Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2017 | Aug. 11, 2017 | |
Document And Entity Information [Abstract] | ||
Entity Registrant Name | Ascent Solar Technologies, Inc. | |
Entity Central Index Key | 1,350,102 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2017 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 8,616,723,553 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 |
Current Assets: | ||
Cash and cash equivalents | $ 232,895 | $ 130,946 |
Trade receivables, net of allowance for doubtful accounts of $57,336 and $60,347, respectively | 158,688 | 549,204 |
Inventories | 1,195,862 | 2,569,816 |
Prepaid expenses and other current assets | 514,220 | 983,796 |
Total current assets | 2,101,665 | 4,233,762 |
Property, Plant and Equipment | 36,639,460 | 36,639,460 |
Less accumulated depreciation and amortization | (31,606,565) | (30,983,448) |
Net property, plant and equipment | 5,032,895 | 5,656,012 |
Other Assets: | ||
Patents, net of accumulated amortization of $343,757 and $169,626, respectively | 1,519,799 | 1,647,505 |
Other non-current assets | 63,688 | 77,562 |
Total Other Assets | 1,583,487 | 1,725,067 |
Total Assets | 8,718,047 | 11,614,841 |
Current Liabilities: | ||
Accounts payable | 1,960,913 | 4,902,471 |
Related party payables | 200,000 | 214,903 |
Accrued expenses | 2,020,427 | 1,469,684 |
Current portion of long-term debt | 358,993 | 243,113 |
Notes Payable | 1,422,026 | 0 |
Promissory Notes, net of discount of $1,500 and zero, respectively | 4,326,500 | 1,430,000 |
Current portion of litigation settlement | 49,620 | 339,481 |
Short term embedded derivative liabilities | 1,876,440 | 6,578,154 |
Make-whole dividend liability | 243,024 | 500,176 |
Total current liabilities | 15,350,496 | 19,447,684 |
Long-Term Debt | 5,292,946 | 5,281,776 |
Accrued Warranty Liability | 126,372 | 176,457 |
Commitments and Contingencies (Notes 4 & 23) | ||
Stockholders’ Deficit: | ||
Common stock, $0.0001 par value, 20,000,000,000 shares authorized; 6,976,187,874 and 554,223,320 shares issued and outstanding as of June 30, 2017 and December 31, 2016, respectively | 697,619 | 55,422 |
Additional paid in capital | 380,777,042 | 369,886,065 |
Accumulated deficit | (394,226,434) | (383,932,576) |
Total stockholders’ deficit | (12,751,767) | (13,991,076) |
Total Liabilities, Mezzanine Equity and Stockholders’ Deficit | 8,718,047 | 11,614,841 |
Series E Preferred Stock [Member] | ||
Current Liabilities: | ||
Preferred stock and notes | 32,877 | 56,360 |
Series F Preferred Stock [Member] | ||
Current Liabilities: | ||
Preferred stock and notes | 160,001 | 160,001 |
Series G Preferred Stock [Member] | ||
Current Liabilities: | ||
Preferred stock and notes | 0 | 408,326 |
July 2016 Convertible Notes [Member] | ||
Current Liabilities: | ||
Convertible notes payable | 496,600 | 1,159,610 |
Series I Exchange Notes [Member] | ||
Current Liabilities: | ||
Convertible notes payable | 56,331 | 26,597 |
Series J Preferred Stock [Member] | ||
Current Liabilities: | ||
Preferred stock and notes | 898,744 | 1,350,000 |
Series K Preferred Stock [Member] | ||
Current Liabilities: | ||
Preferred stock and notes | 1,050,000 | 0 |
Stockholders’ Deficit: | ||
Preferred stock | 1,050,000 | |
October 2016 Convertible Notes [Member] | ||
Current Liabilities: | ||
Convertible notes payable | 198,000 | 66,000 |
TFG Promissory Notes [Member] | ||
Current Liabilities: | ||
Tertius Financial Group promissory notes, net of discount of zero and $59,658, respectively | 0 | 542,808 |
Series J-1 Preferred Stock [Member] | ||
Stockholders’ Deficit: | ||
Preferred stock | 700,000 | 700,000 |
Series A Preferred Stock [Member] | ||
Stockholders’ Deficit: | ||
Preferred stock | $ 6 | $ 13 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 |
Allowance for doubtful accounts | $ 57,336 | $ 60,347 |
Patents, Amortization | $ 343,757 | $ 169,626 |
Preferred stock, shares authorized (in shares) | 25,000,000 | |
Preferred stock, par value (in dollars per share) | $ 0.0001 | |
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized (in shares) | 20,000,000,000 | 2,000,000,000 |
Common stock, shares issued (in shares) | 6,976,187,874 | 554,223,320 |
Common stock, shares outstanding (in shares) | 6,976,187,874 | 554,223,320 |
Promissory note [Member] | ||
Unamortized discount | $ 1,500 | $ 0 |
Series E Preferred Stock [Member] | ||
Unamortized discount | $ 37,123 | 63,640 |
Preferred stock, shares outstanding (in shares) | 70 | |
Series G Preferred Stock [Member] | ||
Unamortized discount | $ 0 | 699,674 |
Series I Exchange Notes [Member] | ||
Unamortized discount | 62,205 | 199,474 |
Series J Preferred Stock [Member] | ||
