Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2018 | Nov. 16, 2018 | |
Document And Entity Information | ||
Entity Registrant Name | Vystar Corp | |
Entity Central Index Key | 1,308,027 | |
Document Type | 10-Q | |
Trading Symbol | VYST | |
Document Period End Date | Sep. 30, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity's Reporting Status Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Stock, Shares Outstanding | 312,257,582 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2,018 | |
Entity Emerging Growth Company | false | |
Entity Small Business | true |
BALANCE SHEETS (unaudited)
BALANCE SHEETS (unaudited) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash | $ 191,192 | $ 13,502 |
Accounts receivable | 83,117 | 3,963 |
Inventories | 432,456 | |
Prepaid expenses | 160,950 | 166,091 |
Total current assets | 867,715 | 183,556 |
Property and equipment, net | 311,141 | 0 |
Other assets: | ||
Intangible assets, net | 2,228,663 | 123,882 |
Total assets | 3,407,519 | 307,438 |
Current liabilities: | ||
Related party line of credit | 1,499,875 | |
Accounts payable | 585,287 | 468,906 |
Accrued stock based compensation | 421,051 | 19,355 |
Shareholder and contingently convertible notes payable - current maturities | 404,297 | 674,990 |
Accrued expenses and interest payable | 146,750 | 294,995 |
Derivative and warrant liabilities | 296,241 | |
Total current liabilities | 1,853,626 | 2,958,121 |
Long-term liabilities: | ||
Loan payable Fidelity Bank | 500,000 | |
Related party loan | 1,499,875 | |
Shareholder and contingently convertible notes payable - net of current maturities | 95,000 | 206,683 |
Total long-term liabilities | 2,094,875 | 206,683 |
Total liabilities | 3,948,501 | 3,164,804 |
Stockholders' deficit: | ||
Preferred stock, $0.0001 par value 15,000,000 shares authorized; 13,828 issued and outstanding at September 30, 2018 and December 31, 2017,respectively | 1 | 1 |
Common stock, $0.0001 par value, 600,000,000 shares authorized; 272,969,463 and 132,809,218 shares issued and outstanding at September 30, 2018 and December 31, 2017, respectively | 27,297 | 13,280 |
Additional paid-in capital | 30,751,118 | 25,128,476 |
Accumulated deficit | (31,319,398) | (27,999,123) |
Total stockholders' deficit | (540,982) | (2,857,366) |
Total liabilities and stockholders' deficit | $ 3,407,519 | $ 307,438 |
BALANCE SHEETS (unaudited) (Par
BALANCE SHEETS (unaudited) (Parenthetical) - $ / shares | Sep. 30, 2018 | Dec. 31, 2017 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, authorized | 15,000,000 | 15,000,000 |
Preferred stock, issued | 13,828 | 13,828 |
Preferred stock, outstanding | 13,828 | 13,828 |
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, authorized | 600,000,000 | 600,000,000 |
Common stock, issued | 272,969,463 | 132,809,218 |
Common stock, outstanding | 272,969,463 | 132,809,218 |
STATEMENTS OF OPERATIONS (unaud
STATEMENTS OF OPERATIONS (unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Income Statement [Abstract] | ||||
Revenue | $ 187,543 | $ 5,400 | $ 250,516 | $ 11,723 |
Cost of revenue | 182,937 | 4,775 | 251,402 | 15,800 |
Gross profit (loss) | 4,606 | 625 | (886) | (4,077) |
Operating expenses: | ||||
General and administrative, including non-cash share-based compensation of $115,072 and $242,038 for the three months ended September 30, 2018 and 2017, respectively and $1,726,983 and $427,998 for the nine months ended September 30, 2018 and 2017, respectively. | 477,705 | 331,807 | 2,970,664 | 860,589 |
Loss from operations | (473,099) | (331,182) | (2,971,550) | (864,666) |
Other income (expense): | ||||
Other income | 78,513 | 326,237 | 78,513 | |
Interest (expense) | (476,847) | (43,710) | (579,597) | (128,943) |
Change in fair value of derivative liabilities | (95,365) | (95,365) | ||
Total other income (expense), net | (572,212) | 34,803 | (348,725) | (50,430) |
Loss from continuing operations | (1,045,311) | (296,379) | (3,320,275) | (915,096) |
Income from discontinued operations | 47,229 | 42,382 | ||
Net loss | $ (1,045,311) | $ (249,150) | $ (3,320,275) | $ (872,714) |
Basic and diluted loss per share: | ||||
Net loss per share (in dollars per share) | $ 0 | $ 0 | $ 0 | $ (0.01) |
Basic and diluted weighted average number of common shares outstanding | 239,105,306 | 127,657,923 | 194,316,108 | 122,514,759 |
STATEMENTS OF OPERATIONS (una_2
STATEMENTS OF OPERATIONS (unaudited) (Parenthetical) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Income Statement [Abstract] | ||||
Non-cash share-based compensation | $ 115,072 | $ 242,038 | $ 1,726,983 | $ 427,998 |
STATEMENTS OF CASH FLOWS (unaud
STATEMENTS OF CASH FLOWS (unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Cash flows from operating activities: | ||
Net loss | $ (3,320,275) | $ (872,714) |
Adjustments to reconcile net loss to cash used in operating activities: | ||
Share-based compensation | 1,726,983 | 427,998 |
Depreciation | 29,859 | |
Amortization of intangible assets | 126,653 | 11,760 |
Amortization of debt discount | 281,814 | |
Change in fair value and excess fair value of derivative liabilities | 242,788 | |
(Increase) decrease in assets: | ||
Accounts receivable | (79,154) | 11,930 |
Inventories | (228,865) | |
Prepaid expenses | 5,141 | (15,487) |
Increase (decrease) in liabilities: | ||
Accounts payable | 116,381 | (31,159) |
Accrued compensation and expenses | 27,238 | 53,541 |
Net cash used in operating activities | (1,071,437) | (414,131) |
Cash flows from investing activities: | ||
Patent and trademark fees | (4,423) | |
Cash flows from financing activities: | ||
Proceeds of Fidelity Bank loan | 500,000 | |
Issuance of common stock, net of costs | 384,500 | |
Proceeds from the issuance of notes, net | 753,550 | |
Net cash provided by financing activities | 1,253,550 | 384,500 |
Net increase (decrease) in cash | 177,690 | (29,631) |
Cash paid during the period for: | 13,502 | 36,282 |
Cash - end of period | 191,192 | 6,651 |
Cash paid during the period for | ||
Interest | 93,540 | 73,875 |
Non-cash transactions: | ||
Purchase of tangible and intangible assets | 2,786,602 | |
Shareholder notes and accrued interest converted to common stock | 1,029,581 | 55,470 |
Shares issued for accrued compensation | 1,125,000 | 214,167 |
Derivatives issued as debt discount | 419,559 | |
Reclass of derivative liabilities to additional paid-in capital | $ 340,616 |
DESCRIPTION OF BUSINESS
DESCRIPTION OF BUSINESS | 9 Months Ended |
Sep. 30, 2018 | |
Description Of Business | |
DESCRIPTION OF BUSINESS | NOTE 1 DESCRIPTION OF BUSINESS Vystar Corporation (“Vystar”, the “company”, “we”, “us”, or “our”) is the creator and exclusive owner of the innovative technology to produce Vytex® Natural Rubber Latex (“NRL”). Our global multi-patented technology reduces antigenic and total protein in natural rubber latex products to virtually undetectable levels. Vytex® NRL, our “ultra-low protein” natural rubber latex has been introduced throughout the worldwide marketplace that uses NRL or latex substitutes as a raw material for end products. Natural rubber latex or latex substitutes are used in an extensive range of products including balloons, textiles, footwear and clothing (threads), adhesives, foams (mattresses, pillows, mattress toppers, etc.), furniture (foam and adhesives), carpet, paints, coatings, protective equipment, sporting equipment, and, especially health care products such as condoms, surgical and exam gloves, among others. Vystar has expanded into the consumer arena with an introduction into mattresses, mattress toppers and pillows aligning with key foam manufacturers, producers of mattresses, toppers and pillows, and furniture stores in specific areas of the Unites States. On January 22, 2015, Vystar announced the signing of an exclusive domestic distribution agreement with Worcester, MA based NHS Holdings, LLC (NHS) who sources eco-friendly materials and technologies for use in furnishings and other markets. In September 2016, the Vystar Board of Directors voted to end the January 2015 NHS agreement and replace it with a global exclusive for foam manufactured with Vytex and sold into the home furnishings industry. This change reflects the global nature of the mattress, topper and pillow businesses, the need for local warehousing, and access to container loads of foam cores and pillows for domestic, European and Asian manufacturers. As of April 18, 2018, Vystar reacquired its distribution rights from NHS and purchased NHS's inventory and related assets and began selling and distributing the Vytex® NRL products itself. (See Note 10) |
BASIS OF PRESENTATION SUMMARY O
BASIS OF PRESENTATION SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
BASIS OF PRESENTATION SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying unaudited condensed financial statements (“the financial statements”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information. Accordingly, certain information and footnotes required by GAAP for complete financial statements may be condensed or omitted. These interim financial statements should be read in conjunction with our audited financial statements and notes thereto included in the Company's annual report on Form 10-K for the year ended December 31, 2017, filed with the Securities and Exchange Commission ("SEC"). In the opinion of Vystar management, these financial statements contain all adjustments (which comprise only normal and recurring accruals) necessary to present fairly the financial position and results of operations as of and for the periods ended September 30, 2018 and 2017. Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying disclosures. Although these estimates are based on management’s knowledge of current events and actions the Company may undertake in the future, actual results could differ from these estimates. Examples include valuation allowances for valuation of intangible assets acquired, realization and valuation of inventories and fair values of derivatives and share-based compensation. Concentration of Credit Risk Certain financial instruments potentially subject the Company to concentrations of credit risk. These financial instruments consist primarily of cash and accounts receivable. Cash held in banks in many cases exceeds the Federal Deposit Insurance Corporation, or FDIC, insurance limits. While we monitor our cash balances on a regular basis and adjust the balances as appropriate, these balances could be impacted if the underlying financial institutions fail. To date, we have experienced no loss or lack of access to our cash; however, we can provide no assurances that access to our cash will not be impacted by adverse conditions in the financial markets. Loss Per Share Because the Company reported a net loss for the nine-month periods ended September 30, 2018 and 2017, common stock equivalents, including stock options and warrants, were anti-dilutive; therefore, the amounts reported for basic and diluted loss per share were the same. Excluded from the computation of diluted loss per share were options outstanding to purchase 7,498,271 shares and 8,298,271 shares of common stock for the nine months ended September 30, 2018 and 2017, respectively, as their effect would be anti-dilutive. Warrants to purchase 14,831,069 and 16,469,582 shares of common stock for the nine months ended September 30, 2018 and 2017, respectively, were also excluded from the computation of diluted loss per share as their effect would be anti-dilutive. Acquisition of Assets Amounts paid for acquisitions are allocated to the assets acquired and liabilities assumed based on their estimated fair value at the date of acquisition. The fair value of identifiable intangible assets is based on valuations that use information and assumptions provided by management. Identifiable intangible assets with finite lives are amortized over their useful lives. Acquisition-related costs, including, legal, accounting, and other costs, are expensed in the periods in which the costs are incurred. The results of operations of acquired assets are included in the financial statements from the acquisition date. Inventories Inventory cost includes those costs directly attributable to the product before sale. Inventory consists of foam toppers, mattresses and pillows and is carried at the lower of cost or market (net realizable value), using first-in, first-out method. As of September 30, 2018, the Company had approximately $432,000 in finished goods inventory. At December 31, 2017 there was no inventory. Property and Equipment Property and equipment is recorded at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets ranging from three to seven years. Revenues Revenue Recognition On January 1, 2018, we adopted FASB Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers . We reviewed all contracts at the date of initial application and elected to use the modified retrospective transition method, where the cumulative effect of the initial application is recognized as an adjustment to opening retained earnings at January 1, 2018. Therefore, comparative prior periods have not been adjusted and continue to be reported under FASB ASC Topic 605, Revenue Recognition Our principal activities from which we generate our revenue are product sales. Revenue is measured based on considerations specified in a contract with a customer. A contract exists when it becomes a legally enforceable agreement with a customer. The contract is based on either the acceptance of standard terms and conditions on the websites for e-commerce customers and via telephone with our third-party call center for our print media and direct mail customers, or the execution of terms and conditions contracts with retailers and wholesalers. These contracts define each party's rights, payment terms and other contractual terms and conditions of the sale. Consideration is typically paid prior to shipment via credit card or check when our products are sold direct to consumers or approximately 30 days from the time control is transferred when sold to wholesalers, distributors and retailers. We apply judgment in determining the customer’s ability and intention to pay, which is based on a variety of factors including the customer’s historical payment experience and, in some circumstances, published credit and financial information pertaining to the customer. A performance obligation is a promise in a contract to transfer a distinct product to the customer, which for us is transfer of finished goods to our customers. Performance obligations promised in a contract are identified based on the goods that will be transferred to the customer that are both capable of being distinct and are distinct in the context of the contract, whereby the transfer of the goods is separately identifiable from other promises in the contract. We have concluded the sale of finished goods and related shipping and handling are accounted for as the single performance obligation. The transaction price of a contract is allocated to each distinct performance obligation and recognized as revenue when or as the customer receives the benefit of the performance obligation. The transaction price is determined based on the consideration to which we will be entitled to receive in exchange for transferring goods to the customer. We issue refunds to e-commerce and print media customers, upon request, within 30 days of delivery. We estimate the amount of potential refunds at each reporting period using a portfolio approach of historical data, adjusted for changes in expected customer experience, including seasonality and changes in economic factors. For retailers, distributors and wholesalers, we do not offer a right of return or refund and revenue is recognized at the time products are shipped to customers. In all cases, judgment is required in estimating these reserves. Actual claims for returns could be materially different from the estimates. Theere were no estimated reserves for sales returns and allowances at September 30, 2018 and December 31, 2017, respectively. We recognize revenue when we satisfy a performance obligation in a contract by transferring control over a product to a customer when product is shipped. Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by us from a customer, are excluded from revenue. Shipping and handling costs associated with outbound freight after control over a product has transferred to a customer are accounted for as a fulfillment cost and are included in cost of product sales. Advertising Costs Advertising costs are expensed as incurred. Included in general and administrative expenses is approximately $52,000 and $3,000 for the nine months ended September 30, 2018 and 2017, respectively and $18,000 and $2,000 for the three months ended September 30, 2018 and 2017, respectively. Fair Value of Financial Instruments The Company’s financial instruments consist of cash, accounts receivable, accounts payable, accrued expenses, line of credit and shareholder notes payable. The carrying values of all the Company’s financial instruments approximate fair value because of their short maturities. In addition to the short maturities, the carrying amounts of our line of credit and shareholder notes payable approximate fair value because the interest rates at September 30, 2018 approximate market interest rates for the respective borrowings. In specific circumstances, certain assets and liabilities are reported or disclosed at fair value. Fair value is the exit price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in the Company's principal market for such transactions. If there is not an established principal market, fair value is derived from the most advantageous market. Valuation inputs are classified in the following hierarchy: ● Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities. ● Level 2 inputs are directly or indirectly observable valuation inputs for the asset or liability, excluding Level 1 inputs. ● Level 3 inputs are unobservable inputs for the asset or liability. Highest priority is given to Level 1 inputs and the lowest priority to Level 3 inputs. Acceptable valuation techniques include the market approach, income approach, and cost approach. In some cases, more than one valuation technique is used. Recent Accounting Pronouncements In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820), Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement In June 2018, the FASB issued ASU 2018-07, Compensation - Stock Compensation (Topic 718) 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): Accounting for Certain Financial Instruments with Down Round Features In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business |
LIQUIDITY AND GOING CONCERN
LIQUIDITY AND GOING CONCERN | 9 Months Ended |
Sep. 30, 2018 | |
Liquidity And Going Concern | |
LIQUIDITY AND GOING CONCERN | NOTE 3 LIQUIDITY AND GOING CONCERN The Company's financial statements are prepared using the accrual method of accounting in accordance with GAAP and have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities in the normal course of business. However, the Company has incurred significant losses and experienced negative cash flow from operations since its inception. At September 30, 2018, the Company had cash of $191,000 and a deficit in working capital of approximately $986,000. Further, at September 30, 2018, the accumulated deficit amounted to approximately $31 million. As a result of the Company's history of losses and financial condition, there is substantial doubt about the ability of the Company to continue as a going concern. A successful transition to attaining profitable operations is dependent upon obtaining sufficient revenues from our recent acquisitions in the second quarter of 2018 and financing to fund the Company’s planned expenses and achieving a level of revenue adequate to support the Company’s cost structure. Management plans to finance future operations through the use of cash on hand, increased revenue from the sale of Vytex NRL products, Vytex division license fees, our credit facility, stock warrant exercises from existing shareholders and raising capital through private placements of capital stock and debt. The Company’s future expenditures will depend on numerous factors, including: the rate at which the Company can introduce and license Vytex NRL to manufacturers; the costs of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights; market acceptance of the Company’s products and services; revenue from the sale of Vytex NRL products; and competing technological developments. As the Company expands its activities and operations, cash requirements are expected to increase at a rate consistent with revenue growth after the Company has achieved sustained revenue generation. There can be no assurances that the Company will be able to achieve its projected level of revenue in 2018 and beyond. If the Company is unable to achieve its projected revenue and is not able to obtain alternate additional financing of equity or debt, the Company would need to significantly reorient its operations during 2018, which could have a material adverse effect on the Company’s ability to achieve its business objectives and as a result may require the Company to file for bankruptcy or cease operations. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts classified as liabilities that might be necessary should the Company be forced to take any such actions. |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 9 Months Ended |
Sep. 30, 2018 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | NOTE 4 PROPERTY AND EQUIPMENT Property and equipment, net consists of: September 30, December 31, 2018 2017 Tooling and testing equipment $ 319,000 $ — Warehouse equipment 22,000 — Furniture and fixtures 8,522 8,522 349,522 8,522 Accumulated depreciation (38,381 ) (8,522 ) Property and equipment, net $ 311,141 $ — Depreciation for the nine and three months ended September 30, 2018 was $29,859 and $3,465 respectively. There was no depreciation for the nine or three months ended September 30, 2017. |
INTANGIBLE ASSETS
INTANGIBLE ASSETS | 9 Months Ended |
Sep. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
