Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Apr. 16, 2019 | |
Document And Entity Information | ||
Entity Registrant Name | IMAGING3 INC | |
Entity Central Index Key | 0001205181 | |
Document Type | 10-K | |
Document Period End Date | Dec. 31, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Well-known Seasoned Issuer | No | |
Entity Voluntary Filer | No | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business Flag | true | |
Entity Emerging Growth Company | false | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Public Float | $ 0 | |
Entity Common Stock, Shares Outstanding | 49,689,768 | |
Trading Symbol | IGNG | |
Document Fiscal Period Focus | FY | |
Document Fiscal Year Focus | 2018 |
Balance Sheets
Balance Sheets - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
CURRENT ASSETS: | ||
Cash and cash equivalents | $ 14,214 | $ 3,594 |
Total current assets | 14,214 | 3,594 |
PROPERTY AND EQUIPMENT, net | ||
Total assets | 14,214 | 3,594 |
CURRENT LIABILITIES: | ||
Accounts payable | 703,518 | 488,102 |
Administrative claims payable | 1,113,708 | |
Accrued expenses | 372,773 | 216,031 |
Subscriptions payable | 289,283 | 130,600 |
Derivative liability | 677,990 | 701,347 |
Convertible notes payable, net of discount of $- and $455,478 | 2,167,107 | 1,043,502 |
Total current liabilities | 5,324,379 | 2,579,582 |
LONG TERM LIABILITIES | ||
Administrative claims payable | 1,131,916 | |
TOTAL LIABILITIES | 5,324,379 | 3,711,498 |
COMMITMENTS AND CONTINGENCIES, note 10 | ||
STOCKHOLDERS' DEFICIT: | ||
Common stock and additional paid-in capital authorized 1,000,000,000 shares, no par value and 40,426,983 and 15,474,454 issued and outstanding as of December 31, 2018, and December 31, 2017, respectively | 15,944,948 | 9,417,055 |
Accumulated deficit | (21,255,113) | (13,124,959) |
Total stockholders' deficit | (5,310,165) | (3,707,904) |
Total liabilities and stockholders' deficit | $ 14,214 | $ 3,594 |
Balance Sheets (Parenthetical)
Balance Sheets (Parenthetical) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Statement of Financial Position [Abstract] | ||
Convertible notes payable, discount | $ 455,478 | |
Common stock, shares authorized | 1,000,000,000 | 1,000,000,000 |
Common stock, no par value | ||
Common stock, shares issued | 40,426,983 | 15,474,454 |
Common stock, shares outstanding | 40,426,983 | 15,474,454 |
Statements of Operations
Statements of Operations - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Income Statement [Abstract] | ||
Net revenues | $ 41,829 | |
Cost of goods sold | 14,263 | |
Gross profit | 27,566 | |
Operating expenses | ||
General and administrative expenses | 6,321,546 | 1,654,541 |
Total operating expenses | 6,321,546 | 1,654,541 |
Loss from operations | (6,321,546) | (1,626,975) |
Other income (expense): | ||
Interest expense | (679,685) | (1,171,708) |
Change in value of derivatives | (179,639) | 1,895,731 |
Gain (loss) on extinguishment of debt | 100,914 | 3,668,776 |
Settlement of legal debt | (1,026,071) | |
Other income | (23,327) | 87,487 |
Total other income (expense) | (1,807,808) | 4,480,286 |
Income (loss) before income tax | (8,129,354) | 2,853,311 |
Provision for income taxes | 800 | 800 |
Net income (loss) | $ (8,130,154) | $ 2,852,511 |
Net income (loss) per share - Basic | $ (0.25) | $ 0.21 |
Net income (loss) per share - Diluted | $ (0.25) | $ 0.18 |
Weighted average common stock outstanding - Basic | 32,116,087 | 13,825,914 |
Weighted average common stock outstanding - Diluted | 32,116,087 | 15,667,279 |
Statements of Cash Flows
Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income (loss) | $ (8,130,154) | $ 2,852,511 |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Change in value of derivatives | 179,639 | (1,895,731) |
Non cash interest | 453,218 | 964,437 |
(Gain)loss on extinguishment of debt | (100,914) | (3,668,776) |
Shares issued for services | 5,442,076 | 648,300 |
Warrants issued for services | 194,956 | |
Legal settlement | 1,026,071 | |
Increase / (decrease) in current liabilities: | ||
Accounts payable | 164,878 | 124,778 |
Accrued expenses | 184,849 | 89,675 |
Deferred revenue | (41,829) | |
Net cash used in operating activities | (772,211) | (731,679) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from note payable | 212,750 | 575,035 |
Proceeds from sale of common stock | 377,418 | 137,600 |
Proceeds from subscriptions payable | 192,663 | |
Net cash provided by financing activities | 782,831 | 712,635 |
NET INCREASE (DECREASE) IN CASH & CASH EQUIVALENTS | 10,620 | (19,044) |
CASH & CASH EQUIVALENTS, BEGINNING BALANCE | 3,594 | 22,638 |
CASH & CASH EQUIVALENTS, ENDING BALANCE | 14,214 | 3,594 |
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | ||
Interest paid in cash | ||
Income taxes paid in cash | ||
SUPPLEMENTAL DISCLOSURE OF NON CASH INVESTING AND FINANCING ACTIVITIES: | ||
Notes and accrued interest converted to common stock | 574,524 | 196,797 |
Promissory notes issued for no cash consideration | 151,222 | |
Compensation paid through exercise of options | $ 200,000 |
Statement of Stockholders' Defi
Statement of Stockholders' Deficit - USD ($) | Preferred Stock [Member] | Common Stock [Member] | Accumulated Deficit [Member] | Total |
Balance at Dec. 31, 2016 | $ 7,829,273 | $ (15,977,470) | $ (8,148,197) | |
Balance, shares at Dec. 31, 2016 | 100 | 12,201,005 | ||
Shares issued for cash | $ 7,000 | 7,000 | ||
Shares issued for cash, shares | 7,500 | |||
Shares issued for services | $ 648,300 | 648,300 | ||
Shares issued for services, shares | 2,541,500 | |||
Note payable converted to stock | $ 431,375 | 431,375 | ||
Note payable converted to stock, shares | 431,375 | |||
Warrants issued for services | $ 194,956 | 194,956 | ||
Shares from the issuance of notes | $ 180,000 | 180,000 | ||
Shares from the issuance of notes, shares | 900,000 | |||
Repurchase of preferred stock | ||||
Repurchase of preferred stock, shares | (100) | |||
Aguilera shares cancelled | ||||
Aguilera shares cancelled, shares | (1,400,000) | |||
Cashless exercise of warrants | ||||
Cashless exercise of warrants, shares | 393,074 | |||
Settlement of derivatives | $ (73,849) | (73,849) | ||
Exercise of stock options | $ 200,000 | 200,000 | ||
Exercise of stock options, shares | 400,000 | |||
Net income | 2,852,511 | 2,852,511 | ||
Balance at Dec. 31, 2017 | $ 9,417,055 | (13,124,959) | (3,707,904) | |
Balance, shares at Dec. 31, 2017 | 15,474,454 | |||
Shares issued for cash | $ 377,418 | 377,418 | ||
Shares issued for cash, shares | 2,325,146 | |||
Shares issued for services | $ 5,442,076 | 5,442,076 | ||
Shares issued for services, shares | 18,058,539 | |||
Shares for subscriptions payable | $ 111,500 | 111,500 | ||
