registrant Name | PCT LTD | |
Entity Central Index Key | 0001119897 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2019 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Is Entity's Reporting Status Current? | Yes | |
Is Entity Emerging Growth Company? | false | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Common Stock, Shares Outstanding | 50,518,048 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2019 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 |
CURRENT ASSETS | ||
Cash | $ 9,067 | $ 4,893 |
Accounts receivable | 113,198 | 49,140 |
Inventory | 6,476 | 7,105 |
Prepaid expenses | 64,189 | 218,494 |
Other Assets | 2,110 | 2,110 |
Total current assets | 195,040 | 281,742 |
FIXED ASSETS | ||
Property and equipment, net | 496,604 | 499,972 |
OTHER ASSETS | ||
Intangible assets, net | 3,985,747 | 4,059,775 |
Operating lease right-of-use asset | 31,513 | |
Deposits | 5,499 | 5,499 |
Total other assets | 4,022,759 | 4,065,274 |
TOTAL ASSETS | 4,714,403 | 4,846,988 |
CURRENT LIABILITIES | ||
Accounts payable | 361,515 | 350,593 |
Accrued expenses - related parties | 53,701 | 54,033 |
Accrued expenses | 388,289 | 362,436 |
Current portion of operating lease liability | 33,066 | |
Current portion of notes payable - related party | 827,024 | 93,000 |
Current portion of notes payable | 332,797 | 399,664 |
Current portion of convertible notes payable, net | 376,344 | 161,280 |
Derivative liability | 588,157 | 322,976 |
Preferred stock liability | 57,394 | 144,352 |
Total current liabilities | 3,018,287 | 1,888,334 |
LONG TERM LIABILITIES | ||
Notes payable - related parties, net of current portion and discounts | 733,826 | |
Notes payable, net of current portion and discounts | 126,707 | |
Convertible notes payable, net of current portions and discounts | 6,530 | 392,534 |
TOTAL LIABILITIES | 3,024,817 | 3,141,401 |
STOCKHOLDERS' EQUITY | ||
Preferred stock, $0.001 par value; 10,000,000 authorized; nil issued and outstanding at March 31, 2019 and December 31, 2018, respectively | ||
Common stock, $0.001 par value; 300,000,000 authorized; 50,518,048 and 44,559,238 issued and outstanding at March 31, 2019 and December 31, 2018, respectively | 50,518 | 44,560 |
Additional paid-in capital | 12,486,394 | 11,588,030 |
Accumulated deficit | (10,847,326) | (9,927,003) |
TOTAL STOCKHOLDERS' EQUITY | 1,689,586 | 1,705,587 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 4,714,403 | $ 4,846,988 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Mar. 31, 2019 | Dec. 31, 2018 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | ||
Preferred stock, shares outstanding | ||
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 300,000,000 | 300,000,000 |
Common stock, shares issued | 50,518,048 | 44,559,238 |
Common stock, shares outstanding | 50,518,048 | 44,559,238 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
REVENUES | ||
Product | $ 87,094 | $ 22,641 |
Licensing | 44,500 | |
Equipment leases | 64,363 | 19,500 |
Total revenue | 195,957 | 42,141 |
OPERATING EXPENSES | ||
General and administrative | 666,964 | 445,225 |
Costs of product, licensing and equipment | 72,654 | 15,718 |
Depreciation and amortization | 84,912 | 86,696 |
Total operating expenses | 824,530 | 547,639 |
Loss from operations | (628,573) | (505,498) |
OTHER INCOME (EXPENSES) | ||
Loss on change in fair value of derivative liability | (162,299) | |
Gain on change in fair value of preferred stock liability | 75,477 | |
Loss on settlement of debt | (84,409) | |
Interest expense | (120,519) | (25,804) |
Total other income (expenses) | (291,750) | (25,804) |
Loss from operations before income taxes | (920,323) | (531,302) |
Income taxes | ||
NET LOSS | $ (920,323) | $ (531,302) |
Basic and diluted net loss per share | $ (0.02) | $ (0.01) |
Basic and diluted weighted average shares outstanding | 45,621,657 | 41,288,016 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Cash Flows from Operating Activities | ||
Net loss | $ (920,323) | $ (531,302) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 84,912 | 86,696 |
Amortization of debt discount | 47,592 | 3,677 |
Amortization of operating lease right-of-use asset | 11,817 | |
Common stock payable for services | 43,836 | |
Common stock issued for services | 98,927 | |
Loss on change in fair value of derivative liability | 162,299 | |
Gain on change in fair value of preferred stock liability | (75,477) | |
Loss on settlement of debt | (84,409) | |
Changes in operating assets and liabilities: | ||
Accounts receivable | (73,058) | (9,677) |
Inventory | 629 | 1,670 |
Prepaid expenses | 154,305 | 5,787 |
Operating lease liability | (10,264) | |
Accrued expenses | 78,582 | 82,464 |
Accrued expenses - related party | (332) | 8,528 |
Accounts payable | 35,922 | (26,679) |
Net cash used in operating activities | (320,060) | (335,000) |
Cash Flows from Investing Activities | ||
Purchase of property and equipment | (2,516) | (3,900) |
Purchase of intangible assets | (5,000) | |
Net cash used in investing activities | (7,516) | (3,900) |
Cash Flows from Financing Activities | ||
Proceeds from notes payable | 262,500 | |
Proceeds from notes payable - related parties | 2,544 | |
Proceeds from convertible notes payable | 425,750 | 100,000 |
Repayment of convertible notes payable | (91,000) | |
Repayment of notes payable | (20,000) | |
Repayment of notes payable - related parties | (5,544) | (5,000) |
Proceeds from issuance of common stock | 55,000 | |
Net cash provided by financing activities | 331,750 | 392,500 |
Net change in cash | 4,174 | 53,600 |
Cash and cash equivalents at beginning of period | 4,893 | 7,838 |
Cash and cash equivalents at end of period | 9,067 | 61,438 |
Supplemental Cash Flow Information: | ||
Cash paid for interest | 47,739 | 4,875 |
Cash paid for Income taxes | ||
Non-Cash Investing and Financing Activities | ||
Beneficial conversion feature | 58,401 | |
Extinguishment of notes payable | 250,000 | |
Original debt discount against convertible notes | 217,125 | |
Modification of notes payable | 20,590 | |
Common stock issued in settlement of debt | 805,395 | |
Accounts receivable netted against notes payable | 9,000 | |
Initial operating lease right-of-use asset and liability | $ 43,330 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders’ Equity (Unaudited) - USD ($) | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Total |
Beginning balance, shares at Dec. 31, 2017 | 41,179,238 | |||
Beginning balance, amount at Dec. 31, 2017 | $ 41,180 | $ 10,001,323 | $ (6,744,520) | $ 3,297,983 |
Common stock issued for cash, shares | 110,000 | |||
Common stock issued for cash, amount | $ 110 | 54,890 | 55,000 | |
Shares issuable for services, shares | ||||
Shares issuable for services, amount | 43,836 | 43,836 | ||
Beneficial conversion feature | 58,401 | 58,401 | ||
Net loss | (531,302) | (531,302) | ||
Ending balance, shares at Mar. 31, 2018 | 41,289,238 | |||
Ending balance, amount at Mar. 31, 2018 | $ 41,290 | 10,158,450 | (7,275,822) | 2,923,918 |
Beginning balance, shares at Dec. 31, 2018 | 44,559,238 | |||
Beginning balance, amount at Dec. 31, 2018 | $ 44,560 | 11,588,030 | (9,927,003) | 1,705,587 |
Shares issued in settlement of debt, shares | 5,383,810 | |||
Shares issued in settlement of debt, amount | $ 5,383 | 800,012 | 805,395 | |
Common stock issued for services, shares | 575,000 | |||
Common stock issued for services, amount | $ 575 | 98,352 | 98,927 | |
Beneficial conversion feature | ||||
Net loss | (920,323) | (920,323) | ||
Ending balance, shares at Mar. 31, 2019 | 50,518,048 | |||
Ending balance, amount at Mar. 31, 2019 | $ 50,518 | $ 12,486,394 | $ (10,847,326) | $ 1,689,586 |
NATURE OF BUSINESS AND SUMMARY
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Mar. 31, 2019 | |
Accounting Policies [Abstract] | |
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The unaudited interim condensed consolidated financial statements of PCT LTD (the “Company”) have been prepared in accordance with United States generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and reflect all adjustments which, in the opinion of management, are necessary for a fair presentation of our balance sheet, statements of operations, stockholders’ equity, and cash flows for the periods presented. All such adjustments are of a normal recurring nature. The results of operations for the interim period are not necessarily indicative of the results to be expected for a full year. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these condensed consolidated financial statements be read in conjunction with the financial statements and notes thereto included in the Company’s December 31, 2018 audited financial statements as reported in its Form 10-K, filed on April 15, 2019. Nature of Operations PCT LTD (formerly Bingham Canyon Corporation, (the “Company,” “PCT Ltd,” or “Bingham”), a Delaware corporation, was formed on August 27, 1986. The Company changed its domicile to Nevada on August 26, 1999. On August 31, 2016, the Company entered into a Securities Exchange Agreement with Paradigm Convergence Technologies Corporation (“Paradigm”) to affect the acquisition of Paradigm as a wholly-owned subsidiary. Under the terms of the agreement, Bingham issued 16,790,625 restricted common shares of Bingham stock to the shareholders of Paradigm in exchange for all 22,387,500 outstanding common shares of Paradigm stock. In addition, Bingham issued options exercisable into 2,040,000 shares of the Bingham’s common stock (with exercise prices ranging between $0.133 and $0.333) in exchange for 2,720,000 outstanding Paradigm stock options (with exercise prices ranging between $0.10 and $0.25). These 2,040,000 options have been adjusted at the same exchange rate of 75% that the outstanding common shares were exchanged. As a result of this share exchange agreement, Paradigm, the operating company, is considered the accounting acquirer. Paradigm is located in Little River, SC and was formed June 6, 2012 under the name of EUR-ECA, Ltd. On September 11, 2015, its Board of Directors authorized EUR-ECA Ltd to file with the Nevada Secretary of State to change its name to Paradigm Convergence Technologies Corp. Paradigm is a technology licensing company specializing in environmentally safe solutions for global sustainability. The company holds a patent, intellectual property and/or distribution rights to innovative products and technologies. Paradigm provides innovative products and technologies for eliminating biocidal contamination from water supplies, industrial fluids, hard surfaces, food processing equipment, and medical devices. Paradigm’s overall strategy is to market new products and technologies through the use of equipment leasing, joint ventures, licensing, distributor agreements and partnerships. Effective on March 23, 2018 the Company changed its name from Bingham Canyon Corporation to PCT LTD to more accurately identify the Company’s direction and to develop the complimentary relationship and association with its wholly-owned operating company, Paradigm Convergence Technologies Corporation (“Paradigm” or “PCT Corp.”). Principles of Consolidations The accompanying consolidated financial statements include the accounts of PCT LTD (“Parent”) and its wholly owned subsidiary, Paradigm Convergence Technologies Corporation (“Paradigm” or “Subsidiary”). All intercompany accounts have been eliminated upon consolidation. Use of Estimates The preparation of the condensed consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingencies at the date of the financial statements as well as the reported amounts of revenues and expenses during the reporting periods. Estimates are based on historical experience and on various other market-specific and other relevant assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ materially from those estimates. Cash and Cash Equivalents Cash and cash equivalents are considered to be cash and highly liquid securities with original maturities of three months or less. The cash of $9,067 and $4,893 as of March 31, 2019 and December 31, 2018, respectively, represents cash on deposit in various bank accounts. There were no cash equivalents as of March 31, 2019 and December 31, 2018. Fair Value Measurements The Company follows ASC 820, “Fair Value Measurements and Disclosures,” which defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. A fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last is considered unobservable, is used to measure fair value: • Level 1 - Valuations for assets and liabilities traded in active markets from readily available pricing sources such as quoted prices in active markets for identical assets or liabilities. • Level 2 - Observable inputs (other than Level 1 quoted prices) such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data. • Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques. The carrying values of our financial instruments, including, cash and cash equivalents, accounts receivable, inventory, prepaid expenses, accounts payable and accrued expenses approximate their fair value due to the short maturities of these financial instruments. Derivative liabilities and preferred stock liabilities are determined based on “Level 3” inputs, which are significant and unobservable and have the lowest priority. There were no transfers into or out of “Level 3” during the three months ended March 31, 2019. The recorded values of all other financial instruments approximate their current fair values because of their nature and respective relatively short maturity dates or durations. Our financial assets and liabilities carried at fair value measured on a recurring basis as of March 31, 2019, consisted of the following: Total fair value at Quoted prices in active markets Significant other observable inputs Significant unobservable inputs Description: Preferred stock liability (1) 57,394 — — 57,394 Derivative liability (1) 588,157 — — 588,157 Total 645,551 — — 645,551 Our financial assets and liabilities carried at fair value measured on a recurring basis as of December 31, 2018, consisted of the following: Total fair value at Quoted prices in active markets Significant other observable inputs Significant unobservable inputs Description: Preferred stock liability (1) 144,352 — — 144,352 Derivative liability (1) 322,976 — — 322,976 Total 467,328 — — 467,328 (1) The Company has estimated the fair value of these liabilities using the Binomial Model. Derivative and Preferred Stock Liabilities The Company accounts for derivative instruments in accordance with ASC Topic 815, “ Derivatives and Hedging Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial statement. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates. See Note 7 for additional information. Accounts Receivable Trade accounts receivable are recorded at the time product is shipped or services are provided including any shipping and handling fees. The Company provided allowances for uncollectible accounts receivable equal to the estimated collection losses that will be incurred in collection of all receivables. Accounts receivable is periodically evaluated for collectability bases on past credit history with customers and their current financial condition. The Company’s management determines which accounts are past due and if deemed uncollectible, the Company charges off the receivable in the period the determination is made. Based on management’s evaluation, the Company provided an allowance for doubtful accounts of $0 at March 31, 2019 and December 31, 2018, respectively. Inventories Inventories are stated at the lower of cost or market. Cost is determined by using the first in, first out (FIFO) method. We record the value of our inventory for estimated obsolescence or unmarketable inventory equal to the difference between the cost of inventory and the estimated market value based upon assumptions about future demand, future pricing and market conditions. As of March 31, 2019 and December 31, 2018, the inventory consisted of parts for equipment sold as replacement parts to existing customers or sold to new customers. The Company has recorded a reserve allowance of $0 and $0 as of March 31, 2019 and December 31, 2018, respectively. The Company has determined that some of the supplies inventory is necessary to be placed into service, after assembly into equipment to be used in product manufacturing and classified as Machinery and Equipment. The balance at March 31, 2019 and December 31, 2018 of such supplies and equipment not yet placed in service amounted to $319,735 and $319,735, respectively. Property and Equipment Property and equipment are stated at purchased cost and depreciated utilizing a straight-line method over estimated useful lives ranging from 3 to 7 years after the asset has been placed in service. Upon selling equipment that had been under a lease agreement, the company discontinues the depreciation on that piece of equipment, as it transfers ownership to another entity. Additions and major improvements that extend the useful lives of property and equipment are capitalized. Maintenance and repairs are charged to operations as incurred. Upon trade-in, sale or retirement of property and equipment, the related cost and accumulated depreciation are removed from the accounts and any related gains or losses are recorded in the results of operations. Impairment of Long-lived Assets The carrying values of the Company’s long-lived assets are reviewed for impairment annually and whenever events or changes in circumstances indicate that they may not be recoverable. When projections indicate that the carrying value of the long-lived asset is not recoverable, the carrying value is reduced by the estimated excess of the carrying value over the fair value. Under similar analysis no impairment was recorded during the three months ended March 31, 2019. Intangible Assets Costs to obtain or develop patents are capitalized and amortized over the remaining life of the patents, and technology rights are amortized over their estimated useful lives. The Company currently has the right to several patents and proprietary technology. Patents and technology are amortized from the date the Company acquires or is awarded the patent or technology right, over their estimated useful lives, which range from 1 to 15 years. An impairment charge is recognized if the carrying amount is not recoverable and the carrying amount exceeds the fair value of the intangible assets as determined by projected discounted net future cash flows. The recorded impairment expense was nil for the three months ended March 31, 2019. Research and Development Research and development costs are recognized as an expense during the period incurred, which is until the conceptual formulation, design, and testing of a process is completed and the process has been determined to be commercially viable. Leases In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-02, Leases (Topic 842) ("ASC 842"), which requires lessees to recognize right-of-use ("ROU") assets and related lease liabilities on the balance sheet for all leases greater than one year in duration. We adopted ASC 842 on January 1, 2019 using a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The modified retrospective approach did not require any transition accounting for leases that expired before the earliest comparative period presented. The adoption of this standard resulted in the recording of ROU assets and lease liabilities for our lease agreements with original terms of greater than one year. Upon implementation, the Company recognized an initial operating lease right-of-use asset of $43,330 and operating lease liability of $43,330. Due to the simplistic nature of the Company's leases, no retained earnings adjustment was required. See Note 5 for further details. Revenue Recognition On May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customer (Topic 606) The Company has the following three revenue streams: 1) product sales (equipment and/or fluid solutions); 2) licensing (contract-based use of the Company’s US EPA Product Registration, returning revenue in licensing fees and/or royalties from minimum or actual fluid sales); and 3) equipment leases (under systems service agreements, usually 3-year contracts for the provision of the Company’s equipment and service of such, under contract to customers, with renewable terms). The Company recognizes revenue from the sale of products when the performance obligation is satisfied by transferring control of the product to a customer. The Company recognizes revenue from the leasing of equipment as the entity provides the equipment and the customer simultaneously receives and consumes the benefits through the use of the equipment. This revenue generating activity would meet the criteria for a performance obligation satisfied over time. As a result, the Company recognizes revenue over time by using the output method, as the Company can measure progress of the performance obligation using the time elapsed under each obligation. The Company’s licenses provide a right to use and create performance obligations satisfied at a point in time. The Company recognizes revenue from licenses when the performance obligation is satisfied through the transfer of the license. For licenses that include royalties the Company will recognize royalty revenue as the underlying sales or usages occur, as long as this approach does not result in the acceleration of revenue ahead of the entity’s performance. The Company has disclosed disaggregated revenue via revenue stream on the face of the statement of operations. The Company did not have any contract assets or liabilities at March 31, 2019. Basic and Diluted Loss Per Share Basic loss per share is computed by dividing net loss by the weighted-average number of common shares outstanding during the period. Diluted loss per share is computed by dividing net loss by the weighted-average number of common shares and dilutive potential common shares outstanding during the period. As of March 31, 2019, there were outstanding common share equivalents (options, warrants, convertible debt and preferred stock) which amounted to 13,033,694 shares of common stock. These common share equivalents were not included in the computation of diluted loss per share as their effect would have been anti-dilutive. Recent Accounting Pronouncements The Company has reviewed all other FASB issued ASU accounting pronouncements and interpretations thereof that have effective dates during the period reported and in future periods. The Company has carefully considered the new pronouncements that alter the previous GAAP and do not believe that any new or modified principles will have a material impact on the Company’s reported financial position or operations in the near term. |
GOING CONCERN
GOING CONCERN | 3 Months Ended |
Mar. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
GOING CONCERN | NOTE 2. GOING CONCERN The accompanying unaudited condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company has limited assets, has incurred losses since inception of $10,847,326 and has negative cash flows from operations. As of March 31, 2019, the Company had a working capital deficit of $2,823,247. The Company has relied on raising debt and equity capital in order to fund its ongoing day-to-day operations and its corporate overhead. The Company will require additional working capital from either cash flow from operations, from debt or equity financing, or from a combination of these sources. These factors raise substantial doubt about the ability of the Company to continue as a going concern for a period of one year from the issuance of these financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 3 Months Ended |
Mar. 31, 2019 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | NOTE 3. PROPERTY AND EQUIPMENT Depreciation is computed using the straight-line method and is recognized over the estimated useful lives of the property and equipment, which range from 3 to 7 years once placed into service. Depreciation expense does not begin until documentation of equipment placed in service is provided. Machinery and leased equipment is not intended to be sold to the customer at the end of the lease term. Depreciation expense was $5,884 (2018 - $5,652) for the three months ended March 31, 2019. Property and equipment at March 31, 2019 and December 31, 2018 consisted of the following: March 31, 2019 December 31, 2018 Machinery and leased equipment $ 138,209 $ 138,209 Machinery and equipment not yet in services 372,270 369,754 Office equipment and furniture 20,064 20,064 Website 2,760 2,760 Total property and equipment $ 533,303 $ 530,787 Less: Accumulated Depreciation (36,699 ) (30,815 ) Property and equipment, net 496,604 499,972 |
INTANGIBLE ASSETS
INTANGIBLE ASSETS | 3 Months Ended |
Mar. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
INTANGIBLE ASSETS | NOTE 4. INTANGIBLE ASSETS Amortization is computed using the straight-line method and is recognized over the estimated useful lives of the intangible assets, which range from 1 to 15 years. Amortization expense was $79,028 and $81,044 for the three months ended March 31, 2019 and 2018 respectively. Intangible assets at March 31, 2019 and December 31, 2018 consisted of the following: March 31, 2019 December 31, 2018 Patents $ 4,514,989 $ 4,514,989 Technology rights 240,500 235,500 Intangible, at cost 4,755,489 4,750,489 Less: Accumulated amortization (769,742 ) (690,714 ) Net Carrying Amount $ 3,985,747 $ 4,059,775 Estimated Future Amortization Expense: $ For year ending December 31, 2019 235,253 For year ending December 31, 2020 306,941 For year ending December 31, 2021 305,337 For year ending December 31, 2022 305,337 For year ending December 31, 2023 to December 31, 2034 2,832,879 Total 3,985,747 |
LEASES
LEASES | 3 Months Ended |
Mar. 31, 2019 | |
Debt Disclosure [Abstract] | |
LEASES | NOTE 5 – LEASES In February 2016, the FASB issued ASU No. 2016-02, Leases The depreciable lives of operating lease assets and leasehold improvements are limited by the expected lease term. The Company's leases generally do not provide an implicit rate, and therefore the Company uses its incremental borrowing rate as the discount rate when measuring operating lease liabilities. The Company used incremental borrowing rates as of January 1, 2019 for operating leases that commenced prior to that date. The following table sets forth the ROU assets and liabilities as of March 31, 2019: March 31, 2019 Operating lease right-of-use asset $ 31,513 Operating lease liability: Current operating lease liability $ 33,066 Noncurrent operating lease liability — Total operating lease liability $ 33,066 Expense related to leases is recorded on a straight-line basis over the lease term, including rent holidays. During the three months ended March 31, 2019, the Company recognized operating lease expense of $15,954. Operating lease costs are included within selling, administrative and other expenses on the condensed consolidated statements of income. Cash paid for amounts included in the measurement of operating lease liabilities were $14,400 for the three months ended March 31, 2019. During the three months ended March 31, 2019, the Company reduced its ROU liabilities by $10,263 from cash paid. Our weighted average discount rate is 41% and the weighted average remaining lease term is 8 months. Lease payments over the next five years and thereafter are as follows: March 31, 2019 2019 - remaining $ 38,400 2020 and thereafter — Total lease payments 38,400 Less: imputed interest (5,334 ) Total ROU liabilities $ 33,066 As previously disclosed in our 2018 Form 10-K under the prior guidance of ASC 840, minimum payments under operating lease agreements as of December 31, 2018 were as follows: December 31, 2018 2019 $ 52,950 2020 — Total $ 33,066 |