INTANGIBLE ASSETS | NOTE 5 INTANGIBLE ASSETS Intangible assets consists of the following as of September 30, 2018: Gross Carrying Amount Accumulated Amortization Net Intangible Assets Amortization Period Amortized intangible assets Customer relationships $ 250,000 $ 22,917 $ 227,083 5 Website 156,000 14,625 141,375 4 FDA Certification 650,000 48,750 601,250 5 Patents 440,294 148,001 292,293 6 - 20 Drawings, mechanical engineering and software 214,670 16,101 198,569 5 Total Amortized Intangibles 1,710,964 250,394 1,460,570 Indefinite-lived intangible assets Reacquired distribution rights 481,341 — 481,341 Tradename and brand 286,752 — 286,752 Total Intangible Assets $ 2,479,057 $ 250,394 $ 2,228,663 Patents represent legal and other fees associated with the registration of patents. The Company has multiple patents with the United States Patent and Trade Office (USPTO), as well as many international PCT (Patent Cooperation Treaty) patents. Amortization expense for the three months ended September 30, 2018 and 2017 was $70,862 and $3,920, respectively. Amortization expense for the nine months ended September 30, 2018 and 2017 was $126,653 and $11,760, respectively. Estimated future amortization expense for finite-lived intangible assets is as follows: 2019 2020 2021 2022 2023 Thereafter Intangible assets $ 310,947 $ 310,947 $ 310,947 $ 296,322 $ 184,129 $ 47,278 |
NOTES PAYABLE AND LOAN FACILITY
NOTES PAYABLE AND LOAN FACILITY | 9 Months Ended |
Sep. 30, 2018 | |
Debt Disclosure [Abstract] | |
NOTES PAYABLE AND LOAN FACILITY | NOTE 6 NOTES PAYABLE AND LOAN FACILITY Related Party Line Loan (CMA Note Payable) On November, 2, 2012, the Company executed a $1,500,000 unsecured line of credit agreement with CMA Investments, LLC, a related party and a Georgia limited liability company (the “CMA Note”). Three of the directors of the Company (“CMA directors”) were initially the members of the CMA. Pursuant to the terms of the CMA Note, interest is computed at LIBOR plus 5.25% (8.22% at September 30, 2018), on amounts drawn and fees. The weighted average interest rate in effect on the borrowings for the nine months ended September 30, 2018 was 7.99%. There are no available borrowings under the CMA note at September 30, 2018. The holders of CMA Investments, LLC agreed as of July 10, 2018, to change the terms of the debt as follows: ● The Company will continue to service the debt for the next six months. ● The Company issued 15 million shares in escrow which CMA could start to sell at the end of the six month period, at their discretion to bring down the debt over the next four years. In the event that the total value received upon the sale of the shares was less than the total obligation the Company shall either issue additional shares or pay in cash the shortfall. ● This debt is now considered long-term. During the nine and three months ended September 30, 2018, the Company recorded approximately $90,000 and $30,000 respectively of interest expense and at September 30, 2018, approximately $9,000 is included in accrued expenses and interest payable. During the nine and three months ended September 30, 2017, the Company recorded approximately $72,000 and $25,000 respectively of interest expense and at September 30, 2017, approximately $8,100 is included in accrued expense and interest payable. Fidelity Bank Note Payable During the nine months ended September 30, 2018 certain investors have guaranteed $100,000 each with Fidelity Bank to establish a $500,000 revolving line of credit. At the present time, the Company is paying interest only at a rate of 4.5% per annum, with a balloon payment of $500,000 due in 2033. Shareholder, Convertible and Contingently Convertible Notes Payable The following table summarizes shareholder, convertible and contingently convertible notes payable: September 30, December 31, 2018 2017 Shareholder, convertible and contingently convertible notes $ 860,669 $ 881,673 Accrued interest 25,307 294,995 Total notes and accrued interest 885,976 1,176,668 Less - Accrued interest (25,307 ) (294,995 ) - Debt discount (180,686 ) — - Current maturities (584,983 ) (674,990 ) Long-term portion $ 95,000 $ 206,683 Convertible and Contingently Convertible Notes Payable From January 1, 2018 and through the date of these financial statements, the Company has issued certain convertible and contingently convertible promissory notes in varying amounts, in the aggregate of $607,500. The face amount of the notes represents the amount due at maturity along with the accrued interest, at which time that amount may be converted into shares of the Company stock based on the lowest 2 day closing price for the trailing 20 days prior to conversion and carrying a 35% discount. The contingently convertible notes provide for interest to accrue at an interest rate equal to 12% per annum or the maximum rate permitted under applicable law after the occurrence of any event of default as provided in the notes. At any time after 180 days from the issue date, the holder, at its option, may convert the outstanding principal balance and accrued interest into shares of common stock of the Company. The initial conversion price for the principal and interest in connection with voluntary conversions by a holder of the convertible notes ranges from $0.05 to $0.10 per share, subject to adjustment as provided therein. If the total outstanding balance of the contingent convertible notes were convertible as of September 30, 2018, they would have been convertible into approximately 26 million shares of the Company’s common stock. Based on the variable conversion price, the Company recorded initial derivative liabilities of $541,492, debt discount of $394,069 and interest expense related to the excess fair value of $147,423 upon the date such notes became convertible. In connection with the issuance of the convertible notes, the Company issued warrants to purchase 411,875 shares of the Company’s common stock. The exercise term of the warrants range from issuance to any time on or after the six (6) month anniversary or prior to the maturity of the related note. The exercise price of the warrants is $0.40 per share of the Company’s common stock, as may be adjusted from time to time pursuant to the antidilution provisions of the related warrant. Pursuant to ASU 2017-11, such antidilution features do not subject the Company to derivative accounting pursuant to ASC815. Peak One Opportunity Fund, L.P. During the quarter the Company entered into a financing agreement with Peak One Opportunity Fund, L.P. to receive $435,000 of original issue discount notes in three tranches as follows: 1. July 17, 2018 principal $85,000 with an imputed interest rate of 6%, discounted by 10% and $5,000 for legal fees for a net of $71,500 due three years from the funding date. The Company has the option of receiving two additional amounts ninety days apart; 2. September 14, 2018 $150,000 principal $135,000 net 3. November 13, 2018 a final $200,000 principal $180,000 net. Peak One is entitled to convert the note into common stock at a price equal to 65% of the lowest traded price for the twenty trading days immediately preceding the date of the date of conversion. The Company has the option to redeem the note at varying prices based upon the redemption date. An initial derivative liability of $130,769 was recorded for this note. As of November 16, 2018, only the first tranche had been received and none of it had been converted to stock. Crown Bridge Partners, LLC During the quarter the Company entered into a financing agreement with Crown Bridge Partners, LLC to receive $100,000 of original issue discount notes in two tranches as follows: 1. August 6, 2018 principal $50,000 bearing interest at 8%, discounted by 10% and $2,000 for legal fees for a net of $43,000 due one year from the funding date; 2. The remaining tranche may be funded at the holder's discretion. Crown Bridge is entitled to convert the note into common stock at a price equal to 65% of the average of the two lowest traded prices for the twenty-five trading days immediately preceding the date of the date of conversion. An initial derivative liability of $51,282 was recorded for this note. As of November 16, 2018, only the first tranche had been received and none of it had been converted to stock. In addition, the following notes are convertible after six months from the issue date: Face Interest Net Cash Amount Issue Date and Name Amount Rate Maturity Proceeds Converted Jan 29, 2018 EMA $ 80,000 12 % Jan 29, 2019 $ 72,300 $ 24,640 Feb 14, 2018 Auctus 80,000 12 % Nov 14, 2018 72,500 58,850 Feb 13, 2018 FirstFire Global 76,500 5 % Nov 13, 2018 72,500 62,375 May 23, 2018 Power Up 83,000 12 % May 23, 2019 80,000 — Jun 25, 2018 Power Up 68,000 12 % Jun 25, 2019 65,000 — During the three months ended September 30, 2018 approximately $230,000 of the convertible notes and approximately $15,000 of accrued interest were exchanged for approximately 37,336,000 shares of common stock. In addition, approximately $75,000 of the notes have been subsequently converted to approximately 24,288,000 of common stock. Shareholder Notes From January 1, 2018 to February 9, 2018, the Company issued contingently convertible promissory notes (the “Notes”) for contract work performed by other entities, and in lieu of compensation and expense reimbursement in the amount of $195,635. The Notes are (i) unsecured, (ii) bear interest at an annual rate of five percent (5%) per annum from date of issuance, and (iii) are convertible at the Company's option post April 19, 2018. The Notes mature one year from issuance but may be extended one (1) additional year by the Company. If converted, the Notes plus accrued interest are convertible into shares of the Company’s common stock at the prior twenty (20) day average closing price with a 50% discount. |
DERIVTIVE LIABILITIES
DERIVTIVE LIABILITIES | 9 Months Ended |
Sep. 30, 2018 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
DERIVTIVE LIABILITIES | NOTE 7 DERIVATIVE LIABILITIES As of September 30, 2018, the Company had a $296,241 derivative liability balance on the balance sheet and recorded a loss from derivative fair value adjustments of $95,365 during the nine months ended September 30, 2018. The derivative liability activity comes from the convertible notes payable. The Company analyzed the conversion features and warrants of the various note agreements for derivative accounting consideration under ASC 815-15 "Derivatives and Hedging" and determined that the embedded conversion features should be classified as a derivative because the exercise price of these convertible notes are subject to a variable conversion rate. The Company has determined that the conversion feature is not considered to be solely indexed to the Company's own stock and is therefore not afforded equity treatment. In accordance with AC 815, the Company has bifurcated the conversion feature of the notes and recorded a derivative liability. The embedded derivatives for the notes are carried on the Company's balance sheet at fair value. The derivative liability is marked-to-market each measurement period and any unrealized change in fair value is recorded as a component of the statement of operations and the associated fair value carrying amount on the balance sheet is adjusted by the change. The Company fair values the embedded derivative using the Black-Scholes option pricing model. The conversion feature is valued at the date the feature can be convertible which ranges from the issuance date of the note to 180 days after the issue date. The following table summarizes the derivative liabilities included in the balance sheet at September 30, 2018: Fair Value of Embedded Derivative and Warrant Liabilities: Balance, December 31, 2017 $ — Initial measurement of liabilities 541,492 Change in fair value 95,365 Reclassification due to conversion (340,616 ) Balance, September 30, 2018 $ 296,241 |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 9 Months Ended |