Unamortized discount | $ 176,256 | 0 |
Preferred stock, shares outstanding (in shares) | 1,075 | |
July 2016 Convertible Notes [Member] | ||
Unamortized discount | $ 0 | 1,634,357 |
October 2016 Convertible Notes [Member] | ||
Unamortized discount | 132,000 | 264,000 |
Tertius Financial Group promissory note [Member] | ||
Unamortized discount | $ 0 | $ 59,658 |
Series J-1 Preferred Stock [Member] | ||
Preferred stock, shares authorized (in shares) | 700 | 700 |
Preferred stock, shares issued (in shares) | 700 | 700 |
Preferred stock, shares outstanding (in shares) | 700 | 700 |
Series A Preferred Stock [Member] | ||
Preferred stock, shares authorized (in shares) | 750,000 | 750,000 |
Preferred stock, shares issued (in shares) | 750,000 | 750,000 |
Preferred stock, shares outstanding (in shares) | 60,756 | 125,044 |
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Liquidation preference | $ 729,072 | $ 1,500,528 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Income Statement [Abstract] | ||||
Revenues | $ 25,134 | $ 255,323 | $ 305,737 | $ 965,546 |
Costs and Expenses: | ||||
Cost of revenues (exclusive of depreciation shown below) | 295,026 | 1,272,510 | 1,787,867 | 3,436,906 |
Research, development and manufacturing operations (exclusive of depreciation shown below) | 1,241,108 | 1,785,349 | 2,517,974 | 3,471,766 |
Inventory impairment costs | 0 | 0 | 363,758 | 0 |
Selling, general and administrative (exclusive of depreciation shown below) | 1,405,863 | 2,956,848 | 3,170,094 | 5,943,695 |
Depreciation and amortization | 330,324 | 1,381,357 | 701,976 | 2,757,559 |
Total Costs and Expenses | 3,272,321 | 7,396,064 | 8,541,669 | 15,609,926 |
Loss from Operations | (3,247,187) | (7,140,741) | (8,235,932) | (14,644,380) |
Other Income/(Expense), net | (149,340) | 32,333 | 579,145 | 32,333 |
Interest expense | (2,247,707) | (1,404,853) | (4,239,059) | (3,652,991) |
Change in fair value of derivatives and gain/(loss) on extinguishment of liabilities, net | 928,909 | (2,655,190) | 1,601,987 | (3,428,426) |
Total Other Expense | (1,468,138) | (4,027,710) | (2,057,927) | (7,049,084) |
Net Loss | $ (4,715,325) | $ (11,168,451) | $ (10,293,859) | $ (21,693,464) |
Net Loss Per Share (Basic and diluted) (in dollars per share) | $ (0.0010) | $ (0.6825) | $ (0.0033) | $ (1.66) |
Weighted Average Common Shares Outstanding (Basic and diluted) (in shares) | 4,668,929,066 | 16,364,931 | 3,161,064,888 | 13,042,347 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Operating Activities: | ||
Net loss | $ (10,293,859) | $ (21,693,465) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 701,976 | 2,757,559 |
Share based compensation | 95,911 | 557,980 |
Realized gain on sale of assets | (1,214,659) | 0 |
Amortization of financing costs to interest expense | 70,557 | 104,679 |
Write down of previously capitalized inventory | 363,758 | 0 |
Non-cash interest expense | 727,734 | 206,845 |
Amortization of debt discount | 3,190,184 | 3,006,096 |
Change in fair value of derivatives and gain/loss on extinguishment of liabilities, net | (1,601,987) | 3,428,426 |
Inducement conversion costs | 635,514 | 0 |
Bad debt expense | 9,649 | 182,716 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 396,467 | 978,972 |
Inventories | 1,010,196 | 195,859 |
Prepaid expenses and other current assets | 355,759 | 475,827 |
Accounts payable | (340,200) | (344,269) |
Related party payable | (14,903) | 0 |
Accrued expenses | (26,868) | (124,771) |
Accrued litigation settlement | (289,861) | (264,411) |
Warranty reserve | (50,085) | (28,611) |
Net cash used in operating activities | (6,274,717) | (10,560,568) |
Investing Activities: | ||
Purchase of property, plant and equipment | 0 | 20,688 |
Proceeds from the sale of assets | 150,000 | 0 |
Patent activity costs | (25,341) | (96,344) |
Deposit on building | 0 | 0 |
Net cash provided by/(used in) investing activities | 124,659 | (117,032) |
Financing Activities: | ||
Payment of debt financing costs | 0 | (40,000) |
Repayment of debt | (862,993) | (157,862) |
Proceeds from promissory note | 2,865,000 | 0 |
Proceeds from Committed Equity Line | 0 | 1,056,147 |
Proceeds from issuance of stock and warrants | 4,250,000 | 9,625,000 |
Net cash provided by financing activities | 6,252,007 | 10,483,285 |
Net change in cash and cash equivalents | 101,949 | (194,315) |
Cash and cash equivalents at beginning of period | 130,946 | 326,217 |
Cash and cash equivalents at end of period | 232,895 | 131,902 |
Supplemental Cash Flow Information: | ||
Cash paid for interest | 206,080 | 192,532 |
Non-Cash Transactions: | ||
Non-cash conversions of preferred stock and convertible notes to equity | 6,934,064 | 7,745,950 |
