Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Mar. 31, 2017 | |
Document And Entity Information | ||
Entity Registrant Name | IMAGING3 INC | |
Entity Central Index Key | 1,205,181 | |
Document Type | 10-K | |
Document Period End Date | Dec. 31, 2016 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity a Well-known Seasoned Issuer | No | |
Entity a Voluntary Filer | No | |
Entity's Reporting Status Current | No | |
Entity Filer Category | Smaller Reporting Company | |
Entity Public Float | $ 0 | |
Entity Common Stock, Shares Outstanding | 259,621,593 | |
Document Fiscal Period Focus | FY | |
Document Fiscal Year Focus | 2,016 |
Balance Sheets
Balance Sheets - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
CURRENT ASSETS: | ||
Cash and cash equivalents | $ 22,638 | $ 9,508 |
Accounts receivable, net | 51,505 | |
Total current assets | 22,638 | 61,013 |
PROPERTY AND EQUIPMENT, net | ||
Total assets | 22,638 | 61,013 |
CURRENT LIABILITIES: | ||
Accounts payable | 1,692,652 | 1,942,641 |
Accrued expenses | 132,428 | 277,962 |
Derivative liability | 5,532,898 | 1,197,951 |
Deferred revenue | 41,829 | 72,912 |
Convertible notes payable, net of discount | 771,028 | 420,500 |
Total current liabilities | 8,170,835 | 3,911,966 |
STOCKHOLDERS’ DEFICIT: | ||
Preferred stock, no par value; authorized shares 1,000,000, 2000 and -0 shares issued and outstanding as of December 31, 2016 and 2015 respectively. | ||
Common stock, no par value; authorized shares 1,000,000,000 and 243,844,093 and 190,756,393 issued outstanding as of December 31, 2016, and December 31, 2015, respectively | 7,829,273 | 5,365,047 |
Accumulated deficit | (15,977,470) | (9,216,000) |
Total stockholders’ deficit | (8,148,197) | (3,850,953) |
Total liabilities and stockholders’ deficit | $ 22,638 | $ 61,013 |
Balance Sheets (Parenthetical)
Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2016 | Dec. 31, 2015 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value | ||
Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred stock, shares issued | 2,000 | 0 |
Preferred stock, shares outstanding | 2,000 | 0 |
Common stock, par value | ||
Common stock, shares authorized | 1,000,000,000 | 1,000,000,000 |
Common stock, shares issued | 243,844,093 | 190,756,393 |
Common stock, shares outstanding | 243,844,093 | 190,756,393 |
Statements of Operations
Statements of Operations - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Income Statement [Abstract] | ||
Net revenues | $ 33,083 | $ 220,809 |
Cost of goods sold | 10,247 | 169,120 |
Gross profit | 22,836 | 51,689 |
Operating expenses | ||
General and administrative expenses | 2,697,527 | 1,503,088 |
Total operating expense | 2,697,527 | 1,503,088 |
Loss from operations | (2,674,691) | (1,451,399) |
Other income (expense): | ||
Interest expense | (2,894,263) | (1,191,290) |
Change in value | (1,633,732) | 6,857 |
Loss on extinguishment of debt | 29,489 | |
Other income | 471,504 | 4,200 |
Total other income (expense) | (4,085,979) | (1,180,233) |
Income (Loss) before income tax | (6,760,670) | (2,631,632) |
Provision for income taxes | 800 | 800 |
Net loss | $ (6,761,470) | $ (2,632,432) |
Basic and diluted net loss per share | $ (0.03) | $ (0.01) |
Basic and diluted weighted average common shares outstanding | 212,835,271 | 184,098,899 |
Statements of Cash Flows
Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (6,761,470) | $ (2,632,432) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Stock-based compensation | 139,535 | 168,000 |
Change in value of derivatives | 1,633,732 | (6,857) |
Non cash interest | 2,789,771 | 1,172,809 |
Loss on extinguishment of debt | 29,489 | |
Shares issued for services | 1,903,050 | 134,500 |
(Increase) / decrease in current assets: | ||
Accounts receivable | 51,505 | (47,007) |
Prepaid expenses and other assets | 6,609 | |
Inventory | 1,000 | |
Increase / (decrease) in current liabilities: | ||
Accounts payable | (240,012) | 648,072 |
Accrued expenses | (130,787) | 28,215 |
Deferred revenue | (31,083) | (82,740) |
Net cash used in operating activities | (616,270) | (609,831) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from note payable | 462,500 | 410,000 |
Proceeds from sale of common stock | 166,900 | 196,975 |
Net cash provided by financing activities | 629,400 | 606,975 |
NET INCREASE (DECREASE) IN CASH & CASH EQUIVALENTS | 13,130 | (2,856) |
CASH & CASH EQUIVALENTS, BEGINNING BALANCE | 9,508 | 12,364 |
CASH & CASH EQUIVALENTS, ENDING BALANCE | 22,638 | 9,508 |
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | ||
Interest paid in cash | 0 | 0 |
Income taxes paid in cash | 0 | 0 |
SUPPLEMENTAL DISCLOSURE OF NON CASH INVESTING AND FINANCING ACTIVITIES: | ||
Conversion of debt and accrued interest | $ 70,747 | $ 0 |
Statement Of Stockholders_ Defi
Statement Of Stockholders’ Deficit - USD ($) | Preferred Stock [Member] | Common Stock [Member] | Accumulated Deficit [Member] | Total |
Balance at Dec. 31, 2014 | $ 4,865,572 | $ (6,583,568) | $ (1,717,996) | |
Balance, shares at Dec. 31, 2014 | 169,502,393 | |||
Shares issued for cash | $ 196,975 | $ 196,975 | ||
Shares issued for cash, shares | 12,379,000 | 21,254,000 | ||
Shares issued for services | $ 134,500 | $ 134,500 | ||
Shares issued for services, shares | 8,875,000 | 8,875 | ||
Stock-based compensation | $ 168,000 | $ 168,000 | ||
Net Loss | (2,632,432) | (2,632,432) | ||
Balance at Dec. 31, 2015 | $ 5,365,047 | (9,216,000) | (3,850,953) | |
Balance, shares at Dec. 31, 2015 | 190,756,393 | |||
Shares issued for cash | $ 166,900 | $ 166,900 | ||
Shares issued for cash, shares | 4,504,000 | 53,263,700 | ||
Shares issued for services | $ 1,903,050 | $ 1,903,050 | ||
Shares issued for services, shares | 41,685,000 | 41,685,000 | ||
Stock-based compensation | 139,535 | $ 139,535 | ||
Preferred stock issued to officer | ||||
Preferred stock issued to officer, shares | 2,000 | |||
Note payable converted to stock | $ 254,741 | 254,741 | ||
Note payable converted to stock, shares | 7,074,700 | |||
Net Loss | (6,761,470) | (6,761,470) | ||
Balance at Dec. 31, 2016 | $ 7,829,273 | $ (15,977,470) | $ (8,148,197) | |
Balance, shares at Dec. 31, 2016 | 244,020,093 |
Organization and Description of
Organization and Description of Business | 12 Months Ended |
Dec. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Description of Business | 1. ORGANIZATION AND DESCRIPTION OF BUSINESS Imaging3, Inc. (the “Company”, “us”, “we”, “Imaging3”) is a California corporation incorporated on October 29, 1993 as Imaging Services, Inc. The Company filed a certificate of amendment of articles of incorporation to change its name to Imaging3, Inc. on August 20, 2002. The Company’s primary business has been refurbishment and sale of medical equipment, parts and services to hospitals, surgery centers, research labs, physician offices and veterinarians. Equipment sales have included new and used c-arms, c-arms tables, and surgical tables. Part sales are comprised of replacement parts for c-arms. The Company has developed a proprietary medical technology designed to produce 3d medical diagnostic images in real time. We believe Imaging3 technology has the potential to contribute to the improvement of healthcare. Our technology is designed to cause 3D images to be instantly constructed using high-resolution fluoroscopy. These images can be used as real time references for any current or new medical procedures in which multiple frames of reference are required on or in the human body. This technology is still in the development stage, and the Company intends to seek approval from the Food and Drug Administration (“FDA”), which, if approved, will allow us to offer products utilizing the technology to healthcare providers. |
Basis of Presentation and Summa