Shares for subscriptions payable, shares | 857,694 | |||
Shares from the conversion of notes | $ 596,899 | 596,899 | ||
Shares from the conversion of notes, shares | 6,811,151 | |||
Cancellation of shares | ||||
Cancellation of shares. shares | (3,100,001) | |||
Net income | (8,130,154) | (8,130,154) | ||
Balance at Dec. 31, 2018 | $ 15,944,948 | $ (21,255,113) | $ (5,310,165) | |
Balance, shares at Dec. 31, 2018 | 40,426,983 |
Organization and Description of
Organization and Description of Business | 12 Months Ended |
Dec. 31, 2018 | |
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 corporation incorporated on October 29, 1993 as Imaging Services, Inc. in the state of California. The Company filed a certificate of amendment of articles of incorporation to change its name to Imaging3, Inc. on August 20, 2002. In March of 2018, the Company incorporated in Delaware. The Company is a development stage medical device company. The Company has developed a portable proprietary imaging technology designed to produce 3D x-ray images in real time. The Company’s devices have the potential to use less radiation and require less specialized power sources than many currently available x-ray imaging devices. The Company’s lead device, the Dominion Smartscan, for which the Company plans to submit a 510K application with the FDA in 2020, will be easily transportable and works off conventional household current. While the primary focus is applications for the healthcare industry, there are many potential non-healthcare related uses for the Company’s technology, including agriculture and security. |
Basis of Presentation and Summa
Basis of Presentation and Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2018 | |
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. On March 16, 2018, the Company completed a 1-for-20 reverse stock split. The accompanying financial statements have been retroactively restated to reflect the 1-for-20 reverse-stock split. 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, 2018 or 2017. Revenue Recognition Effective January 1, 2018, the Company adopted the Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 2014-09, Revenue Contracts with Customers (Topic 606). Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring products or providing services. All revenue is recognized when the Company satisfies its performance obligations under the contract. The majority of the Company’s contracts have a single performance obligation and are short term in nature. 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. The Company 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. Basic and Diluted Net Income Per Share Basic net income per share is based upon the weighted average number of common shares outstanding. Diluted net income 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 2018, potentially dilutive securities were excluded from the computation of weighted average shares outstanding-diluted because their effect was anti-dilutive. December 31, 2018 December 31, 2017 Numerator: Net income attributable to common shareholders, for the year ended December 31, 2018 $ (8,130,154 ) 2,852,511 Denominator: Weighted-average number of common shares outstanding during the period 32,116,087 13,825,914 Dilutive effect of stock options, warrants, and convertible promissory notes - 1,841,365 Common stock and common stock equivalents used for diluted earnings per share $ 32,116,087 $ 15,667,279 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, 2018 and 2017 respectively. Level 1 Level 2 Level 3 Total Derivative Liabilities 2018 $ - $ - $ 677,990 $ 677,990 Derivative Liabilities 2017 $ - $ - $ 701,347 $ 701,347 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 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 July 2017, the FASB issued ASU 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480) and Derivatives and Hedging (Topic 815): I. Accounting for Certain Financial Instruments with Down Round Features; II. Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception, (ASU 2017-11). Part I of this update addresses the complexity of accounting for certain financial instruments with down round features. Down round features are features of certain equity-linked instruments (or embedded features) that result in the strike price being reduced on the basis of the pricing of future equity offerings Current accounting guidance creates cost and complexity for entities that issue financial instruments (such as warrants and convertible instruments) with down round features that require fair value measurement of the entire instrument or conversion option. Part II of this update addresses the difficulty of navigating Topic 480, Distinguishing Liabilities from Equity, because of the existence of extensive pending content in the FASB Accounting Standards Codification. This pending content is the result of the indefinite deferral of accounting requirements about mandatorily redeemable financial instruments of certain nonpublic entities and certain mandatorily redeemable noncontrolling interests. The amendments in Part II of this update do not have an accounting effect. This ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. The Company is currently assessing the potential impact of adopting ASU 2017-11 on its financial statements and related disclosures. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 3. 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, 2017 or December 31, 2018. As of December 31, 2018, the Company is still determining the amount of net operating loss (NOL) available or offset future taxable income. The components of the net deferred income taxes at December 31, 2017 and 2018 are summarized below: December 31, 2018 December 31, 2017 Deferred income tax assets Net operating loss carry forwards $ 4,779,000 $ 3,373,000 Less: valuation allowance (4,779,000 ) (3,373,000 ) 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, 2018 December 31, 2017 Tax expense (benefit) at federal statutory rate 21 % 34 % State tax expense, net of federal tax 9 6 Change in deferred taxes due to statutory rate change - 51 Changes in valuation allowance (30 ) (90 ) Effective income tax rate $ - $ - Income tax expense for the period ended December 31, 2017 and the year ended December 31, 2018 is summarized below. 2018 2017 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, 2018 | |
Debt Disclosure [Abstract] | |