Make-whole provision on convertible preferred stock | 257,152 | 0 |
Non-cash financing costs | 2,500 | 0 |
Accounts payable converted to notes payable | 1,422,026 | 0 |
Accounts payable forgiven related to sale of EnerPlex | $ 1,031,726 | $ 0 |
ORGANIZATION
ORGANIZATION | 6 Months Ended |
Jun. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
ORGANIZATION | ORGANIZATION Ascent Solar Technologies, Inc. (“Ascent”) was incorporated on October 18, 2005 from the separation of ITN Energy Systems, Inc's (“ITN”) Advanced Photovoltaic Division and all of that division’s key personnel and core technologies. ITN, a private company incorporated in 1994, is an incubator dedicated to the development of thin-film, photovoltaic (“PV”), battery, fuel cell, and nano technologies. Through its work on research and development contracts for private and governmental entities, ITN developed proprietary processing and manufacturing know-how applicable to PV products generally, and to Copper-Indium-Gallium-diSelenide (“CIGS”) PV products in particular. ITN formed Ascent to commercialize its investment in CIGS PV technologies. In January 2006, in exchange for 5,140 shares of common stock of Ascent, ITN assigned to Ascent certain CIGS PV technologies and trade secrets and granted to Ascent a perpetual, exclusive, royalty-free worldwide license to use, in connection with the manufacture, development, marketing and commercialization of CIGS PV to produce solar power, certain of ITN’s existing and future proprietary and control technologies that, although non-specific to CIGS PV, Ascent believes will be useful in its production of PV modules for its target markets. Upon receipt of the necessary government approvals and pursuant to novation in early 2007, ITN assigned government-funded research and development contracts to Ascent and also transferred the key personnel working on the contracts to Ascent. Currently, the Company is focusing on integrating its PV products into high value markets such as aerospace, satellites, near earth orbiting vehicles, and fixed-wing unmanned aerial vehicles (UAV). Ascent has the capability to design and develop finished products for end users in these areas as well as collaborate with strategic partners to design and develop custom integrated solutions for products like fixed-wing UAVs. Ascent sees significant overlap of the needs of end users across some of these industries and can achieve economies of scale in sourcing, development, and production in commercializing products for these customers. Sale of EnerPlex Brand In February 2017, Ascent announced the sale of our EnerPlex brand and related intellectual properties and trademarks associated with EnerPlex to our battery product supplier, Sun Pleasure Co. Limited (“SPCL”) in an effort to better allocate its resources and to continue to focus on its core strength in the high-value specialty PV market. Following the transfer, Ascent will no longer produce or sell Enerplex-branded consumer products. Ascent will also supply solar PV products to SPCL, supporting the continuous growth of EnerPlex™ with Ascent’s proprietary and award-winning thin-film solar technologies and products. Ascent continues to design and manufacture its own line of PV integrated consumer electronics, as well as portable power applications for commercial, military, and emergency management. Increase of Authorized Common Stock On March 16, 2017, the Company filed a Certificate of Amendment to the Amended and Restated Certificate of Incorporation of the Company (the “Certificate of Amendment”) with the Secretary of State of the State of Delaware to increase the number of authorized shares of Common Stock from 2,000,000,000 to 20,000,000,000 at a par value of $0.0001 . The Certificate of Amendment was approved at the Company’s Special Meeting of Stockholders March 16, 2017. |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 6 Months Ended |