Sep. 30, 2018 | |
Stockholders' Equity Note [Abstract] | |
STOCKHOLDERS' EQUITY | NOTE 8 STOCKHOLDERS’ EQUITY Common Stock and Warrants On June 30, 2016, the Company issued 997,466 common shares as compensation under the Company’s Business Development Agreement with Blue Oar Consulting, Inc. executed in March 2013 as amended in August 2013, as amended in February 2014, as amended in June 2016. On April 27, 2018, 7,500,000 shares were issued under the same agreement, as amended January 3, 2018. The Company recorded an expense of $375,000 for these shares. In addition, the Company accrued approximately $225,000, which approximates the fair value of the additional common stock compensation earned during 2018, included in the terms of the agreement, on the measured dates (included in accrued stock based compensation on the condensed balance sheet). This agreement will remain in force unless terminated by either party after twelve months from the date of the agreement, upon thirty days prior written notice to the other party. Also, $175,000 has been recorded in accounts payable during the current year for fees due to Blue Oar as of December 31, 2017. The balance due as of September 30, 2018 was $152,500. On April 27, 2018, the Company issued 300,000 common shares as compensation under the Company’s Business Development Agreement with Designcenters.com with an effective date of January 3, 2018. The Company recorded an expense of $15,000 for these shares. In addition, the Company accrued approximately $116,000, which approximates the fair value of the additional common stock compensation, included in the terms of the agreement, on the measured dates (included in accrued stock based compensation on the condensed balance sheet). The terms of this agreement will remain in force unless terminated by either party after nine months from the effective date, upon thirty days prior written notice to the other party. During the three months ended September 30, 2018 the majority of Designcenters' compensation was paid in cash in lieu of shares (see Note 11). On April 27, 2018, the Company issued 11,000,000 common shares as a signing bonus under an employment agreement to the CEO Steven Rotman with an effective date of January 3, 2018. The Company recorded an expense of $385,000 for these shares. On April 27, 2018, the Company issued 3,721,408 common shares as compensation under the Company’s Business Development Agreement with Anchor Group, LLC with an effective date of January 3, 2018. The Company recorded an expense of $165,000 for these shares. In addition the Company accrued approximately $80,000, which approximates the fair value of the additional common stock, included in the terms of the agreement, on the measured dates (included in accrued stock based compensation on the condensed balance sheet). The terms of this agreement will remain in force unless terminated by either party after nine months from the effective date, upon thirty days prior written notice to the other party. During the three months ended September 30, 2018 the majority of Anchor Group's compensation was paid in cash in lieu of shares. Other Shares Issued On February 5, 2018, the Company issued 1,500,000 shares under the terms of a Consulting Agreement dated January 26, 2018 to STILLH20s Financial, LLC. The shares were valued at $150,000 (based on the value of the shares on the measurement date and expensed during the three months ended March 31, 2018). On April 9, 2018, the Company issued 428,571 shares under the terms of a Consulting Agreement dated April 9, 2018 to vSource1 Capital Corporation. The shares were valued at $15,000 (based on the value of the shares on the measurement date and expensed during the three months ended June 30, 2018). Cumulative Convertible Preferred Stock On May 2, 2013, the Company began a private placement offering to sell up to 200,000 shares of the Company’s 10% Series A Cumulative Convertible Preferred Stock. Under the terms of the offering, the Company offered to sell up to 200,000 shares of preferred stock at $10.00 per share for a value of $2,000,000. The preferred stock accumulates a 10% per annum dividend and was convertible at a conversion price of $0.075 per common share at the option of the holder after a nine-month holding period. The conversion price was lowered to $0.05 per common share for those holders who invested an additional $25,000 or more in the Company’s common stock in the aforementioned September 2014 Private Placement. The preferred shares have full voting rights as if converted and have a fully participating liquidation preference. At September 30, 2018, the 13,828 shares of outstanding preferred stock had accumulated undeclared dividends of approximately $74,000 and could be converted into 4,244,829 shares of common stock, at the option of the holder. At December 31, 2017, the 13,828 shares of outstanding preferred stock had accumulated undeclared dividends of approximately $63,600 and could be converted into 4,037,977 shares of common stock, at the option of the holder. |
SHARE-BASED COMPENSATION
SHARE-BASED COMPENSATION | 9 Months Ended |
Sep. 30, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
SHARE-BASED COMPENSATION | NOTE 9 SHARE-BASED COMPENSATION GAAP requires share-based payments to employees, including grants of employee stock options, warrants, and common stock to be recognized in the income statement based on their fair values at the date of grant, net of estimated forfeitures. In total, the Company recorded approximately $115,000 and $242,000 of stock-based compensation expense for the three-month period ended September 30, 2018 and 2017, respectively, and approximately $1,727,000 and $428,000 of stock-based compensation for the nine-month period ended September 30, 2018 and 2017, respectively, including shares to be issued related to consultants and board member stock options and common stock and warrants issued to non-employees. As of September 30, 2018, approximately $118,000 of unrecognized compensation expense related to non-vested share-based awards remains to be recognized over a period of approximately four years. Options and Warrants The Company used the Black-Scholes option pricing model to estimate the grant-date fair value of option and warrant awards granted. The following assumptions were used for warrant awards during the nine months ended September 30, 2018: ● Expected Dividend Yield – because we do not currently pay dividends, the expected dividend yield is zero; ● Expected Volatility in Stock Price – volatility based on our own trading activity was used to determine expected volatility; ● Risk-free Interest Rate – reflects the average rate on a United States Treasury Bond with a maturity equal to the expected term of the option; and ● Expected Life of Award – because we have minimal experience with the exercise of options or warrants for use in determining the expected life of each award, we used the option or warrant’s contractual term as the expected life. Options During 2004, the Board of Directors of the Company adopted a stock option plan (the “Plan”) and authorized up to 4,000,000 shares to be issued under the Plan. In April 2009, the Company’s Board of Directors authorized an increase in the number of shares to be issued under the Plan to 10,000,000 shares and to include the independent Board Members in the Plan in lieu of continuing the previous practice of granting warrants each quarter to independent Board Members for services. At September 30, 2018, there were 2,251,729 shares of common stock available for issuance under the Plan. In 2014, the Board adopted an additional stock option plan which provides for an additional 5,000,000 shares which are all available as of September 30, 2018. The Plan is intended to permit stock options granted to employees to qualify as incentive stock options under Section 422 of the Internal Revenue Code of 1986, as amended (“Incentive Stock Options”). All options granted under the Plan that are not intended to qualify as Incentive Stock Options are deemed to be non-qualified options. Stock options are granted at an exercise price equal to the fair market value of the Company’s common stock on the date of grant, typically vest over periods up to 4 years and are typically exercisable up to 10 years. There were no options granted during the nine-month period ended September 30, 2018. The following table summarizes all stock option activity of the Company for the period. Number Weighted Weighted Average (Years) Outstanding, December 31, 2017 7,748,271 $ 0.16 4.43 Granted — Exercised — Expired (250,000 ) $ 0.68 Outstanding, September 30, 2018 7,498,271 $ 0.13 4.10 Exercisable, September 30, 2018 5,383,271 $ 0.19 5.29 The aggregate intrinsic value of the options outstanding at September 30, 2018 was approximately $4,000. Warrants Warrants are issued to employees for expenses and for compensation in lieu of cash as well as to third parties as payment for services and in conjunction with the issuance of convertible notes and common stock. The fair value of each common stock warrant issued is estimated on the date of grant using the Black-Scholes option pricing model. The weighted-average assumptions used in the option pricing model for stock warrant grants were as follows: 2018 Expected Dividend Yield 0.00 % Expected Volatility in Stock Price 309.69 % Risk-Free Interest Rate 3.05 % Expected Life of Awards - Years 6.86 The following table represents the Company’s warrant activity for the nine months ended September 30, 2018: Number Weighted Weighted Price Weighted (Years) Outstanding, December 31, 2017 14,699,582 $ 0.10 6.10 Exercisable, December 31, 2017 14,699,582 Granted 411,875 0.05 $ 0.40 3.90 Exercised — — — Forfeited — — — Expired (155,388 ) — $ 0.90 Outstanding, September 30, 2018 14,956,069 $ 0.08 4.73 Exercisable, September 30, 2018 14,956,069 $ 0.08 4.73 |
ASSET PURCHASE
ASSET PURCHASE | 9 Months Ended |
Sep. 30, 2018 | |
Business Combinations [Abstract] | |