Notes Payable | 4. NOTES PAYABLE During 2015 and 2016, the Company issued promissory notes in the aggregate amount of $942,850 for cash proceeds of $872,500. These notes bear interest at 5%-10% per annum and several were due on various dates between 2015 and 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 $0.20-$1.00 per share, subject to downward adjustments for future equity issuances. In connection with these convertible promissory notes, the Company issued warrants to purchase 3,325,000 shares of common stock at an exercise price of $0.20 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. On January 5, 2017 the Company entered into a financing arrangement with five accredited investors (the “Investors”), whereby amendments to certain convertible note agreements totaling $662,000 were enacted. The amendments to the convertible note agreements involved (1) extending the maturity dates of the note agreements; and (2) amending the optional conversion provisions of the original note agreements to now describe an adjustable conversion price based on the completion of a qualified financing offering. If the cumulative gross proceeds of such offerings exceed $2.5 million, the conversion price will be adjusted automatically to match the offering’s conversion price and conversion to common shares will occur automatically. If the cumulative gross proceeds of such offerings remain below $2.5 million, the conversion price adjusts to match the offering conversion price for the Investors. Should there be an event of default under these amended notes, the Investors will have, in addition to all the other rights described in that certain Securities Purchaser Agreement, the right, at each Investor’s option, to convert the notes into common shares at $0.20 per share. The Company and certain Investors agreed to amend its warrant agreements to reduce the number of warrants by 75% to 831,250. The exercise price remains at $0.20 per share. In consideration of this reduction of the number of warrants, the Company issued to the Investors new convertible promissory notes in total principal amount of $124,688 in the same form as the original convertible notes described above as amended. These additional convertible notes accrue interest beginning on January 9, 2017 and are due May 18, 2018. The amendment to the notes and warrants were accounted for as an extinguishment of debt, which resulted in a gain on extinguishment of debt totaling $3,668,776 for the year ended December 31, 2017. The Investors agreed to lend the Company up to $200,000, in increments of $50,000, at the Company’s discretion (the “Additional Loans”), as long as the Original Notes are not in default. These loans will be evidenced by note agreements in the form of the original notes as amended, described above, with a maturity date of May 18, 2018 and bear interest at 10% per annum. These notes have a face value of 118.75% of the funds actually advanced and contain conversion features (conversion price of $0.50 per share) making them derivative instruments. As of December 31, 2017, $150,034 of cash proceeds have been received from this agreement, for a total principal outstanding of $178,166. The Additional Loans are secured by a UCC filing on the Company’s assets. In connection with these note agreements, the derivative liability created by these note agreements and warrants totaled $288,057. The derivative liability in excess of the cash proceeds received was recorded as a charge to interest expense, which totaled $136,835. In addition, the Company issued 187,500 warrants in the form of the original Warrants as amended granting the Investor the right to purchase, at $0.20 per share in connection with these notes. These warrants were valued using the black-scholes valuation model with the assumptions and inputs discussed in note 6. The agreement to amend the notes and warrants and to loan additional monies to the Company, as described above, was dependent on the two officers of the Company—Chief Executive Officer Dane Medley and Chief Financial Officer Xavier Aguilera—agreeing to restate their respective employment agreement, which they both have done. On January 10, 2017, certain note holders converted notes to common shares. The total principal and accrued interest balance converted amounted to $196,797 along with $234,578 of derivative liability associated with conversion features that were settled upon conversion. The conversion resulted in the issuance of 431,375 common shares. The fair market value of the common shares on the date of conversion totaled $431,375. On May 25, 2017 the Company completed the sale of $500,000 of Convertible Promissory Notes (the “Notes”) to two accredited investors (the “Investors”) that are due May 23, 2018 (the “Maturity Date”). After transaction costs, the company netted $425,000 from the sale of the Notes. These Notes bear interest at the rate of 12% per annum to the Maturity Date and may be redeemed by the Company for 125% of face value within 90 days of issuance and at 135% of face value from 91 days after issuance and before 180 days after issuance. Any amount of principal or interest on these notes which is not paid when due shall bear interest at the rate of 24% per annum from the due date thereof until the same is paid. If the Notes are not repaid by the end of this period, any balance due is convertible—at the option of the note holders—into common stock at 60% of the lowest closing price for the prior 20 trading days. In connection with the sale of the Notes, the Investors received a commitment fee totaling 900,000 shares valued at $180,000, and the holders of a majority of the principal amount of the Company’s notes outstanding at May 18, 2017 (the “Prior Notes”) executed, as of that date, an Omnibus Amendment that enabled the transaction by (i) extending the maturity date of these Prior Notes to May 18, 2018 and (ii) restricting the rights of all the holders of the Prior Notes, including their right to convert until certain conditions are met. In addition, the holders of these Prior Notes were relieved of their obligation to provide the final note tranche of $50,000. In connection with these notes, the Company recorded note discounts totaling $648,750 and an immediate charge to interest of $411,725 related to the excess value of the conversion feature derivative over the carrying value of the notes. During 2018, the Company issued promissory notes in the amount of $101,000 that bear interest at 2% per annum and were due in the fourth quarter of 2018. The notes also provided for the issuance of 101,000 shares to the note holders. During the first quarter of 2019, $76,000 of the above-mentioned notes have been converted to 1,534,960 shares of common stock. During the fourth quarter of 2018, the Company issued a promissory note in the amount of $56,750 that bears interest at 12% and was due the fourth quarter of 2018. The Company is in default on this note. During 2018, debt and accrued interest in the amount of $574,524 were converted to 6,811,151 shares of common stock. As a result of these conversions, the Company recognized approximately $100,000 as a gain on extinguishment of debt, accrued interest, and derivative liabilities. Amortization of note discounts amounted to $449,717 during the year ended December 31, 2018 and $449,281 for the year ended December 31, 2017. |