NOTES PAYABLE
NOTES PAYABLE | 3 Months Ended |
Mar. 31, 2019 | |
Debt Disclosure [Abstract] | |
NOTES PAYABLE | NOTE 6. Notes Payable The following tables summarize notes payable as of March 31, 2019 and December 31, 2018: Type Amount Origination Date Maturity Date Annual Interest Rate Balance at March 31, 2019 Balance at December 31, 2018 Note Payable $ 150,000 5/18/2016 6/1/2019 13.00 % $ 150,000 $ 150,000 Note Payable *** $ 25,000 5/8/2017 6/30/2018 0.00 % $ 27,500 $ 27,500 Note Payable $ 130,000 6/20/2018 1/2/2020 8.00 % $ 130,000 $ 130,000 Note Payable (a) $ 126,964 6/20/2018 8/31/2018 6.00 % $ — $ 126,964 Note Payable (b) $ 26,500 6/26/2018 7/31/2018 10.00 % $ — $ 26,500 Note Payable (b) $ 20,590 2/1/2019 10/1/2019 10.00 % $ 19,090 $ — Note Payable $ 60,000 10/30/2018 12/30/2018 8.00 % $ — $ 60,000 Note Payable $ 8,700 11/15/2018 6/30/2019 10.00 % $ 8,700 $ 8,700 Subtotal $ 335,290 $ 529,664 Debt Discount $ (2,493 ) $ (3,293 ) Balance, net $ 332,797 $ 526,371 Less current portion $ (332,797 ) $ (399,664 ) Total long-term $ — $ 126,707 *** Currently in default a) On January 28, 2019, the Company agreed to convert $131,327 of principal and interest of its note payable with a non-related party into 987,421 shares of the Company’s common stock. The company recorded a loss on settlement of debt of $38,319 equal to the difference between the fair value of the common shares of $177,736 and the carrying value of the note and interest. b) On February 1, 2019, the Company had the following note balance with a non-related party of the Company outstanding (totaling $26,500 – issued June 26, 2018). On February 1, 2019, the Company issued a new note that modified the note above and also applied any outstanding interest owed. The new note issued was for $20,590 with a maturity date on or before October 1, 2019, and bears interest at 10% per annum. Further, the Company and the lender agreed that the customer’s minimum monthly royalty payments of $1,500 would be applied to reduce the principal and interest of the note. Total accounts receivable from the noteholder of $9,000 was applied to the note during the three months ended March 31, 2019. At March 31, 2019, the remaining balance of the note was $19,090. The following table summarizes notes payable, related parties as of March 31, 2019 and December 31, 2018: Type Amount Origination Date Maturity Date Annual Interest Rate Balance at March 31, 2019 Balance at December 31, 2018 Note Payable, RP *** $ 30,000 4/10/2018 1/15/2019 3.00 % $ 30,000 $ 30,000 Note Payable, RP $ 380,000 6/20/2018 1/2/2020 8.00 % $ 380,000 $ 380,000 Note Payable, RP $ 350,000 6/20/2018 1/2/2020 5.00 % $ 350,000 $ 350,000 Note Payable, RP $ 17,000 6/20/2018 1/2/2020 5.00 % $ 17,000 $ 17,000 Note Payable, RP *** $ 50,000 7/27/2018 11/30/2018 8.00 % $ 50,000 $ 50,000 Note Payable, RP $ 5,000 10/9/2018 Demand 0.00 % $ 5,000 $ 5,000 Note Payable, RP $ 5,000 10/19/2018 Demand 0.00 % $ 5,000 $ 5,000 Note Payable, RP ** $ 3,000 10/24/2018 Demand 0.00 % $ — $ 3,000 Note Payable, RP (c)** $ 2,544 1/3/2019 6/30/2019 3.00 % $ — $ — Subtotal $ 837,000 $ 840,000 Debt Discount $ (9,976 ) $ (13,174 ) Balance, net $ 827,024 $ 826,826 Less current portion $ (827,024 ) $ (93,000 ) Total long-term $ — $ 733,826 ** Paid off during the period c) On January 3, 2019, the Company entered into a promissory note with the Chairman and President of the Company for $2,544. The note is due June 30, 2019, is unsecured and bears an interest rate of 3.0% per annum. At March 31, 2019, the remaining balance of this note was $0. The following table summarizes convertible notes payable as of March 31, 2019 and December 31, 2018: Type Amount Origination Date Maturity Date Annual Interest Rate Balance at March 31, 2019 Balance at December 31, 2018 Convertible Note Payable (d) $ 450,000 3/28/2018 3/31/2021 8.00 % $ — $ 450,000 Convertible Note Payable (d)* $ 539,936 1/15/2019 1/15/2022 8.00 % $ — $ — Convertible Note Payable ** $ 38,000 7/30/2018 7/25/2019 12.00 % $ — $ 38,000 Convertible Note Payable ** $ 53,000 8/29/2018 8/27/2019 12.00 % $ — $ 53,000 Convertible Note Payable * $ 50,000 12/6/2018 12/6/2019 5.00 % $ 50,000 $ 50,000 Convertible Note Payable * $ 65,000 12/6/2018 12/6/2019 5.00 % $ 65,000 $ 65,000 Convertible Note Payable $ 63,000 12/12/2018 12/5/2019 12.00 % $ 63,000 $ 63,000 Convertible Note Payable (e) $ 33,000 1/16/2019 1/15/2020 12.00 % $ 33,000 $ — Convertible Note Payable (f) $ 100,000 1/18/2019 1/16/2020 8.00 % $ 100,000 $ — Convertible Note Payable (g) $ 60,000 1/29/2019 1/22/2020 8.00 % $ 60,000 $ — Convertible Note Payable (h)* $ 50,000 2/1/2019 10/22/2019 12.00 % $ 50,000 $ — Convertible Note Payable (i)* $ 60,000 2/21/2019 2/14/2022 0.00 % $ 60,000 $ — Convertible Note Payable (j) $ 55,125 2/21/2019 2/20/2020 8.00 % $ 55,125 $ — Convertible Note Payable (k) $ 53,000 2/26/2019 2/20/2020 12.00 % $ 53,000 $ — Convertible Note Payable (l)* $ 75,000 3/18/2019 12/13/2019 12.00 % $ 75,000 $ — Subtotal $ 664,125 $ 719,000 Debt Discount $ (281,251 ) $ (165,186 ) Balance, net $ 382,874 $ 553,814 Less current portion $ (376,344 ) $ (161,280 ) Total long-term $ 6,530 $ 392,534 * Embedded conversion feature accounted for as a derivative liability d) On January 15, 2019, the Company executed a new, consolidated convertible note with a non-related party by extinguishing the March 28, 2018 convertible note in the amount of $450,000 with interest due of $28,898 and a $60,000 term note, dated October 31, 2018 with interest due of $1,038. The new convertible note is in the amount of $539,936, is due on or before January 15, 2022, has an 8.00% per annum interest rate and may be converted into shares of the Company’s common stock at $0.20 per share. The new note incorporates an anti-dilution feature if the Company issues more than 60,000,000 shares of its common stock. The embedded conversion option qualified for derivative accounting and bifurcation under ASC 815-15 Derivatives and Hedging. The initial fair value of the conversion feature was $292,651. The company recorded a loss on extinguishment of debt of $350,117 equal to the initial fair value of derivative liability on the new note and the previous unamortized debt discount balance of one the old notes. On March 27, 2019, the Company agreed to convert $548,686 of principal ($539,936) and interest ($8,750) of its convertible note payable into 3,597,989 shares of the Company’s common stock. The company recorded a gain on settlement of debt of $359,857 equal to the difference between both the fair value of the common shares of $523,867 and the fair value of the conversion feature at conversion of $335,038 compared to the carrying value of the note and interest. e) On January 16, 2019, the Company entered into a convertible promissory note with an unrelated party for $33,000 of which $3,000 was an original issue discount resulting in cash proceeds to the Company of $30,000. The note is due on January 15, 2020 and bears interest on the unpaid principal balance at a rate of 12% per annum. Stringent pre-payment terms apply (from 12% to 37%, dependent upon the timeframe of repayment during the note’s term) and any part of the note which is not paid when due shall bear interest at the rate of 22% per annum from the due date until paid. The Note may be converted by the Lender at any time after 180 days of the date of issuance into shares of Company’s common stock at a conversion price equal to 61% of the average 3 lowest trading prices during the 15 trading day period prior to the conversion date. Due to this provision, the Company considered whether the embedded conversion option qualifies for derivative accounting under ASC 815-15 Derivatives and Hedging. The note isn’t convertible until 180 days following funding and no derivative liability was recognized as of March 31, 2019. f) On January 18, 2019, the Company entered into a convertible promissory note with an unrelated party for $100,000 of which $5,000 was an original issue discount and $5,000 was paid directly to third parties resulting in cash proceeds to the Company of $90,000. The note is due on January 16, 2020 and bears interest on the unpaid principal balance at a rate of 8% per annum. Stringent pre-payment terms apply (from 10% to 30%, dependent upon the timeframe of repayment during the note’s term) and any part of the note which is not paid when due shall bear interest at the rate of 24% per annum from the due date until paid. The Note may be converted by the Lender at any time after 180 days of the date of issuance into shares of Company’s common stock at a conversion price equal to 64% of the average 2 lowest trading prices during the 10 trading day period prior to the conversion date. Due to this provision, the Company considered whether the embedded conversion option qualifies for derivative accounting under ASC 815-15 Derivatives and Hedging. The note isn’t convertible until 180 days following funding and no derivative liability was recognized as of March 31, 2019. g) On January 29, 2019, the Company entered into a convertible promissory note with an unrelated for $60,000 of which $3,000 was an original issue discount and $8,000 was paid directly to third parties resulting in cash proceeds to the Company of $49,000. The note is due on January 22, 2020 and bears interest on the unpaid principal balance at a rate of 8% per annum. Stringent pre-payment terms apply (from 10% to 30%, dependent upon the timeframe of repayment during the note’s term) and any part of the note which is not paid when due shall bear interest at the rate of 18% per annum from the due date until paid. The Note may be converted by the Lender at any time after 180 days of the date of issuance into shares of Company’s common stock at a conversion price equal to the lower of 64% of the average 2 lowest trading prices during the 10 trading day period prior to the conversion date or $0.12. Due to this provision, the Company considered whether the embedded conversion option qualifies for derivative accounting under ASC 815-15 Derivatives and Hedging. The note isn’t convertible until 180 days following funding and no derivative liability was recognized as of March 31, 2019. h) On February 1, 2019, the Company entered into a convertible promissory note with an unrelated party for $50,000 of which $5,000 was an original issue discount resulting in cash proceeds to the Company of $45,000. The note is due on October 22, 2019 and bears interest on the unpaid principal balance at a rate of 12% per annum and a default interest rate of 24% per annum. The Note may be converted by the Lender at any time after the date of issuance into shares of Company’s common stock at a conversion price equal 50% of the lowest trading price during the 20 trading day period prior to the conversion date. If at any time the closing sales price falls below $0.03, then an additional 15% discount will be attributed to the conversion price. The embedded conversion option qualified for derivative accounting and bifurcation under ASC 815-15 Derivatives and Hedging. The initial fair value of the conversion feature was $158,142 and resulted in a discount to the note payable of $50,000 and an initial derivative expense of $113,142. During the period ended March 31, 2019, the Company recorded accretion of $8,602 increasing the carrying value of the note to $8,602. i) On February 21, 2019, the Company entered into a convertible promissory note with an unrelated party for $60,000 of which $5,000 was an original issue discount and $8,000 was paid directly to third parties resulting in cash proceeds to the Company of $47,000. The Company also issued a warrant with a term of five years to purchase up to 300,000 shares of common stock of the Company at an exercise price of $0.20 per share and subject to adjustment for dilutive issuances and cashless exercise. The note is due on February 14, 2022 and bears interest on the unpaid principal balance at a rate of 0% per annum. Stringent pre-payment terms apply (from 10% to 40%, dependent upon the timeframe of repayment during the note’s term) and in the event of default an additional 40% of the principal and interest balance shall be owed. The Note may be converted by the Lender at any time after the date of issuance into shares of Company’s common stock at a conversion price equal to the lower of 60% of the lowest trading price during the 20 trading day period prior to the conversion date or $0.12. If at any time the closing sales