Basis of Presentation and Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2016 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Summary of Significant Accounting Policies | 2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES On September 13, 2012 (the “Petition Date”), the Company filed a voluntary petition with the federal bankruptcy court in Los Angeles, California, to enter bankruptcy under Chapter 11 of the United States Bankruptcy Code. On or about July 15, 2013, our Plan of Reorganization was approved by the United States Bankruptcy Court. On July 30, 2013, we emerged from bankruptcy and continued operations under the terms and conditions of our Bankruptcy Reorganization Plan as it applies to post bankruptcy operations. For accounting purposes, management deemed the effective date of the Chapter 11 Plan (the “Plan”) to be June 30, 2013. The Company’s operations between July 1, 2013 and July 30, 2013 were not significant. The Plan adopted by Imaging3, Inc. is a reorganizing plan. Payments under the Plan were made by utilizing existing cash on hand, borrowings on a secured and unsecured basis, future cash flow, if any, capital raised through the sale of our common stock in private placements, and by conversion of debt to equity. Upon emergence from bankruptcy, Imaging3 adopted fresh-start accounting which resulted in Imaging3 becoming a new entity for financial reporting purposes. Imaging3 applied fresh start accounting as of July 1, 2013. As a result of the application of fresh start accounting and the effects of the implementation of the plan of reorganization, the financial statements on or after July 1, 2013 are not comparable with the financial statements prior to that date. Use of Estimates In preparing financial statements in conformity with accounting principles generally accepted in the United States of America, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, and revenues and expenses during the reporting period. Actual results could differ from those estimates. Cash and Cash Equivalents The Company considers all liquid investments with a maturity of three months or less from the date of purchase that are readily convertible into cash to be cash equivalents. The Company maintains its cash in bank deposit accounts that may exceed federally insured limits. The Company has not experienced any losses in such accounts. The Company had no cash equivalents at December 31, 2016 or 2015. Revenue Recognition Revenue is recognized upon shipment, provided that evidence of an arrangement exists, title and risk of loss have passed to the customer, fees are fixed or determinable and collection of the related receivable is reasonably assured. Revenue is recorded net of estimated product returns, which is based upon the Company’s return policy, sales agreements, management estimates of potential future product returns related to current period revenue, current economic trends, changes in customer composition and historical experience. The Company accrues for warranty costs, sales returns, and other allowances based on its experience. Generally, the Company extends credit to its customers and does not require collateral. The Company performs ongoing credit evaluations of its customers and historic credit losses have been within management’s expectations and has a revenue receivables policy for service and warranty contracts. Equipment sales usually have a one year warranty of parts and service. After a one year period, the Company contacts the buyer to initiate the sale of a new warranty contract for one year. Warranty revenues are deferred and recognized on a straight-line basis over the term of the contract or as services are performed. Deferred Revenue Deferred revenue consists substantially of amounts received from customers in advance of the Company’s performance service period. Deferred revenue is recognized as revenue on a systematic basis that is proportionate to the period that the underlying services are rendered, which in certain arrangements is straight-line over the remaining contractual term or estimated customer life of an agreement. Accounts Receivable The Company’s customer base is geographically dispersed. The Company maintains reserves for potential credit losses on accounts receivable. Management reviews the composition of accounts receivable and analyzes historical bad debts, customer concentrations, customer credit worthiness, current economic trends and changes in customer payment patterns to evaluate the adequacy of these reserves. Reserves are recorded primarily on a specific identification basis. Property& Equipment Property and equipment are stated at cost. Expenditures for maintenance and repairs are charged to expenses as incurred and additions, renewals and betterments are capitalized. When property and equipment are retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the respective accounts, and any gain or loss is included in operations. Depreciation of property and equipment is provided using the straight-line method for all assets with estimated lives of three to eight years. Impairment of Long-Lived Assets Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable through the estimated undiscounted cash flows expected to result from the use and eventual disposition of the assets. Whenever any such impairment exists, an impairment loss will be recognized for the amount by which the carrying value exceeds the fair value. The Company tests long-lived assets, including property, plant, equipment and intangible assets subject to periodic amortization, for recoverability at least annually or more frequently upon the occurrence of an event or when circumstances indicate that the net carrying amount is greater than its fair value. Assets are grouped and evaluated at the lowest level for their identifiable cash flows that are largely independent of the cash flows of other groups of assets. The Company considers historical performance and future estimated results in its evaluation of potential impairment, and then compares the carrying amount of the asset to the future estimated cash flows expected to result from the use of the asset. If the carrying amount of the asset exceeds estimated expected undiscounted future cash flows, the Company measures the amount of impairment by comparing the carrying amount of the asset to its fair value. The estimation of fair value is generally measured by discounting expected future cash flows at the rate the Company utilizes to evaluate potential investments. The Company estimates fair value based on the information available in making whatever estimates, judgments and projections are considered necessary. Basic and Diluted Net Loss Per Share Basic net loss per share is based upon the weighted average number of common shares outstanding. Diluted net loss per share is based on the assumption that all dilutive convertible shares and stock options were converted or exercised. Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period. During the years ended December 31, 2016 and 2015, potentially dilutive securities were excluded from the computation of weighted average shares outstanding-diluted because their effect was anti-dilutive. The Company’s policy for Equity – Based compensation is predicated on Employment Agreements for both Dane Medley CEO and Xavier Aguilera, CFO. Derivative Financial Instruments The Company generally does not use derivative financial instruments to hedge exposures to cash-flow risks or market-risks that may affect the fair values of its financial instruments. The Company utilizes various types of financing to fund its business needs, including convertible notes and warrants and other instruments not indexed to our stock. The Company is required to record its derivative instruments at their fair value. Changes in the fair value of derivatives are recognized in earnings in accordance with ASC 815. The Company’s only asset or liability measured at fair value on a recurring basis is its derivative liability associated with warrants to purchase common stock and convertible notes. Fair Value of Financial Instruments The fair value accounting standard creates a three-level hierarchy to prioritize the inputs used in the valuation techniques to derive fair values. The basis for fair value measurements for each level within the hierarchy is described below with Level 1 having the highest priority and Level 3 having the lowest. Level 1: Observable prices in active markets for identical assets or liabilities. Level 2: Observable prices for