ASSET PURCHASE | NOTE 10 ASSET PURCHASE NHS Holdings, LLC The Company issued 27,769,500 shares of its restricted common stock valued at approximately $972,000 based on the closing price of the Company’s common stock on April 18, 2018 in exchange for certain assets of NHS Holdings, LLC (NHS), the exclusive U.S. distributorship of Vystar's Vytex® virtually allergen-, VOC-, and odor-free natural rubber latex (NRL) foam. All shares of restricted common stock issued in conjunction with this transaction will be held in escrow for a minimum of nine months to secure certain potential indemnification obligations of NHS. Such shares will be voted by NHS while they are held in escrow. As the exclusive global distributor of Vytex® in the home furnishing goods market, NHS worked extensively with NRL producers to create Vytex® foam products for the bedding industry. NHS was instrumental in introducing these products to manufacturers for use in mattresses, pillows and other bedding products. In addition, NHS was the non-exclusive, global distributor of products in other industries utilizing the Vytex® NRL process. Reacquiring the Vytex® distribution rights from NHS is expected to stimulate sales by lowering the cost of Vytex® to the manufacturer as a result of eliminating the middleman which will allow the Company to realize the entire gross margin on the sale rather than a 7% royalty on the cost of the product to NHS previously provided in the distribution agreement. The following summarizes the transaction with NHS Holdings, LLC at closing on April 18, 2018: Cash $ 15,000 Inventory 203,591 Property and equipment 22,000 Intangible assets 731,341 Total assets $ 971,932 Net purchase (fair value of common stock issued) $ 971,932 In determining the fair value of the intangible assets, the Company considered, among other factors, the best use of acquired assets such as the reacquired distribution rights, customer relationships, analysis of historical financial performance of the products and estimates of future performance of the products and intellectual properties acquired. The preliminary establishment of the allocation to identifiable intangible assets required extensive use of financial information and management's best estimate of fair value. The Company has preliminarily recorded the purchase price of the identified intangible assets and is, if applicable, amortizing such assets over their estimated useful lives of five years. The Company is in the process of finalizing the purchase price allocation and this preliminary allocation is subject to adjustment. Accordingly, differences between these preliminary estimates and the final allocation to the intangible assets may occur and these differences could have a material impact on the accompanying financial statements. NHS Related Parties NHS’s largest membership interest owners are also major investors and in some cases affiliates and/or reporting insiders of the Company. NHS major shareholders include: ● Steven Rotman, President, CEO, and interim CFO of the Company and member of the Company's Board of Directors ● Dr. Keith Osborn, MD; member of the Company's Board of Directors, orthopedic spine surgeon; ● Dr. Bryan Stone, MD; member of the Company's Board of Directors, nephrologists and CEO of Fluid Energy Conversion. UV Flu Technologies, Inc. Effective May 7, 2018, nine (9) shareholders of the Company, consented to purchase substantially all the assets of UV Flu Technologies, Inc., a Nevada corporation (“UV Flu”). The consents were submitted pursuant to Rule 14(a)-2(b) (2) promulgated under the Securities and Exchange Act of 1934, as amended. Such Rule provides that other than certain proxy solicitation rules which were either complied with or were otherwise not applicable to the consents submitted to the Company, the proxy solicitation rules set forth in SEC Regulation 14A do not apply to “[any] solicitation made otherwise than on behalf of the registrant where the total number of persons being solicited is not more than ten.” The Company has been presented with written consents which include (a) an approved form of Asset Purchase Agreement between the Company and UV Flu with respect to the purchase of substantially all the assets of UV Flu. The Common Stock held by the consenting shareholders totaled 118,211,379 shares or approximately 52.8% of the total outstanding shares of Common Stock of the Company. Pursuant to the Asset Purchase Agreement, the purchase of substantially all assets of UV Flu was consummated on May 7, 2018. Vystar acquired all UV Flu intellectual property and two patents, product lines, tooling, FDA clearances, research data, websites and other assets for the purchase price of $1,814,670 or 27,918,000 shares of Vystar restricted common stock which may not be assigned or sold by UV Flu for twelve months. Vystar will continue production of UV Flu product lines with Blue Ocean Innovation, Ltd., a world-class manufacturer. The first container of product received into inventory by the end of November. Vystar plans to sell RxAir residential units via online and retail channels. Vystar is assembling the distribution network to relaunch sales of UV400 and Rx3000 units to the healthcare and medical markets, which UV Flu had ceased due to sales force, distribution and cash flow constraints. All shares of restricted common stock issued to UV Flu at closing will be held for a minimum of one year before sale or distribution of such shares to the UV Flu shareholders and will be voted consistent with the vote of the Company’s other shareholders until such distribution. The following summarizes the transaction with UV Flu at closing on May 7, 2018: Property and equipment $ 319,000 Intangible assets 1,495,670 Total assets $ 1,814,670 Net purchase (fair value of common stock issued) $ 1,814,670 In determining the fair value of the intangible assets, the Company considered, among other factors, the best use of acquired assets such as tooling and testing equipment, analysis of historical financial performance of the products and estimates of future performance of the products and intellectual properties acquired. The fair values of the identified intangible assets related to the website, FDA Certification, tradename and branding and the Company has preliminarily recorded the purchase price of the identified intangible assets. The Company is in the process of finalizing the purchase price allocation and this preliminary allocation is subject to adjustment. Accordingly, differences between these preliminary estimates and the final allocation to the intangible assets may occur and these differences could have a material impact on the accompanying financial statements. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 9 Months Ended |
Sep. 30, 2018 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 11 RELATED PARTY TRANSACTIONS Designcenters.com This entity is owned by Jamie Rotman, who is the daughter of the Company's CEO, Steven Rotman. Designcenters provides bookkeeping and management services to the Company. In exchange for such services, the Company has entered into a consulting agreement with the related party entity. Compensation of approximately $21,000 was paid in cash during the three months ended September 30, 2018 (see Note 8). Blue Oar Consulting, Inc. This entity is owned by Gregory Rotman, who is the son of the Company's CEO, Steven Rotman. Blue Oar provides business consulting services to the Company. In exchange for such services, the Company has entered into a consulting agreement with the related party entity (see Note 8). In addition to stock-based compensation beginning April 2018, Blue Oar received $15,000 monthly in cash compensation for consulting services. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2018 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 12 SUBSEQUENT EVENTS The Company has received an executed written consent from a majority of shareholders of the Company’s common stock with respect to taking the following actions: 1. To approve the Resolutions to amend the Corporation’s Articles of Incorporation to increase the authorized shares of common stock to 975,000,000; 2. To create a Class A Preferred Shares and to (i) set aside 300 shares for such class, (ii) to provide voting approval as a separate class on all matters, (iii) to provide 40% voting approval when joining with the common stock as of the date of issuance on all matters, (iv) permit the redemption of all but one share no earlier than two years after the date of issuance, in the Corporation’s sole discretion, at a redemption price of $75,000 (for 299 shares) per year, each subject to the continuation by holder of a guaranty on $3 million in debt for the benefit of the Corporation (such guaranty being several but not joint); 3. To create a Class B Preferred Shares and (i) to set aside 50 shares for such class, (ii) to provide 20% voting approval when joining with the common stock as of the date of issuance on all matters, (iii) permit the redemption of all shares no earlier than two years after the date of issuance, in the Corporation’s sole discretion, at a redemption price of $50,000 (for 50 shares) per year, each subject to the continuation by holder of a guaranty on $500,000 in debt for the benefit of the Corporation (such guaranty being several but not joint); 4. To create Class C Preferred Shares and (i) to set aside 300 shares for such class, (ii) to provide 10% voting approval when joining with the common stock as of the date of issuance on all matters, (iii) permit the redemption of all shares no earlier than two years after the date of issuance, in the Corporation’s sole discretion, at a redemption price of $150,000 (for 300 shares) per year, each subject to the continuation by holder of a guaranty on $3 million in debt for the benefit of the Corporation (such guaranty being several but not joint); 5. To approve the Resolutions to amend the Corporation’s Articles of Incorporation to change the name of the Corporation to “Vytex Corporation”; 6. To authorize a reverse stock split of the common stock of the Corporation at any time over the next 12 months in the Board’s discretion, at a range from 5:1 through 50:1; 7. To authorize a raise in capital for up to $2 million in convertible notes; 8. To approve the Resolutions to acquire from 58% to 100% of the shares of Murida Furniture Co., Inc. dba Rotman’s; and 9. To approve the Resolutions to acquire substantially all assets of Fluid Energy Conversion in consideration of a $100,000 convertible note pursuant to the Asset Purchase Agreement. During the period October 1, 2018 through the date of these statements an additional 24,288,119 shares of common stock were issued on convertible notes and 15,000,000 shares of common stock for CMA were still being held in escrow. |
BASIS OF PRESENTATION SUMMARY_2
BASIS OF PRESENTATION SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed financial statements (“the financial statements”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information. Accordingly, certain information and footnotes required by GAAP for complete financial statements may be condensed or omitted. These interim financial statements should be read in conjunction with our audited financial statements and notes thereto included in the Company's annual report on Form 10-K for the year ended December 31, 2017, filed with the Securities and Exchange Commission ("SEC"). In the opinion of Vystar management, these financial statements contain all adjustments (which comprise only normal and recurring accruals) necessary to present fairly the financial position and results of operations as of and for the periods ended September 30, 2018 and 2017. |