price falls below $0.01, then an additional 10% discount will be attributed to the conversion price. The embedded conversion option and warrant qualified for derivative accounting and bifurcation under ASC 815-15 Derivatives and Hedging. The initial fair value of the conversion feature of $124,796 and the warrant of $51,856 resulted in a discount to the note payable of $60,000 and an initial derivative expense of $129,652. During the period ended March 31, 2019, the Company recorded accretion of $6,530 increasing the carrying value of the note to $6,530. j) On February 21, 2019, the Company entered into a convertible promissory note with an unrelated party for $55,125 of which $2,500 was an original issue discount and $2,625 was paid directly to third parties resulting in cash proceeds to the Company of $50,000. The note is due on February 20, 2020 and bears interest on the unpaid principal balance at a rate of 8% per annum. Stringent pre-payment terms apply (from 10% to 30%, dependent upon the timeframe of repayment during the note’s term) and any part of the note which is not paid when due shall bear interest at the rate of 24% per annum from the due date until paid. The Note may be converted by the Lender at any time after 180 days of the date of issuance into shares of Company’s common stock at a conversion price equal to 64% of the average 2 lowest trading prices during the 10 trading day period prior to the conversion date. Due to this provision, the Company considered whether the embedded conversion option qualifies for derivative accounting under ASC 815-15 Derivatives and Hedging. The note isn’t convertible until 180 days following funding and no derivative liability was recognized as of March 31, 2019. k) On February 26, 2019, the Company entered into a convertible promissory note with an unrelated party for $53,000 of which $3,000 was an original issue discount resulting in cash proceeds to the Company of $50,000. The note is due on February 20, 2020 and bears interest on the unpaid principal balance at a rate of 12% per annum. Stringent pre-payment terms apply (from 12% to 37%, dependent upon the timeframe of repayment during the note’s term) and any part of the note which is not paid when due shall bear interest at the rate of 22% per annum from the due date until paid. The Note may be converted by the Lender at any time after 180 days of the date of issuance into shares of Company’s common stock at a conversion price equal to 61% of the average 3 lowest trading prices during the 15 trading day period prior to the conversion date. Due to this provision, the Company considered whether the embedded conversion option qualifies for derivative accounting under ASC 815-15 Derivatives and Hedging. The note isn’t convertible until 180 days following funding and no derivative liability was recognized as of March 31, 2019. l) On March 18, 2019, the Company entered into a convertible promissory note with an unrelated party for $75,000 of which $10,250 was an original issue discount resulting in cash proceeds to the Company of $64,750. The Company also issued a warrant with a term of five years to purchase up to 187,500 shares of common stock of the Company at an exercise price of $0.20 per share and subject to adjustment for dilutive issuances and cashless exercise. The note is due on December 13, 2019 and bears interest on the unpaid principal balance at a rate of 12% per annum and a default interest rate of 24% per annum. The Note may be converted by the Lender at any time after the date of issuance into shares of Company’s common stock at a conversion price equal to 50% of the lowest trading price during the 25 trading day period prior to the conversion date. The embedded conversion option and warrant qualified for derivative accounting and bifurcation under ASC 815-15 Derivatives and Hedging. The initial fair value of the conversion feature of $139,196 and the warrant of $25,401 resulted in a discount to the note payable of $75,000 and an initial derivative expense of $99,847. During the period ended March 31, 2019, the Company recorded accretion of $8,699 increasing the carrying value of the note to $8,699. |
DERIVATIVE AND PREFERRED STOCK
DERIVATIVE AND PREFERRED STOCK LIABILITIES | 3 Months Ended |
Mar. 31, 2019 | |
Notes to Financial Statements | |
DERIVATIVE AND PREFERRED STOCK LIABILITIES | NOTE 7 – DERIVATIVE AND PREFERRED STOCK LIABILITIES The embedded conversion option of (1) the convertible debentures described in Note 6; (2) preferred stock liability; (3) warrants; contain conversion features that qualify for embedded derivative classification. The fair value of the liabilities will be re-measured at the end of every reporting period and the change in fair value will be reported in the statement of operations as a gain or loss on derivative financial instruments. Upon the issuance of the convertible notes payable described in Note 6, the Company concluded that it only has sufficient shares to satisfy the conversion of some but not all of the outstanding convertible notes, warrants and options. The Company elected to reclassify contracts from equity with the earliest inception date first. As a result, none of the Company’s previously outstanding convertible instruments qualified for derivative reclassification, however, any convertible securities issued after the election, including the warrants described in Note 10, qualified for derivative classification. The Company reassesses the classification of the instruments at each balance sheet date. If the classification changes as a result of events during the period, the contract is reclassified as of the date of the event that caused the reclassification. The table below sets forth a summary of changes in the fair value of the Company’s Level 3 financial liabilities. March 31, 2019 December 31, 2018 Balance at the beginning of period $ 322,976 $ — Original discount limited to proceeds of notes 156,750 100,000 Fair value of derivative liabilities in excess of notes proceeds received 342,641 247,033 Settlement of derivative instruments (53,868 ) — Change in fair value of embedded conversion option (180,342 ) (24,057 ) Balance at the end of the period $ 588,157 $ 322,976 The Company uses Level 3 inputs for its valuation methodology for the embedded conversion option and warrant liabilities as their fair values were determined by using the Binomial Model based on various assumptions. Significant changes in any of these inputs in isolation would result in a significant change in the fair value measurement. As required, these are classified based on the lowest level of input that is significant to the fair value measurement. The following table shows the assumptions used in the calculations: Expected Volatility Risk-free Interest Rate Expected Dividend Yield Expected Life (in years) At issuance 128-252 % 2.42-2.51 % 0 % 0.72-5.00 At March 31, 2019 130-239 % 2.21-2.44 % 0 % 0.56-4.96 On December 1, 2018, the Company’s Board of Director authorized an offering for 1,000,000 Preferred Series “A” stock at $0.10 per share and with 100%, regular or cashless exercise at $0.10 per share of common stock warrant coverage. At December 31, 2018, the Company received $60,000 of subscriptions for the issuance of 600,000 shares of Preferred Series “A” stock to three accredited investors who are related parties. This Preferred Series “A” stock had not been issued as of March 31, 2019. The Company did issue 600,000 warrants subject to cashless exercise at $0.10 per share for 5 years. The Company is unable to issue the subscriber the preferred shares until the Company files a Certificate of Designation and the Preferred Series “A” stock has been duly validly authorized. At March 31, 2019, the Company had not filed the Certificate of Designation, and as the Company cannot issue the preferred shares to settle the proceeds received, it was determined the subscriptions were settleable in cash. As a result, the Company has classified the subscriptions received as a liability in accordance with ASC 480 Distinguishing Liabilities from Equity. The fair value of the liability of the preferred stock at December 31, 2018 was $144,352. On March 29, 2019, the Company executed a settlement agreement that included the settlement of 100,000 of the Series A Preferred Shares and 100,000 of the warrants subscribed for as part of the December 1, 2018 offering. The Company agreed to issue 164,000 shares of its common stock as payment in full $25,000 owed to the subscriber for services rendered; the Company agreed to accept conversion and exercise of the purchased 100,000 Preferred Series A shares into 100,000 shares of the Company’s common stock and the Company shall accept the cashless conversion of 100,000 warrant into 34,400 shares of the Company’s restricted common stock; and, as inducement for and consideration for the settlement of the Company’s debt, the Company agrees to grant 500,000 additional shares of the Company’s restricted stock. The Company recorded the fair value of the shares issued of $103,792 and recorded a loss on the settlement of the subscriptions and the amounts payable of $55,830. The Company has not issued any shares with regard to the settlement of this debt at the time of this report. The fair value of the liability of the preferred stock at March 31, 2019 was $57,394. The Company recorded a gain on the change in fair value of the preferred shares of $75,477. The Company uses Level 3 inputs for its valuation methodology for the preferred share liability as their fair values were determined by using the Binomial Model based on various assumptions. Significant changes in any of these inputs in isolation would result in a significant change in the fair value measurement. As required, these are classified based on the lowest level of input that is significant to the fair value measurement. The following table shows the assumptions used in the calculations: Expected Volatility Risk-free Interest Rate Expected Dividend Yield Expected Life (in years) At March 31, 2019 134 % 2.23 % 0 % 4.68 |
STOCKHOLDERS' DEFICIT AND STOCK
STOCKHOLDERS' DEFICIT AND STOCK OPTIONS | 3 Months Ended |
Mar. 31, 2019 | |
Equity [Abstract] | |
STOCKHOLDERS' DEFICIT AND STOCK OPTIONS | NOTE 8 - STOCKHOLDERS’ DEFICIT Preferred Stock Effective March 23, 2018, the Company amended the articles of incorporation and authorized 10,000,000 shares of preferred stock with a par value of $0.001 per share. As of March 31, 2019, there were no shares of preferred stock issued or outstanding. See Note 7 for liabilities related to the Company’s commitment to issue shares of Series A stock upon the designation. Common Stock Effective March 23, 2018, the Company amended the articles of incorporation and increased the authorized shares of common stock with a par value of $0.001 per share from 100,000,000 to 300,000,000 shares. The number of shares outstanding of the registrant’s common stock as of March 31, 2019 was 50,518,048. On January 1, 2019, the Company entered into a four-year employment agreement with F. Jody Read in his role as Chief Executive Officer. The terms of the contract call for an annual salary of $90,000 for the first year, effective March 1, 2019 and increasing to $120,000 once the Company’s revenue exceeds monthly expenses, then incrementally over time and with certain operational results, up to $200,000/year. The salary may be paid, at the employee’s discretion, either in cash or in common stock. A $1,000 per month allowance will be granted to the executive for housing near the Company’s South Carolina facility. The employment agreement awards the CEO 1,500,000 restricted shares of the Company’s restricted stock, which shall vest in the following manner: 375,000 shares on March 1, 2019, 375,000 shares on March 1, 2020; 375,000 shares on March 1, 2021 and the final 375,000 shares on March 1, 2022. On January 1, 2019 the fair value of the restricted stock award totaled $240,000 which will be expensed over vesting period. As of March 31, 2019, 375,000 shares were issued and the Company had recognized $64,927 of expense. On January 28, 2019, the Company agreed to convert $131,327 of principal and interest of the notes payable described in Note 6(a) into 987,421 shares of the Company’s common stock. On March 25, 2019, the Company issued 200,000 shares of common stock to two employees of the Company as compensation in lieu of commission on sales of the Company’s products. As of March 31, 2019, the Company recorded the fair value of the common shares of $34,000 in consulting expense. On March 29, 2019, the Company executed a settlement agreement with a contractual consultant, UCAP Partners, LLC for the settlement of $25,000 owed to the contractor for the provision of services as related to the March 15, 2018 agreement between UCAP and us. The settlement terms include acknowledgement that the Company owes UCAP $25,000 as payment for said services; that UCAP purchased and fully paid for Series A Preferred Stock and Warrants from the Company on December 3, 2018 (100,000 Preferred Series A Shares and 100,000 warrants to purchase common shares at $0.10/share); the settlement is outlined as follows: the Company shall issue 164,000 shares of its common stock as payment in full for the services rendered on the consulting contract; the Company shall accept UCAP’s conversion and exercise of the purchased 100,000 Preferred Series A shares into 100,000 shares of the Company’s common stock and the Company shall accept the cashless conversion of UCAP’s 100,000 warrant into 34,400 shares of the Company’s restricted common stock; and, as inducement for and consideration for the settlement of the Company’s debt to UCAP, the Company agrees to grant 500,000 additional shares of the Company’s restricted stock. NOTE 9 – STOCK OPTIONS The Company did not grant any stock options during the year ended December 31, 2018 or the three months ended March 31, 2019. Below is a table summarizing the options issued and outstanding as of March 31, 2019: Number of Weighted average exercise price Balance, December 31, 2018 2,287,500 0.34 Granted — — Expired (30,000 ) 2.00 Settled — — Balance, March 31, 2019 2,257,500 0.32 As at March 31, 2019, the following stock options were outstanding: Date Number Number Exercise Weighted Average Remaining Contractual Expiration Proceeds to Company if Issued Outstanding Exercisable Price $ Life (Years) Date Exercised 05/21/2014 1,875,000 1,875,000 0.13 0.14 05/20/2019 $ 250,000 01/01/2016 90,000 90,000 0.33 0.75 12/31/2019 25,000 01/01/2016 75,000 75,000 0.33 0.75 12/31/2019 30,000 09/15/2016 10,000 10,000 1.00 0.75 12/31/2019 10,000 10/01/2016 7,500 7,500 1.00 0.75 12/31/2019 7,500 01/26/2017 200,000 200,000 2.00 2.83 01/26/2022 400,000 2,257,500 2,257,500 $ 722,500 The weighted average exercise prices are $0.32 for the options outstanding and exercisable, respectively. The intrinsic value of stock options outstanding at March 31, 2019 was $Nil. |