similar assets or liabilities in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs are observable in the market. Level 3: Valuations derived from valuation techniques in which one or more significant inputs are unobservable. These unobservable assumptions reflect estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques include use of option pricing models, discounted cash flow models, and similar techniques. The Company had the following assets or liabilities measured at fair value on a recurring basis at December 31, 2016 and 2015 respectively. Level 1 Level 2 Level 3 Total Derivative Liabilities 2016 $ - $ - $ 5,532,898 $ 5,532,898 Derivative Liabilities 2015 $ - $ - $ 1,197,951 $ 1,197,951 Income Taxes The Company accounts for income taxes in accordance with ASC 740-10, “Income Taxes” which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each year-end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. The provision for income taxes represents the tax payable for the period and the change during the period in deferred tax assets and liabilities. Research and Development Costs and expenses that can be clearly identified as research and development are charged to expense as incurred in accordance with FASB ASC 730-10. Included in research and development costs are operating costs, facilities, supplies, external services, clinical trial and manufacturing costs, and overhead directly related to the Company’s research and development operations, as well as costs to acquire technology licenses. Recent Accounting Pronouncements In May 2014, FASB issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements—Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern In April 2015, the FASB issued ASU No 2015-3, Simplifying the Presentation of Debt Issuance Costs. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting In April 2016, the FASB issued AS 2016-10, Revenue from Contracts with Customers (Topic 606), which amends certain aspects of the Board’s new revenue standard, ASU 2014-09, Revenue from Contracts with Customers. The standard should be adopted concurrently with adoption of ASU 2014-09 which is effective for annual and interim periods beginning after December 15, 2017. The Company has not yet selected a transition method nor has it determined the effect of the standard on its ongoing financial reporting. |
Accounts Receivable
Accounts Receivable | 12 Months Ended |
Dec. 31, 2016 | |
Receivables [Abstract] | |
Accounts Receivable | 3. ACCOUNTS RECEIVABLE All accounts receivable are trade related. These receivables are current and management believes are collectible except for which a reserve has been provided. The balance of accounts receivable as of December 31, 2015 and 2016 were $51,505 and $-, respectively. The reserve amount for uncollectible accounts was $-0- and $ -0- as of December 31, 2015 and 2016, respectively. |
Accrued Expenses
Accrued Expenses | 12 Months Ended |
Dec. 31, 2016 | |
Payables and Accruals [Abstract] | |
Accrued Expenses | 4. ACCRUED EXPENSES During 2003, the Company paid payroll net of taxes and accrued said taxes without payment due to cash flow limitations resulting from a 2002 warehouse fire that incinerated our inventory. The Company subsequently received a tax lien in 2005 related to 2003 payroll taxes from the Internal Revenue Service and continued to accrue interest and penalty charges. The original amount was $104,052. In 2008, payments were made and the Internal Revenue Service issued a tax lien release for this amount and the liability carried on the Company’s books was relieved. In 2009, the Company was notified by the Internal Revenue Service that additional payroll taxes, interest, and penalty charges were still owed. After researching, it is believed that the Internal Revenue Service double booked the original payments made and released the lien in error. Settlement was reached and the Company is currently paying $2,578 per month on a total liability of $48,627 as of December 31, 2016, including interest and penalties. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 5. INCOME TAXES The Company’s book losses and other timing differences result in a net deferred income tax benefit which is offset by a valuation allowance for a net deferred asset of zero. The Company has concluded, in accordance with the applicable accounting standards, that it is more likely than not that the Company may not realize the benefit of all of its deferred tax assets. Accordingly, management has provided a 100% valuation allowance against its deferred tax assets until such time as management believes that its projections of future profits as well as expected future tax rates make the realization of these deferred tax assets more-likely-than-not. Significant judgment is required in the evaluation of deferred tax benefits and differences in future results from our estimates could result in material differences in the realization of these assets. The Company has recorded a full valuation allowance related to all of its deferred tax assets. The Company has performed an assessment of positive and negative evidence regarding the realization of the net deferred tax asset in accordance with FASB ASC 740-10, “Accounting for Income Taxes.” This assessment included the evaluation of scheduled reversals of deferred tax liabilities, the availability of carry forwards and estimates of projected future taxable income. The availability of the Company’s net operating loss carry forwards is subject to limitation if there is a 50% or more change in the ownership of the Company’s stock. The provision for income taxes consists of the state minimum tax imposed on corporations of $800. The Company has adopted guidance issued by the FASB that clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold of more likely than not and a measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. In making this assessment, a company must determine whether it is more likely than not that a tax position will be sustained upon examination, based solely on the technical merits of the position and must assume that the tax position will be examined by taxing authorities. The Company’s policy is to include interest and penalties related to unrecognized tax benefits in income tax expense. The Company has not recognized any unrecognized tax benefits and does not have any interest or penalties related to uncertain tax positions as of December 31, 2015 or December 31, 2016. As of December 31, 2016, the Company estimated it had available gross net operating loss (NOL) carry forwards of approximately $18.665 million, which expire at various dates through 2037. The components of the net deferred income taxes at December 31, 2015 and 2016 are summarized below: December 31, 2015 December 31, 2016 Deferred income tax assets Net operating loss carry forwards $ 18,400,000 $ 18,665,000 Less: valuation allowance (18,400,000 ) (18,665,000 ) Deferred income tax assets, net $ - $ - The following is a reconciliation of the provision for income taxes at the U.S. federal income tax rate to the income taxes reflected in the Statement of Operations: December 31, 2015 December 31, 2016 Tax expense (benefit) at federal statutory rate (34 )% (34 )% State tax expense, net of federal tax (6 ) (6 ) Changes in valuation allowance 40 40 Effective income tax rate $ - $ - Income tax expense for the period ended December 31, 2015 and the year ended December 31, 2016 is summarized below. 2015 2016 Current tax expense: Federal $ - $ - State 800 800 Total current tax expense $ 800 $ 800 Deferred tax expense: Federal $ - $ - State - - Total deferred tax expense, net $ - $ - Tax expense $ 800 $ 800 |
Notes Payable
Notes Payable | 12 Months Ended |
Dec. 31, 2016 | |
Debt Disclosure [Abstract] | |