Going Concern
Going Concern | 12 Months Ended |
Dec. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Going Concern | 5. 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, 2018 had an accumulated deficit totaling $21.3 million. During the years ended December 31, 2018 and 2017, the Company utilized an aggregate of $1.5 million of cash in operating activities and incurred an aggregate net loss of $5.28 million. 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; or, possibly merge with another operating organization. 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. |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Dec. 31, 2018 | |
Equity [Abstract] | |
Stockholders' Equity | 6. STOCKHOLDERS’ EQUITY Preferred Stock The Company has authorized 1,000,000 shares of preferred stock. During 2017, 2,000 shares of preferred shares were cancelled. As of December 31, 2018 and 2017, there are no shares of preferred stock outstanding. 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, 2017 the Company issued a total of 7,500 shares of common stock for cash in the amount of $7,000 and 2,541,500 shares were issued for services rendered valued at $648,300. In addition, the Company raised $130,600 of capital related to shares of common stock, however these shares were not issued as of December 31, 2017 and are presented as a subscription payable on the accompanying balance sheet. During the year ended December 31, 2018, the Company issued 18,058,539 shares related to services valued at $5,442,076, of which 3,100,001 shares were cancelled during 2018, 2,325,146 shares were issued for cash proceeds of $377,418, 6,811,151 shares related to conversions of notes payable, and 857,694 shares related to the satisfaction of $111,500 of subscriptions payable. As of December 31, 2018, there were approximately 580 record holders of our common stock, not including shares held in “street name” in brokerage accounts which is unknown. As of December 31, 2018, there were 40,426,983 shares of our common stock outstanding on record. Stock Option Plan During 2014, the Board of Directors adopted, and the shareholders approved, the 2014 Stock Option Plan under which a total of 27,000,000 shares of common stock had been reserved for issuance. The Stock Option Plan will terminate in September 2024. Stock Options Transactions in FY2018 Quantity Weighted- Average Exercise Price Per Share Weighted- Average Remaining Contractual Life Outstanding, December 31, 2017 250,000 $ 1.00 7.57 Granted Exercised $ Cancelled/Forfeited Outstanding, December 31, 2018 250,000 $ 1.00 6.57 Exercisable, December 31, 2018 250,000 $ 1.00 6.57 Transactions in FY2017 Outstanding, December 31, 2016 650,000 $ 0.69 8.86 Granted Exercised (400,000 ) $ 0.50 Cancelled/Forfeited Outstanding, December 31, 2017 250,000 $ 1.00 7.57 Exercisable, December 31, 2017 250,000 $ 1.00 7.57 As of December 31, 2018, former employees of the Company hold options to purchase 250,000 shares of common stock at an exercise price of $1.00. On September 15, 2017, two officers exercised their 400,000 options at a cost of $200,000, by offsetting and reducing their deferred salary and other amounts owed to them by the Company. |
Warrants
Warrants | 12 Months Ended |
Dec. 31, 2018 | |
Warrants and Rights Note Disclosure [Abstract] | |
Warrants | 7. WARRANTS Following is a summary of warrants outstanding at December 31, 2018: Number of Warrants Exercise Price Expiration Date 541,362 $ 0.00002 July 2023 25,000 $ 0.20 April 2022 312,500 $ 0.20 August 2022 287,500 $ 0.20 April 2023 125,000 $ 0.20 May 2023 81,250 $ 0.20 August 2023 2,800,000 $ 0.40 May 2022 187,500 $ 0.20 January 2024 Effective May 1, 2017, the Board of Directors of the Company authorized the issuance of 2,800,000 warrants to purchase 2,800,000 shares of the Company’s common stock at an exercise price of $0.40 per share for a period of five years from the date of issuance to the officers of the Company. These warrants were fully-vested upon grant and as such, an expense was recognized upon grant. The fair value of the warrants was calculated using a Black-Scholes model and was estimated to be $194,956. The significant assumptions used in the calculations were as follows: Term 5.0 years Dividend Yield 0 % Risk-free rate 1.84 % Volatility 60 % |
Derivative Liabilities
Derivative Liabilities | 12 Months Ended |
Dec. 31, 2018 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Liabilities | 8. 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, 2018 and 2017: 12-31-2016 Balance $ 5,532,898 Creation 1,188,275 Reclassification of equity (163,674 ) Change in Value (5,856,152 ) 12-31-2017 Balance $ 701,347 12-31-2017 Balance $ 701,347 Creation - Reclassification to Equity (202,996 ) Change in Value 179,639 12-31-2018 Balance $ 677,990 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 1.20% - 1.77 % Volatility 60 % |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 9. COMMITMENTS AND CONTINGENCIES 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. As of December 31, 2018, the Company has not made any of the payments required and is in default pursuant to the terms of the Agreement. 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. 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, except that the Judge’s order in its final paragraph stated that “Notwithstanding the foregoing [order closing the bankruptcy case pursuant to 11 United 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”. Thus, technically, the case could possibly be reopened by either of those aforementioned creditors. As of the date of filing of this report, the Company is in default of certain terms of the Greenberg, Glusker and Mentor agreements, however, the Company maintains open and cordial relations with Greenberg, Glusker and Mentor. Pending Litigation On September 13, 2017, Alpha Capital Anstalt and Brio Capital Master Fund, LTD, two minority members of a group of investors in the Company (the “Plaintiff”) filed a lawsuit seeking damages and injunctive relief in the United States District Court for the Southern District of New York claiming that the Company breached certain Note and Warrant agreements among the parties to the action. The holders of the majority of the investment involved in the above lawsuit chose not to join in the lawsuit and have informed the Company that they believe the lawsuit to be baseless. On November 21, 2017, the Court denied the Plaintiff’s request for injunctive relief against the Company. As a result, the case essentially became an action for money damages against the Company, which the Company believes to be without merit and has defended. However, on July 27, 2018 United States District Court for the Southern District of New York granted the plaintiffs motion for summary judgement, awarding them approximately $1.4 million dollars. The Company is, as of the date of this letter, in advanced negotiations to settle this judgment. The Company has accrued this amount, in full, as of December 31, 2018, resulting in a charge to other expenses of approximately $1.034 million during 2018. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | 10. SUBSEQUENT EVENTS On March 11, 2019 the Company signed a non-binding letter of intent (“LOI”) to be acquired in a reverse acquisition (the “Acquisition”) by a privately held Los Angeles based cannabis company (the “Acquirer”). The Acquirer holds licenses issued by the State of California to manufacture and distribute cannabis products in California. The Acquirer commenced operations in mid-2018 and has reported more than $550,000 in revenue from operations since they commenced. The Acquirer maintains facilities in Riverside County California near Palm Springs. On Thursday, March 7, 2019 the Acquirer obtained its final permit and clearance from the local fire department to commence operation of an ethanol extraction laboratory at such facilities and will initiate related extraction and post processing operations as soon as practicable. The Acquirer’s laboratory will be able to extract CBD hemp under Federal law pursuant to the recently signed 2018 Farm Act that classifies CBD hemp as an insurable commodity. Pursuant to the terms of the LOI, the Company and the Acquirer have initiated negotiations intended to result in completion of a definitive Exchange Agreement (the “Agreement”) encompassing all of the material terms of the Agreement on or before March 31, 2019. Pursuant to the terms of the LOI, the Agreement will provide that upon conclusion of the Acquisition, the Acquirer’s designees shall own 80% of the then outstanding common shares of the Company and the Company’s current shareholders shall own 20% of such outstanding common shares. In addition, the Company will be required to settle certain outstanding creditor obligations on terms acceptable to both the Acquirer and the Company. Furthermore, the Acquirer is required to obtain a commitment for a bridge loan of not less than $1,250,000.00 to be funded upon the closing of the Acquisition and an equity infusion of at least $5,000,000.00 at a pre-money valuation of at least $15,000,000.00 to be funded upon the closing of the Acquisition. Simultaneous with a successful closing of the Acquisition, the Company will assign all rights to its intellectual property and assets relating to its Dominion imaging technology to a private closely held Company to be owned by IGNG, current IGNG management and board members, certain other persons currently associated with the Company and the Acquirer’s designees in percentages to be negotiated among those persons prior to the closing of the transaction. The Dominion enterprise will thereafter execute its business plan as previously articulated in IGNG’s periodic reports to the SEC. At the closing, current IGNG officers and directors shall appoint the Acquirer’s designees to officer and directors positions at post acquisition IGNG and resign there officer and director positions. In January 2019, a former officer of the company canceled 8,000,000 shares of common stock that were previously issued. |
Basis of Presentation and Sum_2
Basis of Presentation and Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
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, 2018 or 2017. |
Revenue Recognition | Revenue Recognition Effective January 1, 2018, the Company adopted the Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 2014-09, Revenue Contracts with Customers (Topic 606). Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring products or providing services. All revenue is recognized when the Company satisfies its performance obligations under the contract. The majority of the Company’s contracts have a single performance obligation and are short term in nature. 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. The Company 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. |
Basic and Diluted Net Income Per Share | Basic and Diluted Net Income Per Share Basic net income per share is based upon the weighted average number of common shares outstanding. Diluted net income 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 2018, potentially dilutive securities were excluded from the computation of weighted average shares outstanding-diluted because their effect was anti-dilutive. December 31, 2018 December 31, 2017 Numerator: Net income attributable to common shareholders, for the year ended December 31, 2018 $ (8,130,154 ) 2,852,511 Denominator: Weighted-average number of common shares outstanding during the period 32,116,087 13,825,914 Dilutive effect of stock options, warrants, and convertible promissory notes - 1,841,365 Common stock and common stock equivalents used for diluted earnings per share $ 32,116,087 $ 15,667,279 |
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, 2018 and 2017 respectively. Level 1 Level 2 Level 3 Total Derivative Liabilities 2018 $ - $ - $ 677,990 $ 677,990 Derivative Liabilities 2017 $ - $ - $ 701,347 $ 701,347 |
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 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 July 2017, the FASB issued ASU 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480) and Derivatives and Hedging (Topic 815): I. Accounting for Certain Financial Instruments with Down Round Features; II. Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception, (ASU 2017-11). Part I of this update addresses the complexity of accounting for certain financial instruments with down round features. Down round features are features of certain equity-linked instruments (or embedded features) that result in the strike price being reduced on the basis of the pricing of future equity offerings Current accounting guidance creates cost and complexity for entities that issue financial instruments (such as warrants and convertible instruments) with down round features that require fair value measurement of the entire instrument or conversion option. Part II of this update addresses the difficulty of navigating Topic 480, Distinguishing Liabilities from Equity, because of the existence of extensive pending content in the FASB Accounting Standards Codification. This pending content is the result of the indefinite deferral of accounting requirements about mandatorily redeemable financial instruments of certain nonpublic entities and certain mandatorily redeemable noncontrolling interests. The amendments in Part II of this update do not have an accounting effect. This ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. The Company is currently assessing the potential impact of adopting ASU 2017-11 on its financial statements and related disclosures. |