WARRANTS
WARRANTS | 3 Months Ended |
Mar. 31, 2019 | |
Guarantees and Product Warranties [Abstract] | |
WARRANTS | NOTE 10 – WARRANTS As described in Note 6, on from February 14 through March 13, 2019, the Company issued 487,500 warrants subject to an exercise price of $0.20 per share for 5 years. The Company concluded that it only has sufficient shares to satisfy the conversion of some but not all of the outstanding convertible instruments. The initial fair value of the warrants issued during the period was calculated using the Binomial Model as described in Note 7. The following table summarizes the continuity of share purchase warrants: Number of Weighted average exercise price Balance, December 31, 2018 650,000 0.17 Granted 487,500 0.20 Settled (100,000 ) 0.10 Balance, March 31, 2019 1,037,500 0.19 As at March 31, 2019, the following share purchase warrants were outstanding: Date Number Number Exercise Weighted Average Remaining Contractual Expiration Proceeds to Company if Issued Outstanding Exercisable Price $ Life (Years) Date Exercised 11/28/2018 50,000 50,000 1.00 2.67 11/28/2021 $ 50,000 12/3/2018 500,000 500,000 0.10 4.68 12/3/2023 50,000 2/14/2019 300,000 300,000 0.20 4.88 2/14/2024 60,000 3/13/2019 187,500 187,500 0.20 4.96 3/13/2024 37,500 1,037,500 1,037,500 $ 197,500 The intrinsic value of warrants outstanding at March 31, 2019 was $15,000. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 3 Months Ended |
Mar. 31, 2019 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 11 – RELATED PARTY TRANSACTIONS The Company has agreements with related parties for consulting services, accrued rent, accrued interest, notes payable and stock options. See Notes to Financial Statements numbers 6, 9, 8 and 12 for more details. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Mar. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 12 – COMMITMENTS AND CONTINGENCIES Consulting Agreements On March 15, 2018, the Company entered into a 12-month service agreement, expiring on March 15, 2019, for strategic planning, financing, capital formation, up listing and expansion of the Company’s shareholder base. The consulting company received a $5,000 non-refundable initial fee and the agreement included $2,500 per month through March 14, 2019 and received 2,000,000 shares of the Company’s restricted common stock. On July 2, 2018, the Company entered into a 6-month service contract for investor relations services through January 2, 2019. The agreement called for 1,000,000 restricted shares of common stock to be issued to Life Sciences Journeys, Inc. The shares were issued on October 9, 2018. The Company placed a stop transfer order on the shares, discussed the benefits of services provided by Life Sciences Journeys and rescinded its stop transfer, allowing the contract to continue through its end. On November 28, 2018, the Company re-engaged the services of a prior contractor for finance assistance related to obtaining a line of credit based on the Company’s equipment and/or contracts, through November 27, 2019. If the Company obtains a line of credit based on the Company’s equipment and/or contracts the Company will incur a fee of 4% of financings from $1,000,000 to $5,000,000, 3% of financings from $5,000,001 to $10,000,000, and 0.25% of financings over $10,000,000. On December 3, 2018, the Company engaged a consultant for services related to business development in the healthcare market. The contract is in place through June 3, 2019 and the consultant received 100,000 restricted shares of the Company’s common stock for the services. In addition to contracts for service, the Company also regularly uses the professional services of securities attorneys, a US EPA specialist, professional accountants and other public-company specialists. Employment Agreements – On January 1, 2019, the Company entered into a four-year employment agreement with F. Jody Read in his role as Chief Executive Officer. The terms of the contract call for an annual salary of $90,000 for the first year, effective March 1, 2019 and increasing to $120,000 once the Company’s revenue exceeds monthly expenses, then incrementally over time and with certain operation results, up to $200,000/year. The salary may be paid, at the employee’s discretion, either in cash or in common stock. A $1,000 per month allowance will be granted to the executive for housing near the Company’s South Carolina facility. The employment agreement awards the CEO 1,500,000 restricted shares of the Company’s restricted stock, which shall vest in the following manner: 375,000 shares on March 1, 2019, 375,000 shares on March 1, 2020, 375,000 shares on March 1, 2021 and the final 375,000 shares on March 1, 2022. Other Obligations and Commitments – On March 27, 2019, the Registrant entered into a letter of intent (the “LOI”) with Magnolia Columbia Limited (“Magnolia”), a Canadian company traded on the TSXV under the symbol “MCO”. Pursuant to the terms of the LOI, the parties agreed to negotiate and enter into a definitive agreement pursuant to which, by way of share exchange, amalgamation or other form of business combination to be determined by the legal and tax advisors of the parties, Magnolia will acquire all of the issued and outstanding shares of the Registrant in exchange for shares of Magnolia (the “Proposed Transaction”). Following completion of the Proposed Transaction, the Registrant would become a wholly-owned subsidiary of Magnolia (the “Resulting Issuer”) and will carry on the business of the Registrant assuming the PCT LTD name. Paradigm Convergence Technology Corporation (PCT Corp) will be wholly owned by PCT Ltd and continue to be the operational entity based in the US and operating as PCT Corp. Pursuant to the terms of the LOI, the parties agreed to enter into a definitive agreement that will provide for the following, among other things: 1. All of the common shares in the capital of the Registrant will be exchanged for common shares of Magnolia at a ratio resulting in the stockholders of the Registrant, including following the conversion of certain debt, owning 60% of the Resulting Issuer and the shareholders of the Company owning 40% of the Resulting Issuer on an undiluted basis. 2. The Registrant will use its best efforts to convert a minimum of USD$1.4million of its current debt in shares of common stock. 3. Magnolia will have no material liabilities, approximately CAD$1.8 million in cash and 57,977,098 common shares issued and outstanding along with options and warrants outstanding. 4. Magnolia will loan the Registrant CAD$250,000 following execution of the LOI and Magnolia will arrange to have a third-party loan the Registrant an additional CAD$400,000. Both loans will convert into shares of common stock upon closing of the Proposed Transaction. 5. The Board of Directors of the Resulting Issuer is expected to be comprised of six members, with three members nominated by Magnolia and three members nominated by the Registrant. 6. The Resulting Issuer shall enter into consulting agreements with members of the Forbes & Manhattan team to provide services as the CFO, Secretary, Controller, Legal Clerk and Investors Relations Manager. In addition, the Resulting Issuer shall enter into a management contract with Jody Read, the current CEO of the Registrant. The LOI provides that the parties will carry out due diligence and will proceed reasonably and in good faith toward the negotiation and execution of definitive documentation regarding the Proposed Transaction. The completion of the Proposed Transaction is subject to the receipt of all necessary approvals, including without limitation stockholder approval of the Proposed Transaction, regulatory approval for the listing of the common shares of Magnolia on the CSE and the concurrent delisting of the common shares of Magnolia from the TSXV. The proposed delisting from the TSXV will also require the approval of the Magnolia Board as well as the consent of the majority of the minority of the shareholders of Magnolia. If a definitive agreement is not executed by the parties on or before April 27, 2019 (or such other date agreed to by the parties), the LOI will terminate. As of April 28, 2019, we had not entered into a definitive agreement with Magnolia or agreed to any extensions of the LOI, therefore the LOI terminated. However, we continue to negotiate with Magnolia for a potential future transaction. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 3 Months Ended |
Mar. 31, 2019 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 13. SUBSEQUENT EVENTS On April 8, 2019, the Company executed an unsecured line of credit loan with Kabbage Bank in the amount of $42,500. The Company will pay interest on the loan of $9,563. As of April 28, 2019, the Company had not entered into a definitive agreement with Magnolia or agreed to any extensions of the LOI, therefore the LOI terminated. However, the Company continues to negotiate with Magnolia for a potential future transaction. On May 2, 2019, the Company entered into a convertible promissory with an unrelated party for $38,000 of which $3,000 was an original issue discount resulting in cash proceeds to the Company of $35,000. The note is due on April 29, 2020 and bears interest on the unpaid principal balance at a rate of 12% per annum. Stringent pre-payment terms apply (from 12% to 37%, dependent upon the timeframe of repayment during the note’s term) and any part of the note which is not paid when due shall bear interest at the rate of 22% per annum from the due date until paid. The Note may be converted by the Lender at any time after 180 days of the date of issuance into shares of Company’s common stock at a conversion price equal to 61% of the average 3 lowest trading prices during the 15 trading day period prior to the conversion date. 3,337,236 shares of the Company’s common stock are held in reserve against default of this note. |
NATURE OF BUSINESS AND SUMMAR_2
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Mar. 31, 2019 | |
Accounting Policies [Abstract] | |
Nature of Operations | Nature of Operations PCT LTD (formerly Bingham Canyon Corporation, (the “Company,” “PCT Ltd,” or “Bingham”), a Delaware corporation, was formed on August 27, 1986. The Company changed its domicile to Nevada on August 26, 1999. On August 31, 2016, the Company entered into a Securities Exchange Agreement with Paradigm Convergence Technologies Corporation (“Paradigm”) to affect the acquisition of Paradigm as a wholly-owned subsidiary. Under the terms of the agreement, Bingham issued 16,790,625 restricted common shares of Bingham stock to the shareholders of Paradigm in exchange for all 22,387,500 outstanding common shares of Paradigm stock. In addition, Bingham issued options exercisable into 2,040,000 shares of the Bingham’s common stock (with exercise prices ranging between $0.133 and $0.333) in exchange for 2,720,000 outstanding Paradigm stock options (with exercise prices ranging between $0.10 and $0.25). These 2,040,000 options have been adjusted at the same exchange rate of 75% that the outstanding common shares were exchanged. As a result of this share exchange agreement, Paradigm, the operating company, is considered the accounting acquirer. Paradigm is located in Little River, SC and was formed June 6, 2012 under the name of EUR-ECA, Ltd. On September 11, 2015, its Board of Directors authorized EUR-ECA Ltd to file with the Nevada Secretary of State to change its name to Paradigm Convergence Technologies Corp. Paradigm is a technology licensing company specializing in environmentally safe solutions for global sustainability. The company holds a patent, intellectual property and/or distribution rights to innovative products and technologies. Paradigm provides innovative products and technologies for eliminating biocidal contamination from water supplies, industrial fluids, hard surfaces, food processing equipment, and medical devices. Paradigm’s overall strategy is to market new products and technologies through the use of equipment leasing, joint ventures, licensing, distributor agreements and partnerships. Effective on March 23, 2018 the Company changed its name from Bingham Canyon Corporation to PCT LTD to more accurately identify the Company’s direction and to develop the complimentary relationship and association with its wholly-owned operating company, Paradigm Convergence Technologies Corporation (“Paradigm” or “PCT Corp.”). |