Notes Payable | 6. NOTES PAYABLE During 2015, the Company issued promissory notes in the aggregate amount of $455,000. These notes bear interest at 10% per annum and are past due as of December 31, 2016. The notes are secured by substantially all assets of the Company. The convertible promissory note is convertible into shares of the Company’s common stock at a rate equal to $0.01 per share, subject to downward adjustments for future equity issuances. In connection with these convertible promissory notes, the Company issued 27,000,000 warrants to purchase common stock at an exercise price of $0.01 per share, subject to downward adjustments for future equity issuances. The warrants have a term of 7 years from the date of issuance. The Company is in default under the terms of these notes. During 2016, the Company issued promissory notes in the aggregate amount of $487,850 for cash proceeds of $465,000. These notes bear interest at 5%-10% per annum and are due on various dates through June 2017. These notes are secured by substantially all assets of the Company. The convertible promissory notes are convertible into shares of the Company’s common stock at a rate equal to $0.01-$0.05 per share, subject to downward adjustments for future equity issuances. In connection with these convertible promissory notes, the Company issued warrants to purchase 36,500,000 shares of common stock at an exercise price of $0.01 per share, subject to downward adjustments for future equity issuances. The warrants have a term of 7 years from the date of issuance. The Company is in default under the terms of these notes. The conversion features and warrants are considered derivative liabilities pursuant to ASC 815 and were measured at their grant-date fair value and recorded as a liability and note discount on the date of issuance. Subsequent changes to the value of the derivative liabilities are recorded in earnings. As a result, during the ended year ended December 31, 2015, the Company recorded an initial note discount of $455,000, with an additional immediate charge to interest expense of $749,809 relating to the excess value of the derivative liabilities over the promissory notes. During the year ended December 31, 2016, the Company recorded an additional note discount of $388,000, with an immediate charge to interest expense of $2,440,000 relating to the excess value of the derivative liabilities over the promissory notes. Amortization of the note discount amounted to $349,000 during the year ended December 31, 2016 and $378,000 for the year ended December 31, 2015. |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Dec. 31, 2016 | |
Equity [Abstract] | |
Stockholders' Equity | 7. STOCKHOLDERS’ EQUITY Preferred Stock Upon confirmation of the Company’s Chapter 11 Reorganization Plan, the Company is authorized to issue 1,000,000 shares of preferred stock, no par value. The rights, privileges, and preferences of the preferred stock are to be determined by the Company’s board of directors and may be issued in series. As of December 31, 2015 there were no shares of preferred stock outstanding. On January 18, 2016, Imaging3 issued 2000 preferred voting shares to Dane Medley, CEO/Chairman. Each share constitutes 350,000 voting shares. Common Stock The Company is authorized to issue 1,000,000,000 shares of no par value common stock. During the year ended December 31, 2015, the Company issued a total of 21,254,000 shares of common stock, 12,379,000 of such shares were issued for cash proceeds of $196,975. The remaining 8,875,000 shares were issued for services rendered, valued at $134,500. During the year ended December 31, 2016, the Company issued 53,263,700 shares of common stock, 41,685,000 shares related to services valued at $1,903,050, 4,504,000 shares were issued for cash proceeds of $166,900, and 7,074,700 shares related to a conversion of notes payable at $0.01 per share. Stock Option Plan During 2014, the Board of Directors adopted, and the shareholders approved, the 2014 Stock Option Plan under which a total of 36,276,614 shares of common stock had been reserved for issuance. The Stock Option Plan will terminate in September 2024. Stock Options Transactions in FY2016 Quantity Weighted- Average Exercise Price Per Share Weighted- Average Remaining Contractual Life Outstanding, December 31, 2015 8,000,000 $ 0.025 9.00 Granted 5,000,000 $ 0.025 8.63 Exercised 0 Cancelled/Forfeited 0 Outstanding, December 31, 2016 13,000,000 $ 0.025 8.86 Exercisable, December 31, 2016 13,000,000 $ 0.025 8.86 Transactions in FY2015 Outstanding, December 31, 2014 Granted 8,000,000 $ 0.025 9.00 Exercised 0 Cancelled/Forfeited 0 Outstanding, December 31, 2015 8,000,000 $ 0.025 9.00 Exercisable, December 31, 2015 8,000,000 $ 0.025 9.00 The fair value of the options granted during the year ended December 31, 2016 is estimated at approximately $139,535 which was expensed upon grant as the options vested immediately. The fair value of these options was estimated at the date of grant using the Black Scholes option pricing model with the following assumptions for the fiscal year ended December 31, 2016: no dividends, expected volatility of 60%, risk free interest rate of 1.91%, and expected life of 9 years. The weighted average remaining contractual life of options outstanding issued under the Plan was 8.86 years at December 31, 2016. |
Warrants
Warrants | 12 Months Ended |
Dec. 31, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Warrants | 8. WARRANTS Pursuant to the Chapter 11 Reorganization Plan, the Company issued 7,861,472 and 10,287,224 warrants to purchase common stock to Gemini Master Fund, Ltd and Alpha Capital, respectively. These warrants are exercisable at an exercise price of $0.000001 per share and expire July 30, 2023. During the years ended December 31, 2016 and 2015, the Company issued warrants to purchase common stock in connection with convertible promissory notes. The warrants are exercisable at $0.01 per share, subject to downward adjustments for future equity issuances, and have a term of 7 years. Warrant Activity 12-31-2014 Balance 18,148,696 Granted 27,000,000 12-31-2015 Balance 45,148,696 Granted 36,500,000 12-31-2016 Balance 81,648,696 Following is a summary of warrants outstanding at December 31, 2016 Number of Warrants Exercise Price Expiration Date 18,148,696 $ 0.000001 July 2023 2,000,000 $ 0.01 April 2022 25,000,000 $ 0.01 August 2022 30,000,000 $ 0.01 April 2023 6,500,000 $ 0.01 August 2023 |
Derivative Liabilities
Derivative Liabilities | 12 Months Ended |
Dec. 31, 2016 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Liabilities | 9. DERIVATIVE LIABILITIES The Company’s only asset or liability measured at fair value on a recurring basis was its derivative liability associated with warrants to purchase common stock and the conversion features embedded in convertible promissory notes. In connection with financing transactions, the Company issued warrants to purchase common stock and convertible promissory notes. These instruments included provisions that could result in a reduced exercise price based on specified full-ratchet anti-dilution provisions. The “reset” provisions were triggered in the event the Company subsequently issued common stock, stock warrants, stock options or convertible debt with a stock price, exercise price or conversion price lower than contractually specified amounts. Upon triggering the “reset” provisions, the exercise / conversion price of the instrument will be reduced. Accordingly, pursuant to ASC 815, these instruments were not considered to be solely indexed to the Company’s own stock and were not afforded equity treatment. The following table summarizes activity in the Company’s derivative liability during the years ended December 31, 2016 and 2015: 12-31-2014 Balance $ -0- Creation $ 1,204,809 Change in Value $ (6,857 ) 12-31-2015 Balance $ 1,197,952 12-31-2015 Balance $ 1,197,952 Creation $ 2,813,219 Settlement (112,005 ) Change in Value $ 1,633,732 12-31-2016 Balance $ 5,532,898 The Company classifies the fair value of these derivative liabilities under level 3 of the fair value hierarchy of financial instruments. The fair value of the derivative liability was calculated using a Black Scholes model. The Company’s stock price and estimates of volatility are the most sensitive inputs in validation of assets and liabilities at fair value. The liabilities were measured using the following assumptions: Term 0.5 years -7.0 years Dividend Yield 0 % Risk-free rate 0.23% - 1.69 % Volatility 60 % |
Going Concern