Jun. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BASIS OF PRESENTATION | BASIS OF PRESENTATION The accompanying condensed consolidated financial statements have been derived from the accounting records of Ascent Solar Technologies, Inc., Ascent Solar (Asia) Pte. Ltd., and Ascent Solar (Shenzhen) Co., Ltd. (collectively, "the Company") as of June 30, 2017 and December 31, 2016 , and the results of operations for the three and six months ended June 30, 2017 and 2016 . Ascent Solar (Shenzhen) Co., Ltd. is wholly owned by Ascent Solar (Asia) Pte. Ltd., which is wholly owned by Ascent Solar Technologies, Inc. All significant inter-company balances and transactions have been eliminated in the accompanying condensed consolidated financial statements. The accompanying, unaudited, condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") for interim financial information and in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, these interim financial statements do not include all of the information and footnotes typically found in U.S. GAAP audited annual financial statements. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair statement have been included. The Condensed Consolidated Balance Sheet at December 31, 2016 has been derived from the audited financial statements as of that date but does not include all of the information and footnotes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 . These condensed consolidated financial statements and notes should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 . The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Operating results for the six months ended June 30, 2017 are not necessarily indicative of the results that may be expected for the year ending December 31, 2017 . |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Jun. 30, 2017 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Company’s significant accounting policies were described in Note 3 to the audited financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 . There have been no significant changes to our accounting policies as of June 30, 2017 . In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) . The update will establish a comprehensive revenue recognition standard for virtually all industries in GAAP. ASU 2014-09 will change the amount and timing of revenue and cost recognition, implementation, disclosures and documentation. In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of Effective Date. The amendments in ASU 2015-14 defer the effective date of ASU 2014-09 for all entities by one year. ASU 2014-09 is now effective for the Company in fiscal year 2018. The Company is researching whether the adoption of ASU 2014-09 will have a material effect on the Company’s consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) . ASU 2016-02 requires lessees to recognize all leases, including operating leases, on the balance sheet as a lease asset or lease liability, unless the lease is a short-term lease. ASU 2016-02 also requires additional disclosures regarding leasing arrangements. ASU 2016-02 is effective for interim periods and fiscal years beginning after December 15, 2018, and early application is permitted. The Company is currently evaluating the impact, if any, that the adoption of this guidance will have on its consolidated financial statements. In May 2017, the FASB issued ASU No. 2017-09, Compensation - Stock Compensation (Topic 718) . ASU 2017-09 provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. ASU 2017-09 is effective for interim periods and fiscal years beginning after December 15, 2017, and early application is permitted. The Company is currently evaluating the impact, if any, that the adoption of this guidance will have on its consolidated financial statements. In July 2017, the FASB issued ASU No. 2017-11 Part I, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480), Derivatives and Hedging (Topic 815) . ASU 2017-11 Part I changes the classification analysis of certain equity-linked financial instruments with down round features. ASU 2017-11 Part I is effective, for public business entities, for interim periods and fiscal years beginning after December 15, 2018, and early application is permitted. The Company is currently evaluating the impact, if any, that the adoption of this guidance will have on its consolidated financial statements. The Series J Preferred Stock was reclassified from mezzanine equity in the 2016 financial information to conform to the 2017 presentation in liabilities. Such reclassifications had no effect on the net loss. |
LIQUIDITY AND CONTINUED OPERATI
LIQUIDITY AND CONTINUED OPERATIONS | 6 Months Ended |
Jun. 30, 2017 | |
LIQUIDITY AND CONTINUED OPERATIONS [Abstract] | |