Principles of Consolidations | Principles of Consolidations The accompanying consolidated financial statements include the accounts of PCT LTD (“Parent”) and its wholly owned subsidiary, Paradigm Convergence Technologies Corporation (“Paradigm” or “Subsidiary”). All intercompany accounts have been eliminated upon consolidation. |
Use of Estimates | Use of Estimates The preparation of the condensed consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingencies at the date of the financial statements as well as the reported amounts of revenues and expenses during the reporting periods. Estimates are based on historical experience and on various other market-specific and other relevant assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ materially from those estimates. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents are considered to be cash and highly liquid securities with original maturities of three months or less. The cash of $9,067 and $4,893 as of March 31, 2019 and December 31, 2018, respectively, represents cash on deposit in various bank accounts. There were no cash equivalents as of March 31, 2019 and December 31, 2018. |
Fair Value Measurements | Fair Value Measurements The Company follows ASC 820, “Fair Value Measurements and Disclosures,” which defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. A fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last is considered unobservable, is used to measure fair value: • Level 1 - Valuations for assets and liabilities traded in active markets from readily available pricing sources such as quoted prices in active markets for identical assets or liabilities. • Level 2 - Observable inputs (other than Level 1 quoted prices) such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data. • Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques. The carrying values of our financial instruments, including, cash and cash equivalents, accounts receivable, inventory, prepaid expenses, accounts payable and accrued expenses approximate their fair value due to the short maturities of these financial instruments. Derivative liabilities and preferred stock liabilities are determined based on “Level 3” inputs, which are significant and unobservable and have the lowest priority. There were no transfers into or out of “Level 3” during the three months ended March 31, 2019. The recorded values of all other financial instruments approximate their current fair values because of their nature and respective relatively short maturity dates or durations. Our financial assets and liabilities carried at fair value measured on a recurring basis as of March 31, 2019, consisted of the following: Total fair value at Quoted prices in active markets Significant other observable inputs Significant unobservable inputs Description: Preferred stock liability (1) 57,394 — — 57,394 Derivative liability (1) 588,157 — — 588,157 Total 645,551 — — 645,551 Our financial assets and liabilities carried at fair value measured on a recurring basis as of December 31, 2018, consisted of the following: Total fair value at Quoted prices in active markets Significant other observable inputs Significant unobservable inputs Description: Preferred stock liability (1) 144,352 — — 144,352 Derivative liability (1) 322,976 — — 322,976 Total 467,328 — — 467,328 (1) The Company has estimated the fair value of these liabilities using the Binomial Model. |
Derivative and Preferred Stock Liabilities | Derivative and Preferred Stock Liabilities The Company accounts for derivative instruments in accordance with ASC Topic 815, “ Derivatives and Hedging Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial statement. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates. See Note 7 for additional information. |
Accounts Receivable | Accounts Receivable Trade accounts receivable are recorded at the time product is shipped or services are provided including any shipping and handling fees. The Company provided allowances for uncollectible accounts receivable equal to the estimated collection losses that will be incurred in collection of all receivables. Accounts receivable is periodically evaluated for collectability bases on past credit history with customers and their current financial condition. The Company’s management determines which accounts are past due and if deemed uncollectible, the Company charges off the receivable in the period the determination is made. Based on management’s evaluation, the Company provided an allowance for doubtful accounts of $0 at March 31, 2019 and December 31, 2018, respectively. |
Inventories | Inventories Inventories are stated at the lower of cost or market. Cost is determined by using the first in, first out (FIFO) method. We record the value of our inventory for estimated obsolescence or unmarketable inventory equal to the difference between the cost of inventory and the estimated market value based upon assumptions about future demand, future pricing and market conditions. As of March 31, 2019 and December 31, 2018, the inventory consisted of parts for equipment sold as replacement parts to existing customers or sold to new customers. The Company has recorded a reserve allowance of $0 and $0 as of March 31, 2019 and December 31, 2018, respectively. The Company has determined that some of the supplies inventory is necessary to be placed into service, after assembly into equipment to be used in product manufacturing and classified as Machinery and Equipment. The balance at March 31, 2019 and December 31, 2018 of such supplies and equipment not yet placed in service amounted to $319,735 and $319,735, respectively. |
Property and Equipment | Property and Equipment Property and equipment are stated at purchased cost and depreciated utilizing a straight-line method over estimated useful lives ranging from 3 to 7 years after the asset has been placed in service. Upon selling equipment that had been under a lease agreement, the company discontinues the depreciation on that piece of equipment, as it transfers ownership to another entity. Additions and major improvements that extend the useful lives of property and equipment are capitalized. Maintenance and repairs are charged to operations as incurred. Upon trade-in, sale or retirement of property and equipment, the related cost and accumulated depreciation are removed from the accounts and any related gains or losses are recorded in the results of operations. |
Impairment of Long-lived Assets | Impairment of Long-lived Assets The carrying values of the Company’s long-lived assets are reviewed for impairment annually and whenever events or changes in circumstances indicate that they may not be recoverable. When projections indicate that the carrying value of the long-lived asset is not recoverable, the carrying value is reduced by the estimated excess of the carrying value over the fair value. Under similar analysis no impairment was recorded during the three months ended March 31, 2019. |
Intangible Assets | Intangible Assets Costs to obtain or develop patents are capitalized and amortized over the remaining life of the patents, and technology rights are amortized over their estimated useful lives. The Company currently has the right to several patents and proprietary technology. Patents and technology are amortized from the date the Company acquires or is awarded the patent or technology right, over their estimated useful lives, which range from 1 to 15 years. An impairment charge is recognized if the carrying amount is not recoverable and the carrying amount exceeds the fair value of the intangible assets as determined by projected discounted net future cash flows. The recorded impairment expense was nil for the three months ended March 31, 2019. |
Research and Development | Research and Development Research and development costs are recognized as an expense during the period incurred, which is until the conceptual formulation, design, and testing of a process is completed and the process has been determined to be commercially viable. |
Leases | Leases In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-02, Leases (Topic 842) ("ASC 842"), which requires lessees to recognize right-of-use ("ROU") assets and related lease liabilities on the balance sheet for all leases greater than one year in duration. We adopted ASC 842 on January 1, 2019 using a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The modified retrospective approach did not require any transition accounting for leases that expired before the earliest comparative period presented. The adoption of this standard resulted in the recording of ROU assets and lease liabilities for our lease agreements with original terms of greater than one year. Upon implementation, the Company recognized an initial operating lease right-of-use asset of $43,330 and operating lease liability of $43,330. Due to the simplistic nature of the Company's leases, no retained earnings adjustment was required. See Note 5 for further details. |
Revenue Recognition | Revenue Recognition On May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customer (Topic 606) The Company has the following three revenue streams: 1) product sales (equipment and/or fluid solutions); 2) licensing (contract-based use of the Company’s US EPA Product Registration, returning revenue in licensing fees and/or royalties from minimum or actual fluid sales); and 3) equipment leases (under systems service agreements, usually 3-year contracts for the provision of the Company’s equipment and service of such, under contract to customers, with renewable terms). The Company recognizes revenue from the sale of products when the performance obligation is satisfied by transferring control of the product to a customer. The Company recognizes revenue from the leasing of equipment as the entity provides the equipment and the customer simultaneously receives and consumes the benefits through the use of the equipment. This revenue generating activity would meet the criteria for a performance obligation satisfied over time. As a result, the Company recognizes revenue over time by using the output method, as the Company can measure progress of the performance obligation using the time elapsed under each obligation. The Company’s licenses provide a right to use and create performance obligations satisfied at a point in time. The Company recognizes revenue from licenses when the performance obligation is satisfied through the transfer of the license. For licenses that include royalties the Company will recognize royalty revenue as the underlying sales or usages occur, as long as this approach does not result in the acceleration of revenue ahead of the entity’s performance. The Company has disclosed disaggregated revenue via revenue stream on the face of the statement of operations. The Company did not have any contract assets or liabilities at March 31, 2019. |
Basic and Diluted Loss per Share | Basic and Diluted Loss Per Share Basic loss per share is computed by dividing net loss by the weighted-average number of common shares outstanding during the period. Diluted loss per share is computed by dividing net loss by the weighted-average number of common shares and dilutive potential common shares outstanding during the period. As of March 31, 2019, there were outstanding common share equivalents (options, warrants, convertible debt and preferred stock) which amounted to 13,033,694 shares of common stock. These common share equivalents were not included in the computation of diluted loss per share as their effect would have been anti-dilutive. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements The Company has reviewed all other FASB issued ASU accounting pronouncements and interpretations thereof that have effective dates during the period reported and in future periods. The Company has carefully considered the new pronouncements that alter the previous GAAP and do not believe that any new or modified principles will have a material impact on the Company’s reported financial position or operations in the near term. |
NATURE OF BUSINESS AND SUMMAR_3
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Accounting Policies [Abstract] | |
Financial assets and liabilities carried at fair value measured on a recurring basis | Our financial assets and liabilities carried at fair value measured on a recurring basis as of March 31, 2019, consisted of the following: Total fair value at Quoted prices in active markets Significant other observable inputs Significant unobservable inputs Description: Preferred stock liability (1) 57,394 — — 57,394 Derivative liability (1) 588,157 — — 588,157 Total 645,551 — — 645,551 Our financial assets and liabilities carried at fair value measured on a recurring basis as of December 31, 2018, consisted of the following: Total fair value at Quoted prices in active markets Significant other observable inputs Significant unobservable inputs Description: Preferred stock liability (1) 144,352 — — 144,352 Derivative liability (1) 322,976 — — 322,976 Total 467,328 — — 467,328 (1) The Company has estimated the fair value of these liabilities using the Binomial Model. |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Property, Plant and Equipment [Abstract] | |