Estimates | Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying disclosures. Although these estimates are based on management’s knowledge of current events and actions the Company may undertake in the future, actual results could differ from these estimates. Examples include valuation allowances for valuation of intangible assets acquired, realization and valuation of inventories and fair values of derivatives and share-based compensation. |
Concentration of Credit Risk | Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying disclosures. Although these estimates are based on management’s knowledge of current events and actions the Company may undertake in the future, actual results could differ from these estimates. Examples include valuation allowances for valuation of intangible assets acquired, realization and valuation of inventories and fair values of derivatives and share-based compensation. |
Loss Per Share | Loss Per Share Because the Company reported a net loss for the nine-month periods ended September 30, 2018 and 2017, common stock equivalents, including stock options and warrants, were anti-dilutive; therefore, the amounts reported for basic and diluted loss per share were the same. Excluded from the computation of diluted loss per share were options outstanding to purchase 7,498,271 shares and 8,298,271 shares of common stock for the nine months ended September 30, 2018 and 2017, respectively, as their effect would be anti-dilutive. Warrants to purchase 14,831,069 and 16,469,582 shares of common stock for the nine months ended September 30, 2018 and 2017, respectively, were also excluded from the computation of diluted loss per share as their effect would be anti-dilutive. |
Acquisition of Assets | Acquisition of Assets Amounts paid for acquisitions are allocated to the assets acquired and liabilities assumed based on their estimated fair value at the date of acquisition. The fair value of identifiable intangible assets is based on valuations that use information and assumptions provided by management. Identifiable intangible assets with finite lives are amortized over their useful lives. Acquisition-related costs, including, legal, accounting, and other costs, are expensed in the periods in which the costs are incurred. The results of operations of acquired assets are included in the financial statements from the acquisition date. |
Inventories | Inventories Inventory cost includes those costs directly attributable to the product before sale. Inventory consists of foam toppers, mattresses and pillows and is carried at the lower of cost or market (net realizable value), using first-in, first-out method. As of September 30, 2018, the Company had approximately $432,000 in finished goods inventory. At December 31, 2017 there was no inventory. |
Property and Equipment | Property and Equipment Property and equipment is recorded at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets ranging from three to seven years. |
Revenues | Revenues Revenue Recognition On January 1, 2018, we adopted FASB Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers . We reviewed all contracts at the date of initial application and elected to use the modified retrospective transition method, where the cumulative effect of the initial application is recognized as an adjustment to opening retained earnings at January 1, 2018. Therefore, comparative prior periods have not been adjusted and continue to be reported under FASB ASC Topic 605, Revenue Recognition Our principal activities from which we generate our revenue are product sales. Revenue is measured based on considerations specified in a contract with a customer. A contract exists when it becomes a legally enforceable agreement with a customer. The contract is based on either the acceptance of standard terms and conditions on the websites for e-commerce customers and via telephone with our third-party call center for our print media and direct mail customers, or the execution of terms and conditions contracts with retailers and wholesalers. These contracts define each party's rights, payment terms and other contractual terms and conditions of the sale. Consideration is typically paid prior to shipment via credit card or check when our products are sold direct to consumers or approximately 30 days from the time control is transferred when sold to wholesalers, distributors and retailers. We apply judgment in determining the customer’s ability and intention to pay, which is based on a variety of factors including the customer’s historical payment experience and, in some circumstances, published credit and financial information pertaining to the customer. A performance obligation is a promise in a contract to transfer a distinct product to the customer, which for us is transfer of finished goods to our customers. Performance obligations promised in a contract are identified based on the goods that will be transferred to the customer that are both capable of being distinct and are distinct in the context of the contract, whereby the transfer of the goods is separately identifiable from other promises in the contract. We have concluded the sale of finished goods and related shipping and handling are accounted for as the single performance obligation. The transaction price of a contract is allocated to each distinct performance obligation and recognized as revenue when or as the customer receives the benefit of the performance obligation. The transaction price is determined based on the consideration to which we will be entitled to receive in exchange for transferring goods to the customer. We issue refunds to e-commerce and print media customers, upon request, within 30 days of delivery. We estimate the amount of potential refunds at each reporting period using a portfolio approach of historical data, adjusted for changes in expected customer experience, including seasonality and changes in economic factors. For retailers, distributors and wholesalers, we do not offer a right of return or refund and revenue is recognized at the time products are shipped to customers. In all cases, judgment is required in estimating these reserves. Actual claims for returns could be materially different from the estimates. Theere were no estimated reserves for sales returns and allowances at September 30, 2018 and December 31, 2017, respectively. We recognize revenue when we satisfy a performance obligation in a contract by transferring control over a product to a customer when product is shipped. Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by us from a customer, are excluded from revenue. Shipping and handling costs associated with outbound freight after control over a product has transferred to a customer are accounted for as a fulfillment cost and are included in cost of product sales. |
Advertising Costs | Advertising Costs Advertising costs are expensed as incurred. Included in general and administrative expenses is approximately $52,000 and $3,000 for the nine months ended September 30, 2018 and 2017, respectively and $18,000 and $2,000 for the three months ended September 30, 2018 and 2017, respectively. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company’s financial instruments consist of cash, accounts receivable, accounts payable, accrued expenses, line of credit and shareholder notes payable. The carrying values of all the Company’s financial instruments approximate fair value because of their short maturities. In addition to the short maturities, the carrying amounts of our line of credit and shareholder notes payable approximate fair value because the interest rates at September 30, 2018 approximate market interest rates for the respective borrowings. In specific circumstances, certain assets and liabilities are reported or disclosed at fair value. Fair value is the exit price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in the Company's principal market for such transactions. If there is not an established principal market, fair value is derived from the most advantageous market. Valuation inputs are classified in the following hierarchy: ● Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities. ● Level 2 inputs are directly or indirectly observable valuation inputs for the asset or liability, excluding Level 1 inputs. ● Level 3 inputs are unobservable inputs for the asset or liability. Highest priority is given to Level 1 inputs and the lowest priority to Level 3 inputs. Acceptable valuation techniques include the market approach, income approach, and cost approach. In some cases, more than one valuation technique is used. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820), Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement In June 2018, the FASB issued ASU 2018-07, Compensation - Stock Compensation (Topic 718) 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): Accounting for Certain Financial Instruments with Down Round Features In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and equipment, net | Property and equipment, net consists of: September 30, December 31, 2018 2017 Tooling & testing equipment $ 319,000 $ — Warehouse equipment 22,000 — Furniture and fixtures 8,522 8,522 349,522 8,522 Accumulated depreciation (38,381 ) (8,522 ) Property and equipment, net $ 311,141 $ — |
INTANGIBLE ASSETS (Tables)
INTANGIBLE ASSETS (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of intangible assets | Intangible assets consists of the following as of September 30, 2018: Gross Carrying Amount Accumulated Amortization Net Intangible Assets Amortization Period Amortized intangible assets Customer relationships $ 250,000 $ 22,917 $ 227,083 5 Website 156,000 14,625 141,375 4 FDA Certification 650,000 48,750 601,250 5 Patents 440,294 148,001 292,293 6 - 20 Drawings, mechanical engineering and software 214,670 16,101 198,569 5 Total Amortized Intangibles 1,710,964 250,394 1,460,570 Indefinite-lived intangible assets Reacquired distribution rights 481,341 — 481,341 Tradename and brand 286,752 — 286,752 Total Intangible Assets $ 2,479,057 $ 250,394 $ 2,228,663 |
Schedule of future amortization expense | Estimated future amortization expense for finite-lived intangible assets is as follows: 2019 2020 2021 2022 2023 Thereafter Intangible assets $ 310,947 $ 310,947 $ 310,947 $ 296,322 $ 184,129 $ 47,278 |
NOTES PAYABLE AND LOAN FACILI_2
NOTES PAYABLE AND LOAN FACILITY (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of shareholder, convertible and contingently convertible notes payable | The following table summarizes shareholder, convertible and contingently convertible notes payable: September 30, December 31, 2018 2017 Shareholder, convertible and contingently convertible notes $ 860,669 $ 881,673 Accrued interest 25,307 294,995 Total notes and accrued interest 885,976 1,176,668 Less - Accrued interest (25,307 ) (294,995 ) - Debt discount (180,686 ) — - Current maturities (584,983 ) (674,990 ) Long-term portion $ 95,000 $ 206,683 |