Going Concern | 12 Months Ended |
Dec. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Going Concern | 10. GOING CONCERN The Company’s financial statements are prepared using the generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The Company has historically incurred net losses and as of December 31, 2016 had an accumulated deficit totaling $16.0 M. During the years ended December 31, 2016 and 2015, the Company utilized an aggregate of $1.226 Million of cash in operating activities and incurred an aggregate net loss of $9,393,902. The continuing losses have adversely affected the liquidity of the Company. In view of the matters described in the preceding paragraph, recoverability of a major portion of the recorded asset amounts shown in the accompanying balance sheet is dependent upon continued operations of the Company, which in turn is dependent upon the Company’s ability to raise additional capital, obtain financing and to succeed in its future operations. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary as a result of the Company’s going concern uncertainty. Management’s plan regarding this matter is to, amongst other things, seek additional equity financing by selling our equity securities, obtaining funds through the issuance of debt, and continue seeking approval from the FDA to bring to market our real-time imaging platform. We cannot assure you that funds from these sources will be available when needed or, if available, will be on terms favorable to us or to our stockholders. If we raise additional funds or settle liabilities by issuing equity securities, the percentage ownership of our stockholders will be reduced, stockholders may experience additional dilution or such equity securities may provide for rights, preferences or privileges senior to those of the holders of our common stock. Our ability to execute our business plan and continue as a going concern may be adversely affected if we are unable to raise additional capital or operate profitably. The Company anticipates that further equity/debt financings will be necessary to continue to fund operations in the future and there is no guarantee that such financings will be available or, if available, on acceptable terms. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 11. COMMITMENTS AND CONTINGENCIES Leases During 2014 through May 2015, the Company leased its facilities on a month-to-month lease, which was cancellable by the parties with 30-days written notice. The Company entered into a facility lease agreement effective June 1, 2015 for three years with an option to extend for a 24 month period effective on June 1, 2018. Future annual minimum lease commitments, excluding property taxes and insurance, on this lease are as follows: 2017 $ 35,366 2018 14,915 $ 50,281 Litigation In 2009, the Company was notified by the Internal Revenue Service that additional payroll taxes, interest, and penalty charges were still owed. After researching, it is believed that the Internal Revenue Service double booked the original payments made and released the lien in error. Settlement was reached and the Company is currently paying $2,578 per month on a total liability of $48,627 as of December 31, 2016, including interest and penalties, with a potential balloon payment in one year subject to re-negotiation after one year with the IRS. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2016 | |
Subsequent Events [Abstract] | |
Subsequent Events | 12. SUBSEQUENT EVENTS Notes Payable On January 5, 2017, the Company closed a financing arrangement with five key shareholders, whereby fourteen separate 10% original-issue-discount secured convertible notes held by these shareholders (twelve of which were in default) with an aggregate balance due of about $770,000 have been amended such that (i) the maturity date of all notes is now August 31, 2017 and (ii) the notes are now convertible into subsequent rounds of financing rather than being convertible at $0.01 per share. Should there be an event of default under these amended notes, the conversion price will revert back to $0.01 per share. As part of the financing arrangement, fifteen separate warrants held by these same shareholders were also amended such that the number of shares exercisable pursuant to each warrant has been reduced by 75%. The exercise price of these warrants remains at $0.01. In consideration for this reduction, Imaging3 has issued to the five holders new convertible promissory notes in the total principal amount of $124,688 in the same form as the notes described above, as amended. The resulting reduction in the number of warrant-shares outstanding is 49,875,000. Furthermore, these shareholders agreed, as part of the arrangement, to lend Imaging3 up to an additional $200,000, in increments of $50,000, at the Company’s discretion, as long as the original notes are not in default. These loans will: (i) be evidenced by notes in the form of the notes described above, as amended; (ii) be due on August 31, 2017; (iii) bear interest at 10% per annum; and (iv) have a face value of 118.75% of the funds actually advanced. In addition, Imaging3 shall issue warrants granting the noteholder the right to purchase, at $0.01 per share, that number of common shares of the company equal to 25 times the number of dollars loaned. Administrative Claim of Greenberg Glusker Fields Claman & Machtinger LLP On January 30, 2017 the Company entered into a new Agreement. Under the terms of the Agreement, the Company has agreed to pay Greenberg $1,117,574 plus any interest that has accrued at the rate of 6.0% per annum, as follows: (i) $100,000 on or before December 31, 2017; (ii) $150,000 on or before December 31, 2018 (iii) 4.0% of the first $2.5 million of gross proceeds of any private or public offering by the company (an “Offering”); (iv) 2.0% of the next $2.5 million of gross proceeds from such Offerings; (v) 4.0% of any gross proceeds thereafter from such Offerings; and (vi) the remaining balance on or before December 31, 2019. In addition, Greenberg has the option to convert up to $150,000 of the balance into a warrant that would convert on terms that are equal to (or, in certain cases, better than) the terms offered in subsequent rounds of financing. Bankruptcy Closure On January 31, 2017, United States Bankruptcy Judge for the Central District of California, Neil Bason, granted the Company’s unopposed motion for entry of final decree and also granted approval of the two stipulations regarding payment of court-approved fees. The Company noted that as a result, the Imaging3 Chapter 11 proceeding is now closed—the Company is no longer subject to the jurisdiction of the Bankruptcy Court, and the case cannot be converted to a Chapter 7 proceeding. To clarify, the Judge’s order in its final paragraph stated that “Notwithstanding the foregoing [order closing the bankruptcy case pursuant to 11United States Code Section 350(a)] the bankruptcy case may be reopened on motion as set forth in the Greenberg, Glusker Fee Agreement and/or the Mentor Fee Agreement and thus the court retains jurisdiction for those purposes and as otherwise provided by law or as contemplated by the prior orders and proceedings of this court”. Thusly, technically, the case could possibly be reopened by either of those aforementioned creditors. Stock As of April 2017, the Company cancelled 11 million shares of common stock issued in 2016. Furthermore, the company intends to cancel an additional 18 million shares pending negotiations relating to officer employment agreements. |
Basis of Presentation and Sum19
Basis of Presentation and Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
Accounting Policies [Abstract] | |
Use of Estimates | Use of Estimates In preparing financial statements in conformity with accounting principles generally accepted in the United States of America, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, and revenues and expenses during the reporting period. Actual results could differ from those estimates. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all liquid investments with a maturity of three months or less from the date of purchase that are readily convertible into cash to be cash equivalents. The Company maintains its cash in bank deposit accounts that may exceed federally insured limits. The Company has not experienced any losses in such accounts. The Company had no cash equivalents at December 31, 2016 or 2015. |