Property and equipment | March 31, 2019 December 31, 2018 Machinery and leased equipment $ 138,209 $ 138,209 Machinery and equipment not yet in services 372,270 369,754 Office equipment and furniture 20,064 20,064 Website 2,760 2,760 Total property and equipment $ 533,303 $ 530,787 Less: Accumulated Depreciation (36,699 ) (30,815 ) Property and equipment, net 496,604 499,972 |
INTANGIBLE ASSETS (Tables)
INTANGIBLE ASSETS (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Components of intangible assets | March 31, 2019 December 31, 2018 Patents $ 4,514,989 $ 4,514,989 Technology rights 240,500 235,500 Intangible, at cost 4,755,489 4,750,489 Less: Accumulated amortization (769,742 ) (690,714 ) Net Carrying Amount $ 3,985,747 $ 4,059,775 |
Estimated future amortization expense of intangible assets | $ For year ending December 31, 2019 235,253 For year ending December 31, 2020 306,941 For year ending December 31, 2021 305,337 For year ending December 31, 2022 305,337 For year ending December 31, 2023 to December 31, 2034 2,832,879 Total 3,985,747 |
LEASES (Tables)
LEASES (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Debt Disclosure [Abstract] | |
ROU assets and liabilities | March 31, 2019 Operating lease right-of-use asset $ 31,513 Operating lease liability: Current operating lease liability $ 33,066 Noncurrent operating lease liability — Total operating lease liability $ 33,066 |
Remaining lease payments | March 31, 2019 2019 - remaining $ 38,400 2020 and thereafter — Total lease payments 38,400 Less: imputed interest (5,334 ) Total ROU liabilities $ 33,066 |
Minimum payments under operating lease agreements | December 31, 2018 2019 $ 52,950 2020 — Total $ 33,066 |
NOTES PAYABLE (Tables)
NOTES PAYABLE (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Debt Disclosure [Abstract] | |
Notes payable | The following tables summarize notes payable as of March 31, 2019 and December 31, 2018: Type Amount Origination Date Maturity Date Annual Interest Rate Balance at March 31, 2019 Balance at December 31, 2018 Note Payable $ 150,000 5/18/2016 6/1/2019 13.00 % $ 150,000 $ 150,000 Note Payable *** $ 25,000 5/8/2017 6/30/2018 0.00 % $ 27,500 $ 27,500 Note Payable $ 130,000 6/20/2018 1/2/2020 8.00 % $ 130,000 $ 130,000 Note Payable (a) $ 126,964 6/20/2018 8/31/2018 6.00 % $ — $ 126,964 Note Payable (b) $ 26,500 6/26/2018 7/31/2018 10.00 % $ — $ 26,500 Note Payable (b) $ 20,590 2/1/2019 10/1/2019 10.00 % $ 19,090 $ — Note Payable $ 60,000 10/30/2018 12/30/2018 8.00 % $ — $ 60,000 Note Payable $ 8,700 11/15/2018 6/30/2019 10.00 % $ 8,700 $ 8,700 Subtotal $ 335,290 $ 529,664 Debt Discount $ (2,493 ) $ (3,293 ) Balance, net $ 332,797 $ 526,371 Less current portion $ (332,797 ) $ (399,664 ) Total long-term $ — $ 126,707 *** Currently in default The following table summarizes notes payable, related parties as of March 31, 2019 and December 31, 2018: Type Amount Origination Date Maturity Date Annual Interest Rate Balance at March 31, 2019 Balance at December 31, 2018 Note Payable, RP *** $ 30,000 4/10/2018 1/15/2019 3.00 % $ 30,000 $ 30,000 Note Payable, RP $ 380,000 6/20/2018 1/2/2020 8.00 % $ 380,000 $ 380,000 Note Payable, RP $ 350,000 6/20/2018 1/2/2020 5.00 % $ 350,000 $ 350,000 Note Payable, RP $ 17,000 6/20/2018 1/2/2020 5.00 % $ 17,000 $ 17,000 Note Payable, RP *** $ 50,000 7/27/2018 11/30/2018 8.00 % $ 50,000 $ 50,000 Note Payable, RP $ 5,000 10/9/2018 Demand 0.00 % $ 5,000 $ 5,000 Note Payable, RP $ 5,000 10/19/2018 Demand 0.00 % $ 5,000 $ 5,000 Note Payable, RP ** $ 3,000 10/24/2018 Demand 0.00 % $ — $ 3,000 Note Payable, RP (c)** $ 2,544 1/3/2019 6/30/2019 3.00 % $ — $ — Subtotal $ 837,000 $ 840,000 Debt Discount $ (9,976 ) $ (13,174 ) Balance, net $ 827,024 $ 826,826 Less current portion $ (827,024 ) $ (93,000 ) Total long-term $ — $ 733,826 ** Paid off during the period The following table summarizes convertible notes payable as of March 31, 2019 and December 31, 2018: Type Amount Origination Date Maturity Date Annual Interest Rate Balance at March 31, 2019 Balance at December 31, 2018 Convertible Note Payable (d) $ 450,000 3/28/2018 3/31/2021 8.00 % $ — $ 450,000 Convertible Note Payable (d)* $ 539,936 1/15/2019 1/15/2022 8.00 % $ — $ — Convertible Note Payable ** $ 38,000 7/30/2018 7/25/2019 12.00 % $ — $ 38,000 Convertible Note Payable ** $ 53,000 8/29/2018 8/27/2019 12.00 % $ — $ 53,000 Convertible Note Payable * $ 50,000 12/6/2018 12/6/2019 5.00 % $ 50,000 $ 50,000 Convertible Note Payable * $ 65,000 12/6/2018 12/6/2019 5.00 % $ 65,000 $ 65,000 Convertible Note Payable $ 63,000 12/12/2018 12/5/2019 12.00 % $ 63,000 $ 63,000 Convertible Note Payable (e) $ 33,000 1/16/2019 1/15/2020 12.00 % $ 33,000 $ — Convertible Note Payable (f) $ 100,000 1/18/2019 1/16/2020 8.00 % $ 100,000 $ — Convertible Note Payable (g) $ 60,000 1/29/2019 1/22/2020 8.00 % $ 60,000 $ — Convertible Note Payable (h)* $ 50,000 2/1/2019 10/22/2019 12.00 % $ 50,000 $ — Convertible Note Payable (i)* $ 60,000 2/21/2019 2/14/2022 0.00 % $ 60,000 $ — Convertible Note Payable (j) $ 55,125 2/21/2019 2/20/2020 8.00 % $ 55,125 $ — Convertible Note Payable (k) $ 53,000 2/26/2019 2/20/2020 12.00 % $ 53,000 $ — Convertible Note Payable (l)* $ 75,000 3/18/2019 12/13/2019 12.00 % $ 75,000 $ — Subtotal $ 664,125 $ 719,000 Debt Discount $ (281,251 ) $ (165,186 ) Balance, net $ 382,874 $ 553,814 Less current portion $ (376,344 ) $ (161,280 ) Total long-term $ 6,530 $ 392,534 * Embedded conversion feature accounted for as a derivative liability |
DERIVATIVE AND PREFERRED STOC_2
DERIVATIVE AND PREFERRED STOCK LIABILITIES (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Notes to Financial Statements | |
Summary of changes in the fair value of the Company's Level 3 financial liabilities | March 31, 2019 December 31, 2018 Balance at the beginning of period $ 322,976 $ — Original discount limited to proceeds of notes 156,750 100,000 Fair value of derivative liabilities in excess of notes proceeds received 342,641 247,033 Settlement of derivative instruments (53,868 ) — Change in fair value of embedded conversion option (180,342 ) (24,057 ) Balance at the end of the period $ 588,157 $ 322,976 |
Assumptions used in the calculations for fair value of derivative liabilities | Expected Volatility Risk-free Interest Rate Expected Dividend Yield Expected Life (in years) At issuance 128-252 % 2.42-2.51 % 0 % 0.72-5.00 At March 31, 2019 130-239 % 2.21-2.44 % 0 % 0.56-4.96 |
Assumptions used in the calculations for fair value of preferred stock liabilities | Expected Volatility Risk-free Interest Rate Expected Dividend Yield Expected Life (in years) At March 31, 2019 134 % 2.23 % 0 % 4.68 |
STOCKHOLDERS' DEFICIT AND STO_2
STOCKHOLDERS' DEFICIT AND STOCK OPTIONS (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Equity [Abstract] | |
Summary of options issued and outstanding | Number of Weighted average exercise price Balance, December 31, 2018 2,287,500 0.34 Granted — — Expired (30,000 ) 2.00 Settled — — Balance, March 31, 2019 2,257,500 0.32 |
Stock options outstanding | Date Number Number Exercise Weighted Average Remaining Contractual Expiration Proceeds to Company if Issued Outstanding Exercisable Price $ Life (Years) Date Exercised 05/21/2014 1,875,000 1,875,000 0.13 0.14 05/20/2019 $ 250,000 01/01/2016 90,000 90,000 0.33 0.75 12/31/2019 25,000 01/01/2016 75,000 75,000 0.33 0.75 12/31/2019 30,000 09/15/2016 10,000 10,000 1.00 0.75 12/31/2019 10,000 10/01/2016 7,500 7,500 1.00 0.75 12/31/2019 7,500 01/26/2017 200,000 200,000 2.00 2.83 01/26/2022 400,000 2,257,500 2,257,500 $ 722,500 |
WARRANTS (Tables)
WARRANTS (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Guarantees and Product Warranties [Abstract] | |
Summary of the continuity of share purchase warrants | Number of Weighted average exercise price Balance, December 31, 2018 650,000 0.17 Granted 487,500 0.20 Settled (100,000 ) 0.10 Balance, March 31, 2019 1,037,500 0.19 |
Share purchase warrants outstanding | Date Number Number Exercise Weighted Average Remaining Contractual Expiration Proceeds to Company if Issued Outstanding Exercisable Price $ Life (Years) Date Exercised 11/28/2018 50,000 50,000 1.00 2.67 11/28/2021 $ 50,000 12/3/2018 500,000 500,000 0.10 4.68 12/3/2023 50,000 2/14/2019 300,000 300,000 0.20 4.88 2/14/2024 60,000 3/13/2019 187,500 187,500 0.20 4.96 3/13/2024 37,500 1,037,500 1,037,500 $ 197,500 |
NATURE OF BUSINESS AND SUMMAR_4
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Financial assets and liabilities carried at fair value measured on a recurring basis (Details) - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 | Mar. 31, 2018 | Dec. 31, 2017 |
Preferred stock liability | $ 57,394 | $ 144,352 | ||
Derivative liability | 588,157 | 322,976 | $ 322,976 | |
Total | 645,551 | 467,328 | ||
Quoted prices in active markets (Level 1) | ||||
Preferred stock liability | ||||
Derivative liability | ||||
Total | ||||
Significant other observable inputs (Level 2) | ||||
Preferred stock liability | ||||
Derivative liability | ||||
Total | ||||
Significant unobservable inputs (Level 3) | ||||
Preferred stock liability | 57,394 | 144,352 | ||
Derivative liability | 588,157 | 322,976 | ||
Total | $ 645,551 | $ 467,328 |
NATURE OF BUSINESS AND SUMMAR_5
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | |||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2016 | Dec. 31, 2018 | Dec. 31, 2017 | |
Nature of Operations | |||||
Company common stock issued to Paradigm shareholders, shares | 16,790,625 | ||||
Paradigm common stock acquired in Securities Exchange Agreement, shares | 22,387,500 | ||||
Company options issued to Paradigm shareholders, shares exercisable | 2,040,000 | ||||
Paradigm options received in Securities Exchange Agreement, shares | 2,720,000 | ||||
Cash | $ 9,067 | $ 61,438 | $ 4,893 | $ 7,838 | |
Cash equivalents | |||||
Allowance for doubtful accounts | |||||
Reserve allowance for inventory | |||||
Balance of supplies and equipment not yet placed in service | 319,735 | $ 319,735 | |||
Impairment expense | |||||
Antidilutive securities excluded from calculation of earnings per share | 13,033,694 | ||||
Exercise price, minimum | |||||
Nature of Operations | |||||
Exercise prices of options issued | $ 0.133 | ||||
Exercise prices of options received | 0.10 | ||||
Exercise price, maximum | |||||
Nature of Operations | |||||
Exercise prices of options issued | 0.333 | ||||
Exercise prices of options received | $ 0.25 |
GOING CONCERN (Details Narrativ
GOING CONCERN (Details Narrative) - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Losses incurred since inception | $ (10,847,326) | $ (9,927,003) |
Working capital | $ (2,823,247) |
PROPERTY AND EQUIPMENT - Proper
PROPERTY AND EQUIPMENT - Property and equipment (Details) - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 |
Property, Plant and Equipment [Abstract] | ||
Machinery and leased equipment | $ 138,209 | $ 138,209 |
Machinery and equipment not yet in services | 372,270 | 369,754 |
Office equipment and furniture | 20,064 | 20,064 |
Website | 2,760 | 2,760 |
Total Property and equipment | 533,303 | 530,787 |
Less: Accumulated depreciation | (36,699) | (30,815) |
Property and equipment, net | $ 496,604 | $ 499,972 |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $ (5,884) | $ (5,652) |
INTANGIBLE ASSETS - Components
INTANGIBLE ASSETS - Components of intangible assets (Details) - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Patents | $ 4,514,989 | $ 4,514,989 |
Technology rights | 240,500 | 235,500 |
Intangible, at cost | 4,755,489 | 4,750,489 |
Less: Accumulated amortization | (769,742) | (690,714) |
Net Carrying Amount | $ 3,985,747 | $ 4,059,775 |
INTANGIBLE ASSETS - Estimated f
INTANGIBLE ASSETS - Estimated future amortization expense of intangible assets (Details) | Mar. 31, 2019USD ($) |
Intangible Assets - Estimated Future Amortization Expense Of Intangible Assets | |
For year ending December 31, 2019 | $ 235,253 |
For year ending December 31, 2020 | 306,941 |
For year ending December 31, 2021 | 305,337 |
For year ending December 31, 2022 | 305,337 |
For year ending December 31, 2023 to December 31, 2034 | 2,832,879 |
Total | $ 3,985,747 |
INTANGIBLE ASSETS (Details Narr
INTANGIBLE ASSETS (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Intangible Assets Details Narrative Abstract | ||
Amortization expense | $ (79,028) | $ (81,044) |
LEASES - ROU assets and liabili
LEASES - ROU assets and liabilities (Details) - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 |
Debt Disclosure [Abstract] | ||
Operating lease right-of-use asset | $ 31,513 | |
Operating lease liability: | ||
Current operating lease liability | 33,066 | |
Noncurrent operating lease liability | ||
Total operating lease liability | $ 33,066 |
LEASES - Remaining lease paymen
LEASES - Remaining lease payments (Details) | Mar. 31, 2019USD ($) |
Debt Disclosure [Abstract] | |
2019 - remaining | $ 38,400 |
2020 and thereafter | |
Total lease payments | 38,400 |
Less: imputed interest | (5,334) |
Total ROU liabilities | $ 33,066 |
LEASES - Minimum payments under
LEASES - Minimum payments under operating lease agreements (Details) | Dec. 31, 2018USD ($) |