Basis of Presentation and Sum_3
Basis of Presentation and Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | During 2018, potentially dilutive securities were excluded from the computation of weighted average shares outstanding-diluted because their effect was anti-dilutive. December 31, 2018 December 31, 2017 Numerator: Net income attributable to common shareholders, for the year ended December 31, 2018 $ (8,130,154 ) 2,852,511 Denominator: Weighted-average number of common shares outstanding during the period 32,116,087 13,825,914 Dilutive effect of stock options, warrants, and convertible promissory notes - 1,841,365 Common stock and common stock equivalents used for diluted earnings per share $ 32,116,087 $ 15,667,279 |
Summary of Derivative Liabilities | The Company had the following assets or liabilities measured at fair value on a recurring basis at December 31, 2018 and 2017 respectively. Level 1 Level 2 Level 3 Total Derivative Liabilities 2018 $ - $ - $ 677,990 $ 677,990 Derivative Liabilities 2017 $ - $ - $ 701,347 $ 701,347 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Schedule of Deferred Income Tax | The components of the net deferred income taxes at December 31, 2017 and 2018 are summarized below: December 31, 2018 December 31, 2017 Deferred income tax assets Net operating loss carry forwards $ 4,779,000 $ 3,373,000 Less: valuation allowance (4,779,000 ) (3,373,000 ) 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, 2018 December 31, 2017 Tax expense (benefit) at federal statutory rate 21 % 34 % State tax expense, net of federal tax 9 6 Change in deferred taxes due to statutory rate change - 51 Changes in valuation allowance (30 ) (90 ) Effective income tax rate $ - $ - |
Schedule of Income Tax Expense | Income tax expense for the period ended December 31, 2017 and the year ended December 31, 2018 is summarized below. 2018 2017 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, 2018 | |
Equity [Abstract] | |
Schedule of Stock Options Activity | Stock Options Transactions in FY2018 Quantity Weighted- Average Exercise Price Per Share Weighted- Average Remaining Contractual Life Outstanding, December 31, 2017 250,000 $ 1.00 7.57 Granted Exercised $ Cancelled/Forfeited Outstanding, December 31, 2018 250,000 $ 1.00 6.57 Exercisable, December 31, 2018 250,000 $ 1.00 6.57 Transactions in FY2017 Outstanding, December 31, 2016 650,000 $ 0.69 8.86 Granted Exercised (400,000 ) $ 0.50 Cancelled/Forfeited Outstanding, December 31, 2017 250,000 $ 1.00 7.57 Exercisable, December 31, 2017 250,000 $ 1.00 7.57 |
Warrants (Tables)
Warrants (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Warrants and Rights Note Disclosure [Abstract] | |
Summary of Warrants Outstanding | Following is a summary of warrants outstanding at December 31, 2018: Number of Warrants Exercise Price Expiration Date 541,362 $ 0.00002 July 2023 25,000 $ 0.20 April 2022 312,500 $ 0.20 August 2022 287,500 $ 0.20 April 2023 125,000 $ 0.20 May 2023 81,250 $ 0.20 August 2023 2,800,000 $ 0.40 May 2022 187,500 $ 0.20 January 2024 |
Schedule of Fair Value of Warrants Assumptions | The significant assumptions used in the calculations were as follows: Term 5.0 years Dividend Yield 0 % Risk-free rate 1.84 % Volatility 60 % |
Derivative Liabilities (Tables)
Derivative Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
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, 2018 and 2017: 12-31-2016 Balance $ 5,532,898 Creation 1,188,275 Reclassification of equity (163,674 ) Change in Value (5,856,152 ) 12-31-2017 Balance $ 701,347 12-31-2017 Balance $ 701,347 Creation - Reclassification to Equity (202,996 ) Change in Value 179,639 12-31-2018 Balance $ 677,990 |
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 1.20% - 1.77 % Volatility 60 % |
Basis of Presentation and Sum_4
Basis of Presentation and Summary of Significant Accounting Policies (Details Narrative) - USD ($) | Mar. 16, 2018 | Dec. 31, 2018 | Dec. 31, 2017 |
Accounting Policies [Abstract] | |||
Reverse stock split | 1-for-20 reverse stock split | ||
Cash equivalents |
Basis of Presentation and Sum_5
Basis of Presentation and Summary of Significant Accounting Policies - Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Accounting Policies [Abstract] | ||
Numerator: Net income attributable to common shareholders, for the year ended December 31, 2018 | $ (8,130,154) | $ 2,852,511 |
Denominator: Weighted-average number of common shares outstanding during the period | 32,116,087 | 13,825,914 |
Denominator: Dilutive effect of stock options, warrants, and convertible promissory notes | 1,841,365 | |
Denominator: Common stock and common stock equivalents used for diluted earnings per share | 32,116,087 | 15,667,279 |
Basis of Presentation and Sum_6
Basis of Presentation and Summary of Significant Accounting Policies - Summary of Derivative Liabilities (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Derivative Liabilities | $ 677,990 | $ 701,347 |
Level 1 [Member] | ||
Derivative Liabilities | ||
Level 2 [Member] | ||
Derivative Liabilities | ||
Level 3 [Member] | ||
Derivative Liabilities | $ 677,990 | $ 701,347 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | ||
Valuation allowance percentage | 100.00% | |
Ownership percentage | 50.00% | |
State minimum tax expense | $ 800 | $ 800 |
Net operating loss carry forwards | $ 20,000,000 | |
Operating loss carry forwards expiration | Expire at various dates through 2037. |
Income Taxes - Schedule of Defe
Income Taxes - Schedule of Deferred Income Tax (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Income Tax Disclosure [Abstract] | ||
Net operating loss carry forwards | $ 4,779,000 | $ 3,373,000 |
Less: valuation allowance | (4,779,000) | (3,373,000) |
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, 2018 | Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | ||
Tax expense (benefit) at federal statutory rate | 21.00% | 34.00% |
State tax expense, net of federal tax | 9.00% | 6.00% |
Change in deferred taxes due to statutory rate change | 0.00% | 51.00% |
Changes in valuation allowance | (30.00%) | (91.00%) |