Revenue Recognition | Revenue Recognition Revenue is recognized upon shipment, provided that evidence of an arrangement exists, title and risk of loss have passed to the customer, fees are fixed or determinable and collection of the related receivable is reasonably assured. Revenue is recorded net of estimated product returns, which is based upon the Company’s return policy, sales agreements, management estimates of potential future product returns related to current period revenue, current economic trends, changes in customer composition and historical experience. The Company accrues for warranty costs, sales returns, and other allowances based on its experience. Generally, the Company extends credit to its customers and does not require collateral. The Company performs ongoing credit evaluations of its customers and historic credit losses have been within management’s expectations and has a revenue receivables policy for service and warranty contracts. Equipment sales usually have a one year warranty of parts and service. After a one year period, the Company contacts the buyer to initiate the sale of a new warranty contract for one year. Warranty revenues are deferred and recognized on a straight-line basis over the term of the contract or as services are performed. |
Deferred Revenue | Deferred Revenue Deferred revenue consists substantially of amounts received from customers in advance of the Company’s performance service period. Deferred revenue is recognized as revenue on a systematic basis that is proportionate to the period that the underlying services are rendered, which in certain arrangements is straight-line over the remaining contractual term or estimated customer life of an agreement. |
Accounts Receivable | Accounts Receivable The Company’s customer base is geographically dispersed. The Company maintains reserves for potential credit losses on accounts receivable. Management reviews the composition of accounts receivable and analyzes historical bad debts, customer concentrations, customer credit worthiness, current economic trends and changes in customer payment patterns to evaluate the adequacy of these reserves. Reserves are recorded primarily on a specific identification basis. |
Property & Equipment | Property& Equipment Property and equipment are stated at cost. Expenditures for maintenance and repairs are charged to expenses as incurred and additions, renewals and betterments are capitalized. When property and equipment are retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the respective accounts, and any gain or loss is included in operations. Depreciation of property and equipment is provided using the straight-line method for all assets with estimated lives of three to eight years. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable through the estimated undiscounted cash flows expected to result from the use and eventual disposition of the assets. Whenever any such impairment exists, an impairment loss will be recognized for the amount by which the carrying value exceeds the fair value. The Company tests long-lived assets, including property, plant, equipment and intangible assets subject to periodic amortization, for recoverability at least annually or more frequently upon the occurrence of an event or when circumstances indicate that the net carrying amount is greater than its fair value. Assets are grouped and evaluated at the lowest level for their identifiable cash flows that are largely independent of the cash flows of other groups of assets. The Company considers historical performance and future estimated results in its evaluation of potential impairment, and then compares the carrying amount of the asset to the future estimated cash flows expected to result from the use of the asset. If the carrying amount of the asset exceeds estimated expected undiscounted future cash flows, the Company measures the amount of impairment by comparing the carrying amount of the asset to its fair value. The estimation of fair value is generally measured by discounting expected future cash flows at the rate the Company utilizes to evaluate potential investments. The Company estimates fair value based on the information available in making whatever estimates, judgments and projections are considered necessary. |
Basic and Diluted Net Loss Per Share | Basic and Diluted Net Loss Per Share Basic net loss per share is based upon the weighted average number of common shares outstanding. Diluted net loss per share is based on the assumption that all dilutive convertible shares and stock options were converted or exercised. Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period. During the years ended December 31, 2016 and 2015, potentially dilutive securities were excluded from the computation of weighted average shares outstanding-diluted because their effect was anti-dilutive. The Company’s policy for Equity – Based compensation is predicated on Employment Agreements for both Dane Medley CEO and Xavier Aguilera, CFO. |
Derivative Financial Instruments | Derivative Financial Instruments The Company generally does not use derivative financial instruments to hedge exposures to cash-flow risks or market-risks that may affect the fair values of its financial instruments. The Company utilizes various types of financing to fund its business needs, including convertible notes and warrants and other instruments not indexed to our stock. The Company is required to record its derivative instruments at their fair value. Changes in the fair value of derivatives are recognized in earnings in accordance with ASC 815. The Company’s only asset or liability measured at fair value on a recurring basis is its derivative liability associated with warrants to purchase common stock and convertible notes. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The fair value accounting standard creates a three-level hierarchy to prioritize the inputs used in the valuation techniques to derive fair values. The basis for fair value measurements for each level within the hierarchy is described below with Level 1 having the highest priority and Level 3 having the lowest. Level 1: Observable prices in active markets for identical assets or liabilities. Level 2: Observable prices for similar assets or liabilities in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs are observable in the market. Level 3: Valuations derived from valuation techniques in which one or more significant inputs are unobservable. These unobservable assumptions reflect estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques include use of option pricing models, discounted cash flow models, and similar techniques. The Company had the following assets or liabilities measured at fair value on a recurring basis at December 31, 2016 and 2015 respectively. Level 1 Level 2 Level 3 Total Derivative Liabilities 2016 $ - $ - $ 5,532,898 $ 5,532,898 Derivative Liabilities 2015 $ - $ - $ 1,197,951 $ 1,197,951 |
Income Taxes | Income Taxes The Company accounts for income taxes in accordance with ASC 740-10, “Income Taxes” which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each year-end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. The provision for income taxes represents the tax payable for the period and the change during the period in deferred tax assets and liabilities. |