Debt Disclosure [Abstract] | |
2019 | $ 52,950 |
2020 | |
Total | $ 33,066 |
LEASES (Details Narrative)
LEASES (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Dec. 31, 2018 | |
Debt Disclosure [Abstract] | ||
Net lease assets | $ 43,330 | |
Net lease liabilities | $ 43,330 | |
Operating lease expense recognized | $ 15,954 | |
Amounts paid included in measurement of operating lease liabilities | 14,400 | |
Decrease in ROU liabilities from cash paid | $ 10,263 |
NOTES PAYABLE - Notes payable (
NOTES PAYABLE - Notes payable (Details) | 3 Months Ended |
Mar. 31, 2019USD ($) | |
Notes Payable (1) | |
Original amount | $ 150,000 |
Issuance date | May 18, 2016 |
Maturity date | Jun. 1, 2018 |
Interest rate | 13.00% |
Balance, beginning | $ 150,000 |
Balance, ending | 150,000 |
Notes Payable (4) | |
Original amount | $ 25,000 |
Issuance date | May 8, 2017 |
Maturity date | Jun. 30, 2018 |
Interest rate | 0.00% |
Balance, beginning | $ 27,500 |
Balance, ending | 27,500 |
Notes Payable (14) | |
Original amount | $ 130,000 |
Issuance date | Jun. 20, 2018 |
Maturity date | Jan. 2, 2020 |
Interest rate | 8.00% |
Balance, beginning | $ 130,000 |
Balance, ending | 130,000 |
Notes Payable (15) | |
Original amount | $ 126,964 |
Issuance date | Jun. 20, 2018 |
Maturity date | Aug. 31, 2018 |
Interest rate | 60.00% |
Balance, beginning | $ 126,964 |
Balance, ending | |
Notes Payable (16) | |
Original amount | $ 26,500 |
Issuance date | Jun. 26, 2018 |
Maturity date | Jul. 31, 2018 |
Interest rate | 10.00% |
Balance, beginning | $ 26,500 |
Balance, ending | |
Notes Payable (19) | |
Original amount | $ 20,590 |
Issuance date | Feb. 1, 2019 |
Maturity date | Oct. 1, 2019 |
Interest rate | 10.00% |
Balance, beginning | |
Balance, ending | 19,090 |
Notes Payable (17) | |
Original amount | $ 60,000 |
Issuance date | Oct. 30, 2018 |
Maturity date | Dec. 30, 2018 |
Interest rate | 8.00% |
Balance, beginning | $ 60,000 |
Balance, ending | |
Notes Payable (18) | |
Original amount | $ 8,700 |
Issuance date | Nov. 15, 2018 |
Maturity date | Jun. 30, 2019 |
Interest rate | 10.00% |
Balance, beginning | $ 8,700 |
Balance, ending | 8,700 |
Notes Payable, Related Party (12) | |
Original amount | $ 30,000 |
Issuance date | Apr. 10, 2018 |
Maturity date | Jan. 15, 2019 |
Interest rate | 3.00% |
Balance, beginning | $ 30,000 |
Balance, ending | 30,000 |
Notes Payable, Related Party (14) | |
Original amount | $ 380,000 |
Issuance date | Jun. 20, 2018 |
Maturity date | Jan. 2, 2020 |
Interest rate | 8.00% |
Balance, beginning | $ 380,000 |
Balance, ending | 380,000 |
Notes Payable, Related Party (15) | |
Original amount | $ 350,000 |
Issuance date | Jun. 20, 2018 |
Maturity date | Jan. 2, 2020 |
Interest rate | 5.00% |
Balance, beginning | $ 350,000 |
Balance, ending | 350,000 |
Notes Payable, Related Party (16) | |
Original amount | $ 17,000 |
Issuance date | Jun. 20, 2018 |
Maturity date | Jan. 2, 2020 |
Interest rate | 5.00% |
Balance, beginning | $ 17,000 |
Balance, ending | 17,000 |
Notes Payable, Related Party (18) | |
Original amount | $ 50,000 |
Issuance date | Jul. 27, 2018 |
Maturity date | Nov. 30, 2018 |
Interest rate | 8.00% |
Balance, beginning | $ 50,000 |
Balance, ending | 50,000 |
Notes Payable, Related Party (19) | |
Original amount | $ 5,000 |
Issuance date | Oct. 9, 2018 |
Interest rate | 0.00% |
Balance, beginning | $ 5,000 |
Balance, ending | 5,000 |
Notes Payable, Related Party (20) | |
Original amount | $ 5,000 |
Issuance date | Oct. 19, 2018 |
Interest rate | 0.00% |
Balance, beginning | $ 5,000 |
Balance, ending | 5,000 |
Notes Payable, Related Party (22) | |
Original amount | $ 3,000 |
Issuance date | Oct. 24, 2018 |
Interest rate | 0.00% |
Balance, beginning | $ 3,000 |
Balance, ending | |
Notes Payable, Related Party (23) | |
Original amount | $ 2,544 |
Issuance date | Jan. 3, 2019 |
Maturity date | Jun. 30, 2019 |
Interest rate | 3.00% |
Balance, beginning | |
Balance, ending | |
Convertible Note Payable (1) | |
Original amount | $ 450,000 |
Issuance date | Mar. 28, 2018 |
Maturity date | Mar. 31, 2021 |
Interest rate | 8.00% |
Balance, beginning | $ 450,000 |
Balance, ending | |
Convertible Note Payable (2) | |
Original amount | $ 539,936 |
Issuance date | Jan. 15, 2019 |
Maturity date | Jan. 15, 2022 |
Interest rate | 8.00% |
Balance, beginning | |
Balance, ending | |
Convertible Note Payable (3) | |
Original amount | $ 38,000 |
Issuance date | Jul. 25, 2018 |
Maturity date | Jul. 25, 2019 |
Interest rate | 12.00% |
Balance, beginning | $ 38,000 |
Balance, ending | |
Convertible Note Payable (4) | |
Original amount | $ 53,000 |
Issuance date | Aug. 27, 2018 |
Maturity date | Aug. 27, 2019 |
Interest rate | 12.00% |
Balance, beginning | $ 53,000 |
Balance, ending | |
Convertible Note Payable (5) | |
Original amount | $ 50,000 |
Issuance date | Dec. 6, 2018 |
Maturity date | Dec. 6, 2019 |
Interest rate | 5.00% |
Balance, beginning | $ 50,000 |
Balance, ending | 50,000 |
Convertible Note Payable (6) | |
Original amount | $ 65,000 |
Issuance date | Dec. 6, 2018 |
Maturity date | Dec. 6, 2019 |
Interest rate | 5.00% |
Balance, beginning | $ 65,000 |
Balance, ending | 65,000 |
Convertible Note Payable (7) | |
Original amount | $ 63,000 |
Issuance date | Dec. 12, 2018 |
Maturity date | Dec. 5, 2019 |
Interest rate | 12.00% |
Balance, beginning | $ 63,000 |
Balance, ending | 63,000 |
Convertible Note Payable (8) | |
Original amount | $ 33,000 |
Issuance date | Jan. 16, 2019 |
Maturity date | Jan. 15, 2020 |
Interest rate | 12.00% |
Balance, beginning | |
Balance, ending | 33,000 |
Convertible Note Payable (9) | |
Original amount | $ 100,000 |
Issuance date | Jan. 18, 2019 |
Maturity date | Jan. 16, 2020 |
Interest rate | 8.00% |
Balance, beginning | |
Balance, ending | 100,000 |
Convertible Note Payable (10) | |
Original amount | $ 60,000 |
Issuance date | Jan. 29, 2019 |
Maturity date | Jan. 22, 2020 |
Interest rate | 8.00% |
Balance, beginning | |
Balance, ending | 60,000 |
Convertible Note Payable (11) | |
Original amount | $ 50,000 |
Issuance date | Feb. 1, 2019 |
Maturity date | Oct. 22, 2019 |
Interest rate | 12.00% |
Balance, beginning | |
Balance, ending | 50,000 |
Convertible Note Payable (12) | |
Original amount | $ 60,000 |
Issuance date | Feb. 21, 2019 |
Maturity date | Feb. 14, 2022 |
Interest rate | 0.00% |
Balance, beginning | |
Balance, ending | 60,000 |
Convertible Note Payable (13) | |
Original amount | $ 55,125 |
Issuance date | Feb. 21, 2019 |
Maturity date | Feb. 20, 2020 |
Interest rate | 8.00% |
Balance, beginning | |
Balance, ending | 55,125 |
Convertible Note Payable (14) | |
Original amount | $ 53,000 |
Issuance date | Feb. 26, 2019 |
Maturity date | Feb. 20, 2020 |
Interest rate | 12.00% |
Balance, beginning | |
Balance, ending | 53,000 |
Convertible Note Payable (15) | |
Original amount | $ 75,000 |
Issuance date | Mar. 18, 2019 |
Maturity date | Dec. 13, 2019 |
Interest rate | 12.00% |
Balance, beginning | |
Balance, ending | $ 75,000 |
DERIVATIVE AND PREFERRED STOC_3
DERIVATIVE AND PREFERRED STOCK LIABILITIES - Summary of changes in the fair value of the Company's Level 3 financial liabilities (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Notes to Financial Statements | ||
Balance at the beginning of period | $ 322,976 | |
Original discount limited to proceeds of notes | 156,750 | 100,000 |
Fair value of derivative liabilities in excess of notes proceeds received | 342,641 | 247,033 |
Settlement of derivative instruments | (53,868) | |
Change in fair value of embedded conversion option | (180,342) | (24,057) |
Balance at the end of the period | $ 588,157 | $ 322,976 |
DERIVATIVE AND PREFERRED STOC_4
DERIVATIVE AND PREFERRED STOCK LIABILITIES - Assumptions used in the calculations for fair value of derivative liabilities (Details) | 3 Months Ended |
Mar. 31, 2019 | |
Derivative liabilities - At Issuance | |
Expected price volatility, minimum | 128.00% |
Expected price volatility, maximum | 252.00% |
Expected dividend yield | 0.00% |
Expected option life, minimum | 8 months 19 days |
Expected option life, maximum | 5 years |
Risk-free interest rate, minimum | 2.42% |
Risk-free interest rate, maximum | 2.51% |
Derivative liabilities | |
Expected price volatility, minimum | 130.00% |
Expected price volatility, maximum | 239.00% |
Expected dividend yield | 0.00% |
Expected option life, minimum | 6 months 22 days |
Expected option life, maximum | 4 years 11 months 16 days |
Risk-free interest rate, minimum | 2.21% |
Risk-free interest rate, maximum | 2.44% |
DERIVATIVE AND PREFERRED STOC_5
DERIVATIVE AND PREFERRED STOCK LIABILITIES - Assumptions used in the calculations for fair value of preferred stock liabilities (Details) - Preferred stock liability | 3 Months Ended |
Mar. 31, 2019 | |
Expected price volatility, maximum | 134.00% |
Expected dividend yield | 0.00% |
Expected option life, maximum | 4 years 8 months 5 days |
Risk-free interest rate, maximum | 2.23% |
DERIVATIVE AND PREFERRED STOC_6
DERIVATIVE AND PREFERRED STOCK LIABILITIES (Details Narrative) | 3 Months Ended |
Mar. 31, 2019USD ($) | |
Notes to Financial Statements | |
Fair value of preferred stock liability | $ 57,394 |
Gain on change in fair value of preferred shares | $ 75,477 |
STOCKHOLDERS' DEFICIT AND STO_3
STOCKHOLDERS' DEFICIT AND STOCK OPTIONS - Stock options outstanding (Details) - USD ($) | Jan. 27, 2017 | Oct. 02, 2016 | Sep. 16, 2016 | Jan. 02, 2016 | May 22, 2014 | Mar. 31, 2019 |
Options issued and outstanding | ||||||
Number outstanding | 200,000 | 7,500 | 10,000 | 90,000 | 1,875,000 | 2,257,500 |
Number exercisable | 200,000 | 7,500 | 10,000 | 90,000 | 1,875,000 | 2,257,500 |
Exercise price | $ 2 | $ 1 | $ 1 | $ 0.33 | $ 0.13 | |
Weighted average remaining contractual life | 2 years 9 months 29 days | 9 months | 9 months | 9 months | 1 month 21 days | |
Expiration date | Jan. 26, 2022 | Dec. 31, 2019 | Dec. 31, 2019 | Dec. 31, 2019 | May 20, 2019 | |
Proceeds to Company if exercised | $ 400,000 | $ 7,500 | $ 10,000 | $ 25,000 | $ 250,000 | $ 722,500 |
Options issued and outstanding (2) | ||||||
Number outstanding | 75,000 | |||||
Number exercisable | 75,000 | |||||
Exercise price | $ 0.33 | |||||
Weighted average remaining contractual life | 9 months | |||||
Expiration date | Dec. 31, 2019 | |||||
Proceeds to Company if exercised | $ 30,000 |
STOCKHOLDERS' DEFICIT AND STO_4
STOCKHOLDERS' DEFICIT AND STOCK OPTIONS (Details Narrative) | 3 Months Ended |
Mar. 31, 2019USD ($)$ / sharesshares | |
Equity [Abstract] | |
Conversion of principal and interest of notes payable into common stock, amount | $ 131,327 |
Conversion of principal and interest of notes payable into common stock, shares | shares | 987,421 |
Common stock issued in lieu of compensation, shares | shares | 200,000 |
Common stock issued in lieu of compensation, fair value recorded in consulting expense | $ 34,000 |
Stock Options | |
Weighted average exercise prices of options outstanding | $ / shares | $ .32 |
Weighted average exercise prices of options exercisable | $ / shares | $ .32 |
Instrinsic value of stock options outstanding |
WARRANTS - Summary of the conti
WARRANTS - Summary of the continuity of share purchase warrants (Details) | 3 Months Ended |
Mar. 31, 2019$ / sharesshares | |
Guarantees and Product Warranties [Abstract] | |
Number of warrants, beginning balance | shares | 650,000 |
Number of warrants, granted | shares | 487,500 |
Number of warrants, settled | shares | (100,000) |
Number of warrants, ending balance | shares | 1,037,500 |
Weighted average exercise price, beginning balance | $ / shares | $ .17 |
Weighted average exercise price, granted | $ / shares | .20 |
Weighted average exercise price, settled | $ / shares | .10 |
Weighted average exercise price, ending balance | $ / shares | $ .19 |
WARRANTS - Share purchase warra
WARRANTS - Share purchase warrants outstanding (Details) - Share purchase warrants outstanding - USD ($) | Mar. 14, 2019 | Feb. 15, 2019 | Dec. 04, 2018 | Nov. 29, 2018 | Mar. 31, 2019 |
Number outstanding | 187,500 | 300,000 | 500,000 | 50,000 | 1,037,500 |
Number exercisable | 187,500 | 300,000 | 500,000 | 50,000 | 1,037,500 |
Exercise price | $ 0.20 | $ 0.20 | $ 0.10 | $ 1 | |
Weighted average remaining contractual life | 4 years 11 months 16 days | 4 years 10 months 17 days | 4 years 8 months 5 days | 2 years 8 months 1 day | |
Expiration date | Mar. 13, 2024 | Feb. 14, 2024 | Dec. 3, 2023 | Nov. 28, 2021 | |
Proceeds to Company if exercised | $ 37,500 | $ 60,000 | $ 50,000 | $ 50,000 | $ 197,500 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
Annual base salary for director to serve as president of Annihilyzer Division of Paradigm | $ 90,000 | ||
Signing bonus due to Division president | $ 40,000 | ||
Purchase agreement initial payment amount | $ 5,000 | ||
Consulting agreement (1) | |||
Consulting fees and expenses | $ 3,000 | ||
Monthly consulting fee | 3,000 | ||
Initial fee | 1,000 | ||
Consulting agreement (2) | |||
Consulting fees and expenses | $ 16,667 | ||
Consulting agreement (3) | |||
Monthly consulting fee | 1,250 | ||
Initial fee | 5,000 | ||
Consulting agreement (4) | |||
Monthly consulting fee | 2,500 | ||
Initial fee | $ 5,000 | ||
Shares issued for services | 2,000,000 | ||
Consulting agreement (5) | |||
Shares issued for services | 50,000 | ||
Consulting agreement (6) | |||
Shares issued for services | 1,000,000 | ||
Consulting agreement (7) | |||
Shares issued for services | 100,000 |