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, 2018 | Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | ||
Current tax expense: Federal | ||
Current tax expense: State | 800 | 800 |
Total current tax expense | 800 | 800 |
Deferred tax expense: Federal | ||
Deferred tax expense: State | ||
Total deferred tax expense, net | ||
Tax expense | $ 800 | $ 800 |
Notes Payable (Details Narrativ
Notes Payable (Details Narrative) | May 25, 2017USD ($)numbershares | Jan. 10, 2017USD ($)shares | Jan. 05, 2017USD ($)number$ / sharesshares | Dec. 31, 2018USD ($) | Dec. 31, 2018USD ($)shares | Dec. 31, 2017USD ($)$ / sharesshares | Dec. 31, 2016USD ($)$ / sharesshares | Dec. 31, 2015USD ($)$ / sharesshares |
Promissory notes aggregate amount | $ 942,850 | $ 942,850 | ||||||
Proceeds from debt | $ 872,500 | $ 872,500 | ||||||
Number of warrants issued to purchase common shares | shares | 3,325,000 | 3,325,000 | ||||||
Debt convertible instrument price per share | $ / shares | $ 0.20 | $ 0.20 | ||||||
Warrant term | 7 years | 7 years | ||||||
Gain on extinguishment of debt | $ 100,914 | $ 3,668,776 | ||||||
Proceeds from cash | 212,750 | 575,035 | ||||||
Total principal outstanding | 178,166 | |||||||
Warrant outstanding | 288,057 | |||||||
Accrued interest | $ 196,797 | |||||||
Outstanding derivative liability | $ 234,578 | |||||||
Debt conversion convertible shares | shares | 431,375 | |||||||
Debt conversion convertible shares, value | $ 431,375 | |||||||
Sale of convertible promissory notes | $ 425,000 | |||||||
Investors received a commitment fee, value | $ 5,442,076 | 648,300 | ||||||
Debt instrument description | due in the fourth quarter of 2018 | |||||||
Amortization of the note discount | $ 449,717 | $ 449,281 | ||||||
Common Stock [Member] | ||||||||
Gain on extinguishment of debt | $ 100,000 | |||||||
Debt conversion convertible shares | shares | 6,811,151 | |||||||
Debt conversion convertible shares, value | $ 574,524 | |||||||
Investors received a commitment fee, shares | shares | 18,058,539 | 2,541,500 | ||||||
Investors received a commitment fee, value | $ 5,442,076 | $ 648,300 | ||||||
Stock issued during period | shares | 2,325,146 | 7,500 | ||||||
Convertible Promissory Note [Member] | ||||||||
Promissory notes aggregate amount | $ 101,000 | $ 101,000 | ||||||
Note interest rate | 2.00% | 2.00% | ||||||
Convertible Promissory Note [Member] | First Quarter of 2019 [Member] | ||||||||
Debt original amount | $ 76,000 | |||||||
Debt conversion convertible shares | shares | 1,534,960 | |||||||
Convertible Promissory Note [Member] | Note Holders [Member] | ||||||||
Stock issued during period | shares | 101,000 | |||||||
Convertible Promissory Note One [Member] | ||||||||
Promissory notes aggregate amount | $ 56,750 | $ 56,750 | ||||||
Note interest rate | 12.00% | 12.00% | ||||||
Debt instrument description | due the fourth quarter of 2018 | |||||||
Prior Notes [Member] | ||||||||
Accrued interest | 411,725 | |||||||
Initial note discount | 648,750 | |||||||
Prior Notes [Member] | Share-based Compensation Award, Tranche One [Member] | ||||||||
Total principal outstanding | $ 50,000 | |||||||
Face Value within 90 Days of Issuance [Member] | ||||||||
Debt face amount percentage | 125.00% | |||||||
Face Value from 91 Days after Issuance and Before 180 Days after Issuance [Member] | ||||||||
Debt face amount percentage | 135.00% | |||||||
Due Date [Member] | ||||||||
Note interest rate | 24.00% | |||||||
Investor [Member] | ||||||||
Promissory notes aggregate amount | $ 200,000 | |||||||
Note interest rate | 12.00% | 10.00% | ||||||
Number of warrants issued to purchase common shares | shares | 187,500 | |||||||
Debt convertible instrument price per share | $ / shares | $ 0.50 | $ 0.20 | ||||||
Number of investors | number | 2 | |||||||
Note maturity date | May 23, 2018 | May 18, 2018 | ||||||
Debt original amount | $ 50,000 | |||||||
Debt face amount percentage | 118.75% | |||||||
Interest expense debt | $ 136,835 | |||||||
Sale of convertible promissory notes | $ 500,000 | |||||||
Lowest closing price, percentage | 60.00% | |||||||
Conversion trading days | number | 20 | |||||||
Investors received a commitment fee, shares | shares | 900,000 | |||||||
Investors received a commitment fee, value | $ 180,000 | |||||||
Financing Arrangement [Member] | ||||||||
Promissory notes aggregate amount | $ 662,000 | |||||||
Number of warrants issued to purchase common shares | shares | 831,250 | |||||||
Debt convertible instrument price per share | $ / shares | $ 0.20 | |||||||
Number of investors | number | 5 | |||||||
Proceeds from offering cost | $ 2,500,000 | |||||||
Warrant exercise price | $ / shares | $ 0.20 | |||||||
Number of warrant percentage | 75.00% | |||||||
Note maturity date | May 18, 2018 | |||||||
Financing Arrangement [Member] | Investor [Member] | ||||||||
Promissory notes aggregate amount | $ 124,688 | |||||||
Note Agreement [Member] | ||||||||
Proceeds from cash | $ 150,034 | |||||||
Minimum [Member] | ||||||||
Note interest rate | 5.00% | 5.00% | ||||||
Common stock exercise price | $ / shares | $ 0.20 | $ 0.20 | ||||||
Maximum [Member] | ||||||||
Note interest rate | 10.00% | 10.00% | ||||||
Common stock exercise price | $ / shares | $ 1 | $ 1 |
Going Concern (Details Narrativ
Going Concern (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Accumulated deficit | $ (21,255,113) | $ (13,124,959) |
Net cash used in operating activities | (772,211) | (731,679) |
Net income | $ (8,130,154) | $ 2,852,511 |
Stockholders' Equity (Details N
Stockholders' Equity (Details Narrative) - USD ($) | Sep. 15, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2014 |
Preferred stock, shares authorized | 1,000,000 | |||
Preferred stock shares, outstanding | ||||
Common stock, shares authorized | 1,000,000,000 | 1,000,000,000 | ||
Common stock, no par value | ||||
Common stock issued during period, value | $ 377,418 | $ 7,000 | ||
Shares issued for services, value | 5,442,076 | 648,300 | ||
Common stock, subscription payable not issued | $ 130,600 | |||
Subscriptions payable | $ 111,500 | |||
Common stock shares outstanding | 40,426,983 | 15,474,454 | ||
Exercise of stock options | $ 200,000 | |||
Stock Option [Member] | ||||
Number of option to purchase of common stock | 250,000 | |||
Options exercise price | $ 1 | |||
Stock Option [Member] | Two Officers [Member] | ||||
Exercise of stock options, shares | 400,000 | |||
Exercise of stock options | $ 200,000 | |||
2014 Stock Option Plan [Member] | ||||
Number of common shares reserved for future issuance | 27,000,000 | |||
Options expiration period | The Stock Option Plan will terminate in September 2024. | |||
Preferred Stock [Member] | ||||
Number of shares cancelled | 2,000 | |||
Shares from the conversion of notes, shares | ||||