Summary of convertible notes | In addition, the following notes are convertible after six months from the issue date: Face Interest Net Cash Amount Issue Date and Name Amount Rate Maturity Proceeds Converted Jan 29, 2018 EMA $ 80,000 12 % Jan 29, 2019 $ 72,300 $ 24,640 Feb 14, 2018 Auctus 80,000 12 % Nov 14, 2018 72,500 58,850 Feb 13, 2018 FirstFire Global 76,500 5 % Nov 13, 2018 72,500 62,375 May 23, 2018 Power Up 83,000 12 % May 23, 2019 80,000 — Jun 25, 2018 Power Up 68,000 12 % Jun 25, 2019 65,000 — |
DERIVTIVE LIABILITIES (Tables)
DERIVTIVE LIABILITIES (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of derivative liabilities included in the balance sheet | The following table summarizes the derivative liabilities included in the balance sheet at September 30, 2018: Fair Value of Embedded Derivative and Warrant Liabilities: Balance, December 31, 2017 $ — Initial measurement of liabilities 541,492 Change in fair value 95,365 Reclassification due to conversion (340,616 ) Balance, September 30, 2018 $ 296,241 |
SHARE-BASED COMPENSATION (Table
SHARE-BASED COMPENSATION (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of stock option activity | The following table summarizes all stock option activity of the Company for the period. Number Weighted Weighted Average (Years) Outstanding, December 31, 2017 7,748,271 $ 0.16 4.43 Granted — Exercised — Expired (250,000 ) $ 0.68 Outstanding, September 30, 2018 7,498,271 $ 0.13 4.10 Exercisable, September 30, 2018 5,383,271 $ 0.19 5.29 |
Schedule of weighted-average assumptions used in the option pricing model for stock warrant grants | The weighted-average assumptions used in the option pricing model for stock warrant grants were as follows: 2018 Expected Dividend Yield 0.00 % Expected Volatility in Stock Price 309.69 % Risk-Free Interest Rate 3.05 % Expected Life of Awards - Years 6.86 |
Schedule of warrant activity | The following table represents the Company’s warrant activity for the nine months ended September 30, 2018: Number Weighted Weighted Price Weighted (Years) Outstanding, December 31, 2017 14,699,582 $ 0.10 6.10 Exercisable, December 31, 2017 14,699,582 Granted 411,875 0.05 $ 0.40 3.90 Exercised — — — Forfeited — — — Expired (155,388 ) — $ 0.90 Outstanding, September 30, 2018 14,956,069 $ 0.08 4.73 Exercisable, September 30, 2018 14,956,069 $ 0.08 4.73 |
ASSET PURCHASE (Tables)
ASSET PURCHASE (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Business Combinations [Abstract] | |
Schedule of asset acquisitions | The following summarizes the transaction with NHS Holdings, LLC at closing on April 18, 2018: Cash $ 15,000 Inventory 203,591 Property and equipment 22,000 Intangible assets 731,341 Total assets $ 971,932 Net purchase (fair value of common stock issued) $ 971,932 The following summarizes the transaction with UV Flu at closing on May 7, 2018: Property and equipment $ 319,000 Intangible assets 1,495,670 Total assets $ 1,814,670 Net purchase (fair value of common stock issued) $ 1,814,670 |
BASIS OF PRESENTATION SUMMARY_3
BASIS OF PRESENTATION SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Inventories - finished goods | $ 432,000 | $ 432,000 | $ 0 | ||
Advertising Costs | $ 18,000 | $ 2,000 | $ 52,000 | $ 3,000 | |
Minimum [Member] | |||||
Useful life | 3 years | ||||
Maximum [Member] | |||||
Useful life | 7 years | ||||
Stock Options [Member] | |||||
Antidilutive securities excluded from computation of earnings per share, amount | 7,498,271 | 8,298,271 | |||
Warrant [Member] | |||||
Antidilutive securities excluded from computation of earnings per share, amount | 14,831,069 | 16,469,582 |
LIQUIDITY AND GOING CONCERN (De
LIQUIDITY AND GOING CONCERN (Details Narrative) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Dec. 31, 2016 |
Liquidity And Going Concern Details Narrative Abstract | ||||
Cash | $ 191,192 | $ 13,502 | $ 6,651 | $ 36,282 |
Working capital deficit | 986,000 | |||
Accumulated deficit | $ (31,319,398) | $ (27,999,123) |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
Subtotal | $ 349,522 | $ 8,522 |
Accumulated depreciation | (38,381) | (8,522) |
Property and equipment, net | 311,141 | 0 |
Tooling & Testing Equipment [Member] | ||
Subtotal | 319,000 | |
Warehouse Equipment [Member] | ||
Subtotal | 22,000 | |
Furniture And Fixtures [Member] | ||
Subtotal | $ 8,522 | $ 8,522 |
PROPERTY AND EQUIPMENT (Detai_2
PROPERTY AND EQUIPMENT (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2018 | Sep. 30, 2017 | |
Property, Plant and Equipment [Abstract] | |||
Depreciation | $ 3,465 | $ 29,859 |
INTANGIBLE ASSETS (Details 1)
INTANGIBLE ASSETS (Details 1) - USD ($) | 9 Months Ended | |
Sep. 30, 2018 | Dec. 31, 2017 | |
Intangible Assets, gross | $ 1,710,964 | |
Accumulated amortization | 250,394 | |
Intangible Assets, net | 1,460,570 | |
Total Intangible assets - gross | 2,479,057 | |
Reacquired distribution rights | 481,341 | |
Tradenames | 286,752 | |
Total Intangible Assets | 2,228,663 | $ 123,882 |
Customer Relationships [Member] | ||
Intangible Assets, gross | 250,000 | |
Accumulated amortization | 22,917 | |
Intangible Assets, net | $ 227,083 | |
Estimated Life | 5 years | |
Website [Member] | ||
Intangible Assets, gross | $ 156,000 | |
Accumulated amortization | 14,625 | |
Intangible Assets, net | $ 141,375 | |
Estimated Life | 4 years | |
FDA Certification [Member] | ||
Intangible Assets, gross | $ 650,000 | |
Accumulated amortization | 48,750 | |
Intangible Assets, net | $ 601,250 | |
Estimated Life | 5 years | |
Patents [Member] | ||
Intangible Assets, gross | $ 440,294 | |
Accumulated amortization | 148,001 | |
Intangible Assets, net | $ 292,293 | |
Patents [Member] | Minimum [Member] | ||
Estimated Life | 6 years | |
Patents [Member] | Maximum [Member] | ||
Estimated Life | 20 years | |
Drawings, mechanical engineering and software [Member] | ||
Intangible Assets, gross | $ 214,670 | |
Accumulated amortization | 16,101 | |
Intangible Assets, net | $ 198,569 | |
Estimated Life | 5 years |
INTANGIBLE ASSETS (Details 2)
INTANGIBLE ASSETS (Details 2) | Sep. 30, 2018USD ($) |
Intangible Assets, Net (Excluding Goodwill) [Abstract] | |
2,019 | $ 310,947 |
2,020 | 310,947 |
2,021 | 310,947 |
2,022 | 296,322 |
2,023 | 184,129 |
Thereafter | $ 47,278 |
INTANGIBLE ASSETS (Details Narr
INTANGIBLE ASSETS (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Amortization of intangible assets | $ 70,862 | $ 3,920 | $ 126,653 | $ 11,760 |
NOTES PAYABLE AND LOAN FACILI_3
NOTES PAYABLE AND LOAN FACILITY (Details) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 | Sep. 30, 2017 |
Debt Disclosure [Abstract] | |||
Shareholder, convertible and contingent convertible notes | $ 860,669 | $ 881,673 | |
Accrued interest | 25,307 | 294,995 | |
Total notes and accrued interest | 885,976 | 1,176,668 | |
Accrued interest | (9,000) | (294,995) | $ (8,100) |
Debt Discount | (180,686) | ||
Current maturities | (100,000) | (674,990) | |
Total long-term debt | $ 95,000 | $ 206,683 |
NOTES PAYABLE AND LOAN FACILI_4
NOTES PAYABLE AND LOAN FACILITY (Details 1) - USD ($) | Jun. 25, 2018 | May 23, 2018 | Feb. 14, 2018 | Feb. 13, 2018 | Jan. 29, 2018 | Sep. 30, 2018 |
Amount converted | $ 230,000 | |||||
Convertible Notes Payable EMA [Member] | ||||||
Issue Date | Jan. 29, 2018 | |||||
Face Amount | $ 80,000 | |||||
Interest Rate | 12.00% | |||||
Maturity | Jan. 29, 2019 | |||||
Net Cash Proceeds | $ 72,300 | |||||
Amount converted | $ 24,640 | |||||
Convertible Notes Payable Auctus [Member] | ||||||
Issue Date | Feb. 14, 2018 | |||||
Face Amount | $ 80,000 | |||||
Interest Rate | 12.00% | |||||
Maturity | Nov. 14, 2018 | |||||
Net Cash Proceeds | $ 72,500 | |||||
Amount converted | $ 58,850 | |||||
Convertible Notes Payable FirstFire Global [Member] | ||||||
Issue Date | Feb. 13, 2018 | |||||
Face Amount | $ 76,500 | |||||
Interest Rate | 5.00% | |||||
Maturity | Nov. 13, 2018 | |||||
Net Cash Proceeds | $ 72,500 | |||||
Amount converted | $ 62,375 | |||||
Convertible Notes Payable Power Up [Member] | ||||||
Issue Date | Jun. 25, 2018 | May 23, 2018 | ||||
Face Amount | $ 68,000 | $ 83,000 | ||||
Interest Rate | 12.00% | 12.00% | ||||
Maturity | Jun. 25, 2019 | May 23, 2019 | ||||
Net Cash Proceeds | $ 65,000 | $ 80,000 |
NOTES PAYABLE AND LOAN FACILI_5
NOTES PAYABLE AND LOAN FACILITY (Details Narrative) | Jul. 10, 2018shares | Feb. 09, 2018USD ($) | Sep. 30, 2018USD ($)$ / shares | Sep. 30, 2017USD ($) | Sep. 30, 2018USD ($)$ / sharesshares | Sep. 30, 2017USD ($) | Dec. 31, 2017USD ($) | Nov. 02, 2012USD ($) |
Number of Warrants granted | shares | 411,875 | |||||||
Amount of debt converted | $ 230,000 | |||||||
Interest expense | 30,000 | $ 25,000 | $ 90,000 | $ 75,000 | ||||
Accrued interest payable | 9,000 | $ 8,100 | 9,000 | $ 8,100 | $ 294,995 | |||
Fidelity [Member] | ||||||||
Credit Facility, Maximum Borrowing Capacity | $ 500,000 | $ 500,000 | ||||||
Credit Facility, interest rate | 4.50% | 4.50% | ||||||
Guarantee of credit facility by each investor | $ 100,000 | $ 100,000 | ||||||
Balloon payment | 500,000 | $ 500,000 | ||||||
CMA Investments, LLC [Member] | ||||||||
Number of shares issued in escrow | shares | 15,000,000 | |||||||
Convertible Notes [Member] | ||||||||
Number of closing price days | 2 | |||||||
Number of trailing days prior to conversion | 20 | |||||||
Number of Warrants granted | shares | 411,875 | |||||||
Contingent convertible promissory notes [Member] | ||||||||
Debt face amount | $ 195,635 | $ 607,500 | $ 607,500 | |||||
Debt stated interest rate | 5.00% | 12.00% | 12.00% | |||||
Number of trailing days prior to conversion | 20 | |||||||
Discount to stocks closing price in debt conversion | 50.00% | 35.00% | 35.00% | |||||
Exercise price of warrants | $ / shares | $ .40 | $ .40 | ||||||
Contingent convertible promissory notes [Member] | Minimum [Member] | ||||||||
Conversion Price | $ / shares | 0.05 | 0.05 | ||||||
Contingent convertible promissory notes [Member] | Maximum [Member] | ||||||||
Conversion Price | $ / shares | $ 0.10 | $ 0.10 | ||||||
Contingent convertible promissory notes [Member] | Common Stock [Member] | ||||||||
Shares issued upon conversion of debt | shares | 26,000,000 | |||||||
CMA Note [Member] | ||||||||
Credit Facility, Maximum Borrowing Capacity | $ 1,500,000 | |||||||
Variable rate basis | LIBOR | |||||||
Basis Spread on Variable Rate, During Period | 5.25% | |||||||
Debt, Interest Rate during period | 8.22% | |||||||
Debt, Weighted Average Interest Rate | 7.99% | 7.99% |
NOTES PAYABLE AND LOAN FACILI_6
NOTES PAYABLE AND LOAN FACILITY (Details Narrative 1) | Aug. 06, 2018USD ($) | Jul. 17, 2018USD ($) | Feb. 09, 2018USD ($) | Nov. 16, 2018USD ($)shares | Sep. 30, 2018USD ($)shares | Sep. 30, 2018USD ($) | Nov. 13, 2018USD ($) | Sep. 14, 2018USD ($) |
Initial measurement of liabilities | $ 541,492 | |||||||
Debt amount converted to common stock | $ 230,000 | |||||||
Debt interest amount converted to common stock | $ 15,000 | |||||||
Number of shares issued in the conversion of debt (shares) | shares | 37,336,000 | |||||||
Contingent convertible promissory notes [Member] | ||||||||
Debt face amount | $ 195,635 | $ 607,500 | $ 607,500 | |||||
Debt stated interest rate | 5.00% | 12.00% | 12.00% | |||||
Number of trailing days prior to conversion | 20 | |||||||