Research and Development | Research and Development Costs and expenses that can be clearly identified as research and development are charged to expense as incurred in accordance with FASB ASC 730-10. Included in research and development costs are operating costs, facilities, supplies, external services, clinical trial and manufacturing costs, and overhead directly related to the Company’s research and development operations, as well as costs to acquire technology licenses. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In May 2014, FASB issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements—Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern In April 2015, the FASB issued ASU No 2015-3, Simplifying the Presentation of Debt Issuance Costs. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting In April 2016, the FASB issued AS 2016-10, Revenue from Contracts with Customers (Topic 606), which amends certain aspects of the Board’s new revenue standard, ASU 2014-09, Revenue from Contracts with Customers. The standard should be adopted concurrently with adoption of ASU 2014-09 which is effective for annual and interim periods beginning after December 15, 2017. The Company has not yet selected a transition method nor has it determined the effect of the standard on its ongoing financial reporting. |
Summary of Significant Accounti
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Accounting Policies [Abstract] | |
Summary of Derivative Liability | The Company had the following assets or liabilities measured at fair value on a recurring basis at December 31, 2016 and 2015 respectively. Level 1 Level 2 Level 3 Total Derivative Liabilities 2016 $ - $ - $ 5,532,898 $ 5,532,898 Derivative Liabilities 2015 $ - $ - $ 1,197,951 $ 1,197,951 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
Schedule of Dererred Income Tax | The components of the net deferred income taxes at December 31, 2015 and 2016 are summarized below: December 31, 2015 December 31, 2016 Deferred income tax assets Net operating loss carry forwards $ 18,400,000 $ 18,665,000 Less: valuation allowance (18,400,000 ) (18,665,000 ) Deferred income tax assets, net $ - $ - |
Summary of Reconciliation of Provision for Income Taxes | The following is a reconciliation of the provision for income taxes at the U.S. federal income tax rate to the income taxes reflected in the Statement of Operations: December 31, 2015 December 31, 2016 Tax expense (benefit) at federal statutory rate (34 )% (34 )% State tax expense, net of federal tax (6 ) (6 ) Changes in valuation allowance 40 40 Effective income tax rate $ - $ - |
Schedule of Income Tax Expense | Income tax expense for the period ended December 31, 2015 and the year ended December 31, 2016 is summarized below. 2015 2016 Current tax expense: Federal $ - $ - State 800 800 Total current tax expense $ 800 $ 800 Deferred tax expense: Federal $ - $ - State - - Total deferred tax expense, net $ - $ - Tax expense $ 800 $ 800 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Equity [Abstract] | |
Schedule of Stock Options Activity | Transactions in FY2016 Quantity Weighted- Average Exercise Price Per Share Weighted- Average Remaining Contractual Life Outstanding, December 31, 2015 8,000,000 $ 0.025 9.00 Granted 5,000,000 $ 0.025 8.63 Exercised 0 Cancelled/Forfeited 0 Outstanding, December 31, 2016 13,000,000 $ 0.025 8.86 Exercisable, December 31, 2016 13,000,000 $ 0.025 8.86 Transactions in FY2015 Outstanding, December 31, 2014 Granted 8,000,000 $ 0.025 9.00 Exercised 0 Cancelled/Forfeited 0 Outstanding, December 31, 2015 8,000,000 $ 0.025 9.00 Exercisable, December 31, 2015 8,000,000 $ 0.025 9.00 |
Warrants (Tables)
Warrants (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of Warrant Activity | Warrant Activity 12-31-2014 Balance 18,148,696 Granted 27,000,000 12-31-2015 Balance 45,148,696 Granted 36,500,000 12-31-2016 Balance 81,648,696 |
Schedule of Warrants Exercise Price Range | Following is a summary of warrants outstanding at December 31, 2016 Number of Warrants Exercise Price Expiration Date 18,148,696 $ 0.000001 July 2023 2,000,000 $ 0.01 April 2022 25,000,000 $ 0.01 August 2022 30,000,000 $ 0.01 April 2023 6,500,000 $ 0.01 August 2023 |
Derivative Liabilities (Tables)
Derivative Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Summary of Derivative Liability | The following table summarizes activity in the Company’s derivative liability during the years ended December 31, 2016 and 2015: 12-31-2014 Balance $ -0- Creation $ 1,204,809 Change in Value $ (6,857 ) 12-31-2015 Balance $ 1,197,952 12-31-2015 Balance $ 1,197,952 Creation $ 2,813,219 Settlement (112,005 ) Change in Value $ 1,633,732 12-31-2016 Balance $ 5,532,898 |
Schedule of Assumptions Used | The liabilities were measured using the following assumptions: Term 0.5 years -7.0 years Dividend Yield 0 % Risk-free rate 0.23% - 1.69 % Volatility 60 % |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Future Annual Minimum Lease | Future annual minimum lease commitments, excluding property taxes and insurance, on this lease are as follows: 2017 $ 35,366 2018 14,915 $ 50,281 |
Basis of Presentation and Sum26
Basis of Presentation and Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Cash equivalents | ||
Minimum [Member] | ||
Useful lives of property plant and equipment | 3 years | |
Maximum [Member] | ||
Useful lives of property plant and equipment | 8 years |
Basis of Presentation and Sum27
Basis of Presentation and Summary of Significant Accounting Policies - Summary of Derivative Liability (Details) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
Derivative Liabilities | $ 5,532,898 | $ 1,197,951 | $ 0 |
Level 1 [Member] | |||
Derivative Liabilities | |||
Level 2 [Member] | |||
Derivative Liabilities | |||
Level 3 [Member] | |||
Derivative Liabilities | $ 5,532,898 | $ 1,197,951 |
Accounts Receivable (Details Na
Accounts Receivable (Details Narrative) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Receivables [Abstract] | ||
Accounts receivable | $ 51,505 | |
Amount of uncollectible accounts | $ 0 | $ 0 |
Accrued Expenses (Details Narra
Accrued Expenses (Details Narrative) - USD ($) | Dec. 31, 2016 | Dec. 31, 2003 |
Payables and Accruals [Abstract] | ||
Tax payable amount | $ 48,627 | $ 104,052 |
Loss contingency, monthly payment | $ 2,578 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | ||
Valuation allowance percentage | 100.00% | |
Ownership percentage | 50.00% | |
State minimum tax expense | $ 800 | $ 800 |
Net operating loss carry forward | $ 18,665,000 | |
Net operating loss expiry description | which expire at various dates through 2037 |
Income Taxes - Schedule of Dere
Income Taxes - Schedule of Dererred Income Tax (Details) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Income Tax Disclosure [Abstract] | ||
Net operating loss carry forwards | $ 18,665,000 | $ 18,400,000 |
Less: valuation allowance | (18,665,000) | (18,400,000) |
Deferred income tax assets, net |
Income Taxes - Summary of Recon
Income Taxes - Summary of Reconciliation of Provision for Income Taxes (Details) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | ||
Tax expense (benefit) at federal statutory rate | (34.00%) | (34.00%) |
State tax expense, net of federal tax | (6.00%) | (6.00%) |
Changes in valuation allowance | 40.00% | 40.00% |
Effective income tax rate | 0.00% | 0.00% |
Income Taxes - Schedule of Inco
Income Taxes - Schedule of Income Tax Expense (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | ||
Current tax Federal | ||
Current tax State | 800 | 800 |
Total current tax expense | 800 | 800 |
Deferred tax Federal | ||
Deferred tax State | ||
Total deferred tax expense, net | ||
Tax expense | $ 800 | $ 800 |
Notes Payable (Details Narrativ
Notes Payable (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Promissory notes aggregate amount | $ 487,850 | $ 455,000 |
Note interest rate | 10.00% | |
Promissory note maturity date | Dec. 31, 2016 | |
Debt convertible instrument price per share | $ 0.01 | $ 0.01 |
Number of warrants issued to purchase common shares | 36,500,000 | 27,000,000 |
Warrant exercise price | $ 0.01 | |
Warrant term | 7 years | 7 years |
Proceeds from debt | $ 465,000 | |
Initial note discount | 388,000 | $ 455,000 |
Interest expense | 2,894,263 | 1,191,290 |
Amortization of the note discount | $ 349,000 | $ 378,000 |
Minimum [Member] | ||
Note interest rate | 5.00% | |
Common stock exercise price | $ 0.01 | |
Maximum [Member] | ||
Note interest rate | 10.00% | |
Common stock exercise price | $ 0.05 |
Stockholders' Equity (Details N
Stockholders' Equity (Details Narrative) - USD ($) | Jan. 18, 2016 | Dec. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 |