Exercise of stock options | ||||
Common Stock [Member] | ||||
Number of shares cancelled | 3,100,001 | |||
Common stock issued during period, shares | 2,325,146 | 7,500 | ||
Common stock issued during period, value | $ 377,418 | $ 7,000 | ||
Shares issued for services, shares | 18,058,539 | 2,541,500 | ||
Shares issued for services, value | $ 5,442,076 | $ 648,300 | ||
Shares from the conversion of notes, shares | 6,811,151 | |||
Shares issued in satisfaction of subscriptions payable | 857,694 | |||
Exercise of stock options, shares | 400,000 | |||
Exercise of stock options | $ 200,000 |
Stockholders' Equity - Schedule
Stockholders' Equity - Schedule of Stock Options Activity (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Equity [Abstract] | ||
Options Outstanding, beginning balance | 250,000 | 650,000 |
Options, Granted | ||
Options, Cancelled/Forfeited | ||
Options Outstanding, ending balance | 250,000 | 250,000 |
Options, Exercisable | 250,000 | 250,000 |
Weighted Average Exercise Price Per Share Outstanding, beginning balance | $ 1 | $ 0.69 |
Weighted Average Exercise Price Per Share, Granted | ||
Weighted Average Exercise Price Per Share, Exercised | 0.50 | |
Weighted Average Exercise Price Per Share, Cancelled/Forfeited | ||
Weighted Average Exercise Price Per Share, ending balance | 1 | 1 |
Weighted Average Exercise Price Per Share, Exercisable | $ 1 | $ 1 |
Weighted Average Remaining Contractual Life Outstanding, beginning | 7 years 6 months 25 days | 8 years 10 months 10 days |
Weighted Average Remaining Contractual Life, ending | 6 years 6 months 25 days | 7 years 6 months 25 days |
Weighted Average Remaining Contractual Life, Exercisable | 6 years 6 months 25 days | 7 years 6 months 25 days |
Warrants (Details Narrative)
Warrants (Details Narrative) - USD ($) | May 01, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Number of warrants issued to purchase common shares | 3,325,000 | 3,325,000 | |
Warrant term | 7 years | 7 years | |
Fair value of the warrants | $ 194,956 | ||
Board of Directors [Member] | |||
Warrant outstanding | 2,800,000 | ||
Number of warrants issued to purchase common shares | 2,800,000 | ||
Warrant exercise price | $ 0.40 | ||
Warrant term | 5 years |
Warrants - Summary of Warrants
Warrants - Summary of Warrants Outstanding (Details) | 12 Months Ended |
Dec. 31, 2018$ / sharesshares | |
Range One [Member] | |
Number of Warrants | shares | 541,362 |
Exercise Price | $ / shares | $ 0.00002 |
Expiration Date | July 2023 |
Range Two [Member] | |
Number of Warrants | shares | 25,000 |
Exercise Price | $ / shares | $ 0.20 |
Expiration Date | April 2022 |
Range Three [Member] | |
Number of Warrants | shares | 312,500 |
Exercise Price | $ / shares | $ 0.20 |
Expiration Date | August 2022 |
Range Four [Member] | |
Number of Warrants | shares | 287,500 |
Exercise Price | $ / shares | $ 0.20 |
Expiration Date | April 2023 |
Range Five [Member] | |
Number of Warrants | shares | 125,000 |
Exercise Price | $ / shares | $ 0.20 |
Expiration Date | May 2023 |
Range Six [Member] | |
Number of Warrants | shares | 81,250 |
Exercise Price | $ / shares | $ 0.20 |
Expiration Date | August 2023 |
Range Seven [Member] | |
Number of Warrants | shares | 2,800,000 |
Exercise Price | $ / shares | $ 0.40 |
Expiration Date | May 2022 |
Range Eight [Member] | |
Number of Warrants | shares | 187,500 |
Exercise Price | $ / shares | $ 0.20 |
Expiration Date | January 2024 |
Warrants - Schedule of Fair Val
Warrants - Schedule of Fair Value of Warrants Assumptions (Details) - Warrant [Member] | 12 Months Ended |
Dec. 31, 2018 | |
Term | 5 years |
Dividend Yield | 0.00% |
Risk-free rate | 1.84% |
Volatility | 60.00% |
Derivative Liabilities - Summar
Derivative Liabilities - Summary of Derivative Liability (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||
Balance, beginning | $ 701,347 | $ 5,532,898 |
Creation | 1,188,275 | |
Reclassification to equity | (202,996) | (163,674) |
Change in Value | (179,639) | 1,895,731 |
Balance, ending | $ 677,990 | $ 701,347 |
Derivative Liabilities - Schedu
Derivative Liabilities - Schedule of Assumptions Used (Details) | 12 Months Ended |
Dec. 31, 2018 | |
Dividend Yield [Member] | |
Fair value assumptions, percentage | 0.00% |
Volatility [Member] | |
Fair value assumptions, percentage | 60.00% |
Minimum [Member] | Expected Term [Member] | |
Fair value assumptions, term | 6 months |
Minimum [Member] | Risk-free Rate [Member] | |
Fair value assumptions, percentage | 1.20% |
Maximum [Member] | Expected Term [Member] | |
Fair value assumptions, term | 7 years |
Maximum [Member] | Risk-free Rate [Member] | |
Fair value assumptions, percentage | 1.77% |
Commitments and Contingencies (
Commitments and Contingencies (Details Narrative) - USD ($) | Jul. 27, 2018 | Jan. 30, 2017 | Dec. 31, 2018 | Dec. 31, 2016 | Dec. 31, 2015 |
Debt instrument face amount | $ 942,850 | $ 942,850 | |||
Proceeds from debt | $ 872,500 | $ 872,500 | |||
Value awarded to plaintiffs | $ 1,400,000 | ||||
Other expenses | $ 1,034,000 | ||||
New Agreement [Member] | |||||
Debt instrument maturity date | Dec. 31, 2019 | ||||
New Agreement [Member] | On or Before December 31, 2017 [Member] | |||||
Debt instrument face amount | $ 100,000 | ||||
Debt interest rate | 4.00% | ||||
Proceeds from debt | $ 2,500,000 | ||||
New Agreement [Member] | On or Before December 31, 2018 [Member] | |||||
Debt instrument face amount | $ 150,000 | ||||
Debt interest rate | 2.00% | ||||
Proceeds from debt | $ 2,500,000 | ||||
New Agreement [Member] | Thereafter [Member] | |||||
Debt interest rate | 4.00% | ||||
New Agreement [Member] | Greenberg [Member] | |||||
Debt instrument face amount | $ 1,117,574 | ||||
Debt interest rate | 6.00% | ||||
Conversion of debt into warrant | $ 150,000 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - USD ($) | Mar. 11, 2019 | Jan. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Revenue | $ 41,829 | |||
Equity method interest percentage | 50.00% | |||
Subsequent Event [Member] | ||||
Revenue | $ 550,000 | |||
Commitment description | Furthermore, the Acquirer is required to obtain a commitment for a bridge loan of not less than $1,250,000.00 to be funded upon the closing of the Acquisition and an equity infusion of at least $5,000,000.00 at a pre-money valuation of at least $15,000,000.00 to be funded upon the closing of the Acquisition. | |||
Subsequent Event [Member] | Acquirer's Designees [Member] | ||||
Equity method interest percentage | 80.00% | |||
Subsequent Event [Member] | Current Shareholders [Member] | ||||
Equity method interest percentage | 20.00% | |||
Subsequent Event [Member] | Former Officer [Member] | ||||
Number of common stock shares canceled | 8,000,000 |