Discount to stocks closing price in debt conversion | 50.00% | 35.00% | 35.00% | |||||
Subsequent Event [Member] | ||||||||
Debt amount converted to common stock | $ 75,000 | |||||||
Number of shares issued in the conversion of debt (shares) | shares | 24,288,000 | |||||||
Crown Bridge Partners, LLC [Member] | ||||||||
Borrowing amount under financing agreement | $ 100,000 | |||||||
Debt face amount | $ 50,000 | |||||||
Debt stated interest rate | 8.00% | |||||||
Number of closing price days | 2 | |||||||
Number of trailing days prior to conversion | 25 | |||||||
Debt issuance costs | $ 2,000 | |||||||
Debt amount, net of costs | $ 43,000 | |||||||
Debt discount (percent) | 10.00% | |||||||
Percent to stocks closing price in debt conversion | 65.00% | |||||||
Initial measurement of liabilities | $ 51,282 | |||||||
Peak One Opportunity Fund, L.P. [Member] | ||||||||
Borrowing amount under financing agreement | $ 150,000 | |||||||
Debt face amount | $ 85,000 | |||||||
Debt stated interest rate | 6.00% | |||||||
Number of trailing days prior to conversion | 20 | |||||||
Debt issuance costs | $ 5,000 | |||||||
Debt amount, net of costs | $ 71,500 | $ 135,000 | ||||||
Debt discount (percent) | 10.00% | |||||||
Percent to stocks closing price in debt conversion | 65.00% | |||||||
Initial measurement of liabilities | $ 130,769 | |||||||
Peak One Opportunity Fund, L.P. [Member] | Subsequent Event [Member] | ||||||||
Borrowing amount under financing agreement | $ 200,000 | |||||||
Debt amount, net of costs | $ 180,000 |
DERIVTIVE LIABILITIES (Details)
DERIVTIVE LIABILITIES (Details) - USD ($) | 3 Months Ended | 9 Months Ended |
Sep. 30, 2018 | Sep. 30, 2018 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||
Balance, December 31, 2017 | ||
Initial measurement of liabilities | 541,492 | |
Change in fair value of derivative liabilities | $ 95,365 | 95,365 |
Reclassification due to conversion | (340,616) | |
Balance, September 30, 2018 | $ 296,241 | $ 296,241 |
DERIVTIVE LIABILITIES (Details
DERIVTIVE LIABILITIES (Details Narrative) | 3 Months Ended | 9 Months Ended |
Sep. 30, 2018USD ($) | Sep. 30, 2018USD ($) | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||
Derivative and warrant liabilities | $ 296,241 | $ 296,241 |
Change in fair value of derivative liabilities | $ (95,365) | $ (95,365) |
STOCKHOLDERS' EQUITY (Details N
STOCKHOLDERS' EQUITY (Details Narrative) - USD ($) | Apr. 27, 2018 | Apr. 09, 2018 | Feb. 05, 2018 | Sep. 30, 2016 | May 02, 2013 | Mar. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | Mar. 28, 2018 |
Allocated share based | $ 115,072 | $ 242,038 | $ 1,726,983 | $ 427,998 | |||||||||
Accrued stock based compensation | $ 421,051 | 421,051 | $ 19,355 | ||||||||||
Accumulated dividends preferred stock | $ 74,000 | $ 63,600 | |||||||||||
Preferred stock, outstanding | 13,828 | 13,828 | 13,828 | ||||||||||
Number of shares issuable upon conversion of preferrd stock | 4,244,829 | 4,244,829 | 4,037,977 | ||||||||||
Accounts payable | $ 585,287 | $ 585,287 | $ 468,906 | ||||||||||
Chief Executive Officer [Member] | |||||||||||||
Allocated share based | $ 385,000 | ||||||||||||
Common stock issued under employment agreement, shares | $ 11,000,000 | ||||||||||||
10% Series A Cumulative Convertible Preferred Stock [Member] | |||||||||||||
Preferred stock, shares in private placement offering | 200,000 | ||||||||||||
Price per share | $ 10 | ||||||||||||
Preferred stock value in private placement offering | $ 2,000,000 | ||||||||||||
Preferred stock, dividend rate | 10.00% | ||||||||||||
Preferred stock, stated conversion rate | $ 0.075 | ||||||||||||
10% Series A Cumulative Convertible Preferred Stock [Member] | Additional Investment [Member] | |||||||||||||
Preferred stock, stated conversion rate | $ 0.05 | ||||||||||||
Additional investment lowering conversion price | $ 25,000 | ||||||||||||
Convertible Promissory Notes [Member] | |||||||||||||
Debt conversion discount rate | 50.00% | ||||||||||||
Issuance of unsecured debt | $ 195,635 | ||||||||||||
Interest rate of convertible promissory notes | 5.00% | ||||||||||||
Consulting Agreement [Member] | |||||||||||||
Common stock issued for services, shares | 428,571 | 1,500,000 | |||||||||||
Allocated share based | $ 150,000 | $ 15,000 | |||||||||||
Business Development Agreements [Member] | |||||||||||||
Common stock issued for services, shares | 300,000 | ||||||||||||
Allocated share based | $ 15,000 | ||||||||||||
Accrued stock based compensation | $ 116,000 | ||||||||||||
Business Development Agreements [Member] | Anchor Group, LLC [Member] | |||||||||||||
Common stock issued for services, shares | 3,721,408 | ||||||||||||
Allocated share based | $ 165,000 | ||||||||||||
Accrued stock based compensation | $ 80,000 | ||||||||||||
Blue Oar Consulting, LLC (Consulting Agreement ) [Member] | |||||||||||||
Common stock issued for services, shares | 7,500,000 | 997,466 | |||||||||||
Allocated share based | $ 375,000 | ||||||||||||
Accrued stock based compensation | 225,000 | 225,000 | |||||||||||
Accounts payable | $ 152,500 | $ 152,500 | $ 175,000 |
SHARE-BASED COMPENSATION (Detai
SHARE-BASED COMPENSATION (Details) - Stock Options [Member] - $ / shares | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018 | Dec. 31, 2017 | |
Number of options: | ||
Number of Options outstanding, beginning | 7,748,271 | |
Number of Options expired | (250,000) | |
Number of Options outstanding, ending | 7,498,271 | 7,748,271 |
Number of Options exercisable | 5,383,271 | |
Weighted Average Exercise Price: | ||
Options outstanding, beginning | $ 0.16 | |
Option expired | 0.68 | |
Options outstanding, ending | 0.13 | $ 0.16 |
Options exercisable | $ 0.19 | |
Weighted Average Remaining Contractual Life (Years) | ||
Options outstanding | 4 years 1 month 6 days | 4 years 5 months 5 days |
Options exercisable | 5 years 3 months 15 days |
SHARE-BASED COMPENSATION (Det_2
SHARE-BASED COMPENSATION (Details 1) - Warrant [Member] | 9 Months Ended |
Sep. 30, 2018 | |
Expected Dividend Yield | 0.00% |
Expected Volatility in Stock Price | 309.69% |
Risk-Free Interest Rate | 3.05% |
Expected Life of Awards - Years | 6 years 10 months 10 days |
SHARE-BASED COMPENSATION (Det_3
SHARE-BASED COMPENSATION (Details 2) - $ / shares | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018 | Dec. 31, 2017 | |
Number of Warrant: | ||
Number of Warrants outstanding, beginning | 14,699,582 | |
Number of Warrants granted | 411,875 | |
Number of Warrants expired | (155,388) | |
Number of Warrants outstanding, ending | 14,956,069 | 14,699,582 |
Number of Warrants exercisable | 14,956,069 | 14,699,582 |
Weighted average grant date fair value | $ .05 | |
Warrant Weighted Average Exercise Price: | ||
Warrant outstanding, beginning | 0.10 | |
Warrant granted | 0.40 | |
Warrant expired | .90 | |
Warrant outstanding, ending | .08 | $ 0.10 |
Warrant exercisable | $ 0.08 | |
Weighted Average Remaining Contractual Life | ||
Warrant outstanding | 4 years 8 months 23 days | 6 years 1 month 6 days |
Warrant granted | 3 years 10 months 25 days | |
Warrant exercisable | 4 years 8 months 23 days |
SHARE-BASED COMPENSATION (Det_4
SHARE-BASED COMPENSATION (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Apr. 30, 2009 | Jan. 01, 2004 | |
Share-based compensation | $ 115,000 | $ 242,000 | $ 1,726,983 | $ 427,998 | ||
Unrecognized compensation cost for non-vested awards | $ 118,000 | $ 118,000 | ||||
Period for recognizition of non-vested awards compensation cost | 4 years | |||||
Number of shares reserved for issuance | 2,251,729 | 2,251,729 | ||||
Stock Option Plan [Member] | ||||||
Number of shares authorized under stock option plan | 10,000,000 | 4,000,000 | ||||
Vesting period | 4 years | |||||
Exercisable period | 10 years | |||||
Stock Options [Member] | ||||||
Number of shares authorized under stock option plan | 5,000,000 | 5,000,000 |
ASSET PURCHASE (Details)
ASSET PURCHASE (Details) - USD ($) | May 07, 2018 | Apr. 18, 2018 |
NHS Holdings LLC [Member] | ||
Cash | $ 15,000 | |
Inventory | 203,591 | |
Property and equipment | 22,000 | |
Intangible assets | 731,341 | |
Total assets | 971,932 | |
Net purchase (fair value of common stock issued) | $ 971,932 | |
UV Flu [Member] | ||
Property and equipment | $ 319,000 | |
Intangible assets | 1,495,670 | |
Total assets | 1,814,670 | |
Net purchase (fair value of common stock issued) | $ 1,814,670 |
ASSET PURCHASE (Details Narrati
ASSET PURCHASE (Details Narrative) - USD ($) | May 07, 2018 | Apr. 18, 2018 |
NHS Holdings LLC [Member] | Restricted Stock [Member] | ||
Stock issued in acquisition | $ 972,000 | |
Stock issued in acquisition (shares) | 27,769,500 | |
Estimated useful life of intangibles | 5 years | |
Gross margin sale on royalty | 7.00% | |
UV Flu [Member] | Asset Purchase Agreement [Member] | ||
Stock issued in acquisition | $ 1,814,670 | |
Stock issued in acquisition (shares) | 27,918,000 | |
Common stock held by consenting shareholders (percent) | 52.80% | |
Common stock held by consenting shareholders (shares) | 118,211,379 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details Narrative) | 3 Months Ended |
Sep. 30, 2018USD ($) | |
Designcenters [Member] | |
RELATED PARTY TRANSACTIONS | $ 21,000 |
SUBSEQUENT EVENTS (Details Narr
SUBSEQUENT EVENTS (Details Narrative) | 2 Months Ended | ||
Nov. 19, 2018USD ($)shares | Sep. 30, 2018shares | Dec. 31, 2017shares | |
Common stock, authorized | 600,000,000 | 600,000,000 | |
Authorized preferred stock (shares) | 15,000,000 | 15,000,000 | |
Subsequent Event [Member] | |||
Shares issued in conversion of convertible notes | 24,288,119 | ||
Common stock, authorized | 975,000,000 | ||
Authorization to raise capital by future issuance of convertible notes | $ | $ 2,000,000 | ||
Amount of convertible note to be issued to acquire Fluid Energy | $ | $ 100,000 | ||
Subsequent Event [Member] | CMA Note [Member] | |||
Number of shares held in escrow | 15,000,000 | ||
Subsequent Event [Member] | Minimum [Member] | |||
Reverse stock split ratio | 5 | ||
Acquisition of entity ownership interest | 58.00% | ||
Subsequent Event [Member] | Maximum [Member] | |||
Reverse stock split ratio | 50 | ||
Acquisition of entity ownership interest | 100.00% | ||
Subsequent Event [Member] | Preferred Class A [Member] | |||
Authorized preferred stock (shares) | 300 | ||
Redemption amount of preferred stock | $ | $ 75,000 | ||
Number of shares of preferred stock redeemable | 299 | ||
Number of shares of preferred stock not redeemable | 1 | ||
Percent of voting approval | 40.00% | ||
Guaranty of debt | $ | $ 3,000,000 | ||
Subsequent Event [Member] | Preferred Class B [Member] | |||
Authorized preferred stock (shares) | 50 | ||
Redemption amount of preferred stock | $ | $ 50,000 | ||
Number of shares of preferred stock redeemable | 50 | ||
Percent of voting approval | 20.00% | ||
Guaranty of debt | $ | $ 500,000 | ||
Subsequent Event [Member] | Preferred Class C [Member] | |||
Authorized preferred stock (shares) | 300 | ||
Redemption amount of preferred stock | $ | $ 150,000 | ||
Number of shares of preferred stock redeemable | 300 | ||
Percent of voting approval | 10.00% | ||
Guaranty of debt | $ | $ 3,000,000 |