Preferred stock, shares authorized | 1,000,000 | 1,000,000 | ||
Preferred stock voting rights | Imaging3 issued 2000 preferred voting shares to Dane Medley, CEO/Chairman. Each share constitutes 350,000 voting shares | |||
Common stock, shares authorized | 1,000,000,000 | 1,000,000,000 | ||
Common stock par value | ||||
Common stock issued during period, shares | 53,263,700 | 21,254,000 | ||
Common stock issued for cash, shares | 4,504,000 | 12,379,000 | ||
Common stock issued for cash | $ 166,900 | $ 196,975 | ||
Common stock issued for services, shares | 41,685,000 | 8,875 | ||
Common stock issued for services | $ 1,903,050 | $ 134,500 | ||
Shares converted into debt | 7,074,700 | |||
Stock option vested | $ 139,535 | |||
Dividends | 0.00% | |||
Expected volatility | 60.00% | |||
Risk free interest | 1.91% | |||
Expected life | 9 years | |||
Weighted - Average Remaining Contractual Life, ending | 8 years 10 months 10 days | 9 years | ||
2014 Stock Option Plan [Member] | ||||
Number of common shares reserved for future issuance | 36,276,614 | |||
Stock option due | Sep. 30, 2024 |
Stockholders' Equity - Schedule
Stockholders' Equity - Schedule of Stock Options Activity (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Equity [Abstract] | ||
Options outstanding, beginning balance | 8,000,000 | |
Options, Granted | 5,000,000 | 8,000,000 |
Options, Exercised | 0 | 0 |
Options, Cancelled/Forfeited | 0 | 0 |
Options outstanding, ending balance | 13,000,000 | 8,000,000 |
Options outstanding, Exercisable | 13,000,000 | 8,000,000 |
Weighted - Average Exercise Price Per Share Outstanding, beginning balance | $ 0.025 | |
Weighted - Average Exercise Price Per Share, Granted | 0.025 | 0.025 |
Weighted - Average Exercise Price Per Share, ending balance | 0.025 | 0.025 |
Weighted - Average Exercise Price Per Share, Exercisable | $ 0.025 | $ 0.025 |
Weighted - Average Remaining Contractual Life, beginning | 9 years | 0 years |
Weighted - Average Remaining Contractual Life, Granted | 8 years 7 months 17 days | 9 years |
Weighted - Average Remaining Contractual Life, ending | 8 years 10 months 10 days | 9 years |
Weighted - Average Remaining Contractual Life, Exercisable | 8 years 10 months 10 days | 9 years |
Warrants (Details Narrative)
Warrants (Details Narrative) - $ / shares | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Warrant exercise price | $ 0.01 | |
Warrants expiration date | Jul. 30, 2023 | |
Warrant term | 7 years | 7 years |
Convertible Promissory Note [Member] | ||
Warrant exercise price | $ 0.01 | |
Warrant term | 7 years | |
Warrant [Member] | ||
Warrants to purchase common stock | 7,861,472 | 10,287,224 |
Warrant exercise price | $ 0.000001 | $ 0.000001 |
Warrants - Schedule of Warrant
Warrants - Schedule of Warrant Activity (Details) - shares | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||
Balance, beginning | 45,148,696 | 18,148,696 |
Granted | 36,500,000 | 27,000,000 |
Balance, ending | 81,648,696 | 45,148,696 |
Warrants - (Details)
Warrants - (Details) - $ / shares | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Number of Warrants | 81,648,696 | 45,148,696 | 18,148,696 |
Exercise Price | $ 0.01 | ||
Range One [Member] | |||
Number of Warrants | 18,148,696 | ||
Exercise Price | $ 0.000001 | ||
Expiration Date | July 2,023 | ||
Range Two [Member] | |||
Number of Warrants | 2,000,000 | ||
Exercise Price | $ 0.01 | ||
Expiration Date | April 2,022 | ||
Range Three [Member] | |||
Number of Warrants | 25,000,000 | ||
Exercise Price | $ 0.01 | ||
Expiration Date | August 2,022 | ||
Range Four [Member] | |||
Number of Warrants | 30,000,000 | ||
Exercise Price | $ 0.01 | ||
Expiration Date | April 2,023 | ||
Range Five [Member] | |||
Number of Warrants | 6,500,000 | ||
Exercise Price | $ 0.01 | ||
Expiration Date | August 2,023 |
Derivative Liabilities - Summar
Derivative Liabilities - Summary of Derivative Liability (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||
Balance, beginning | $ 1,197,951 | $ 0 |
Creation | 2,665,464 | 1,204,809 |
Settlement | (112,005) | |
Change in value | (1,633,732) | 6,857 |
Balance, ending | $ 5,532,898 | $ 1,197,951 |
Derivative Liabilities - Schedu
Derivative Liabilities - Schedule of Assumptions Used (Details) | 12 Months Ended |
Dec. 31, 2016 | |
Dividend Yield | 0.00% |
Volatility | 60.00% |
Minimum [Member] | |
Term | 6 months |
Risk-free rate | 0.23% |
Maximum [Member] | |
Term | 7 years |
Risk-free rate | 1.69% |
Going Concern (Details Narrativ
Going Concern (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Accumulated deficit | $ 15,977,470 | $ 9,216,000 |
Net cash used in operating activities | 616,270 | 609,831 |
Net loss | $ 6,761,470 | $ 2,632,432 |
Commitments and Contingencies43
Commitments and Contingencies (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2003 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Lease agreement description | During 2014 through May 2015, the Company leased its facilities on a month-to-month lease, which was cancellable by the parties with 30-days written notice. The Company entered into a facility lease agreement effective June 1, 2015 for three years with an option to extend for a 24 month period effective on June 1, 2018. | |
Tax payable amount | $ 48,627 | $ 104,052 |
Loss contingency, monthly payment | $ 2,578 |
Commitments and Contingencies -
Commitments and Contingencies - Schedule of Plan of Reorganization (Details) | Dec. 31, 2016USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2,017 | $ 35,366 |
2,018 | 14,915 |
Total | $ 50,281 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) | Jan. 30, 2017USD ($) | Jan. 05, 2017USD ($)number$ / sharesshares | Dec. 31, 2016USD ($)$ / sharesshares | Dec. 31, 2015USD ($)$ / sharesshares | Dec. 31, 2014shares |
Debt instrument face amount | $ 487,850 | $ 455,000 | |||
Debt instrument maturity date | Dec. 31, 2016 | ||||
Debt convertible instrument price per share | $ / shares | $ 0.01 | $ 0.01 | |||
Warrant exercise price | $ / shares | $ 0.01 | ||||
Warrants outstanding | shares | 81,648,696 | 45,148,696 | 18,148,696 | ||
Proceeds from debt | $ 465,000 | ||||
Convertible Promissory Note [Member] | |||||
Warrant exercise price | $ / shares | $ 0.01 | ||||
Subsequent Event [Member] | |||||
Number of shareholders | number | 5 | ||||
Debt interest rate | 10.00% | 10.00% | |||
Debt instrument face amount | $ 770,000 | $ 50,000 | |||
Debt instrument maturity date | Aug. 31, 2017 | Aug. 31, 2017 | |||
Debt convertible instrument price per share | $ / shares | $ 0.01 | $ 0.01 | |||
Warrant exercise price | $ / shares | $ 0.01 | ||||
Debt face value percentage | 118.75% | ||||
Subsequent Event [Member] | April 2017 [Member] | |||||
Cancellation of common stock | shares | 11,000,000 | ||||
Subsequent Event [Member] | New Agreement [Member] | |||||
Debt instrument maturity date | Dec. 31, 2019 | ||||
Subsequent Event [Member] | New Agreement [Member] | On Or Before December 31, 2017 [Member] | |||||
Debt interest rate | 4.00% | ||||
Debt instrument face amount | $ 100,000 | ||||
Proceeds from debt | $ 2,500,000 | ||||
Subsequent Event [Member] | New Agreement [Member] | On Or Before December 31, 2018 [Member] | |||||
Debt interest rate | 2.00% | ||||
Debt instrument face amount | $ 150,000 | ||||
Proceeds from debt | $ 2,500,000 | ||||
Subsequent Event [Member] | New Agreement [Member] | Thereafter [Member] | |||||
Debt interest rate | 4.00% | ||||
Subsequent Event [Member] | New Agreement [Member] | Greenberg [Member] | |||||
Debt instrument face amount | $ 1,117,574 | ||||
Conversion of debt into warrant | $ 150,000 | ||||
Subsequent Event [Member] | Officer Employment Agreements [Member] | April 2017 [Member] | |||||
Cancellation of common stock | shares | 18,000,000 | ||||
Subsequent Event [Member] | Convertible Promissory Note [Member] | |||||
Debt instrument face amount | $ 124,688 | ||||
Warrants outstanding | shares | 49,875,000 | ||||
Subsequent Event [Member] | Minimum [Member] | |||||
Warrant percentage | 75.00% | ||||
Subsequent Event [Member] | Maximum [Member] | |||||
Debt instrument face amount | $ 200,000 |