LIQUIDITY AND CONTINUED OPERATIONS | LIQUIDITY AND CONTINUED OPERATIONS During the six months ended June 30, 2017 and the year ended December 31, 2016 , the Company entered into multiple financing agreements to fund operations. Further discussion of these transactions can be found in Notes 8 through 19 of the financial statements presented as of, and for the six months ended, June 30, 2017 , and in Notes 9 through 20 of the financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2016 . The Company has continued PV production at its manufacturing facility. The Company does not expect that sales revenue and cash flows will be sufficient to support operations and cash requirements until it has fully implemented its product strategy. During the six months ended June 30, 2017 the Company used $6.3 million in cash for operations. The Company's primary significant long term cash obligation consists of a note payable of $5.7 million to a financial institution secured by a mortgage on its headquarters and manufacturing building in Thornton, Colorado. Total payments of $0.4 million , including principal and interest, will come due in the remainder of 2017. The Company also owes $50,000 as of June 30, 2017 related to a litigation settlement reached in April 2014, which is being paid in equal installments over 40 months beginning in April 2014. Additional projected product revenues are not anticipated to result in a positive cash flow position for the year 2017 overall and, as of June 30, 2017 , the Company has negative working capital. As such, cash liquidity sufficient for the year ending December 31, 2017 will require additional financing. The Company continues to accelerate sales and marketing efforts related to its consumer and military solar products and specialty PV application strategies through expansion of its sales and distribution channels. The Company has begun activities related to securing additional financing through strategic or financial investors, but there is no assurance the Company will be able to raise additional capital on acceptable terms or at all. If the Company's revenues do not increase rapidly, and/or additional financing is not obtained, the Company will be required to significantly curtail operations to reduce costs and/or sell assets. Such actions would likely have an adverse impact on the Company's future operations. As a result of the Company’s recurring losses from operations, and the need for additional financing to fund its operating and capital requirements, there is uncertainty regarding the Company’s ability to maintain liquidity sufficient to operate its business effectively, which raises substantial doubt as to the Company’s ability to continue as a going concern. |
PROPERTY, PLANT AND EQUIPMENT
PROPERTY, PLANT AND EQUIPMENT | 6 Months Ended |
Jun. 30, 2017 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY, PLANT AND EQUIPMENT | PROPERTY, PLANT AND EQUIPMENT The following table summarizes property, plant and equipment as of June 30, 2017 and December 31, 2016 : As of June 30, As of December 31, 2017 2016 Building $ 5,828,960 $ 5,828,960 Furniture, fixtures, computer hardware and computer software 489,421 489,421 Manufacturing machinery and equipment 30,300,391 30,300,391 Net depreciable property, plant and equipment 36,618,772 36,618,772 Manufacturing machinery and equipment in progress 20,688 20,688 Property, plant and equipment 36,639,460 36,639,460 Less: Accumulated depreciation and amortization (31,606,565 ) (30,983,448 ) Net property, plant and equipment $ 5,032,895 $ 5,656,012 The Company analyzes its long-lived assets for impairment, both individually and as a group, whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. Depreciation expense for the three and six months ended June 30, 2017 was $ 288,493 and $ 623,117 , respectively, compared to depreciation expense of $1,362,718 and $2,722,210 for the three and six months ended June 30, 2016 , respectively. Depreciation expense is recorded under “Depreciation and amortization expense” in the Condensed Consolidated Statements of Operations. |
INVENTORIES
INVENTORIES | 6 Months Ended |
Jun. 30, 2017 | |
Inventory Disclosure [Abstract] | |
INVENTORIES | INVENTORIES Inventories consisted of the following at June 30, 2017 and December 31, 2016 : As of June 30, As of December 31, 2017 2016 Raw materials $ 770,448 $ 832,806 Work in process 45,413 635,130 Finished goods 380,001 1,101,880 Total $ 1,195,862 $ 2,569,816 The Company analyzes its inventory for impairment, both categorically and as a group, whenever events or changes in circumstances indicate that the carrying amount of the inventory may not be recoverable. During the six months ended June 30, 2017 , the Company impaired $363,758 of inventory. Inventory amounts are shown net of allowance of $623,014 and $736,663 for the three months ended June 30, 2017 and the year ended December 31, 2016 , respectively. |
DEBT
DEBT | 6 Months Ended |
Jun. 30, 2017 | |
Debt Disclosure [Abstract] | |
DEBT | DEBT On February 8, 2008, the Company acquired a manufacturing and office facility in Thornton, Colorado, for approximately $5.5 million . The purchase was financed by a promissory note, deed of trust and construction loan agreement (the “Construction Loan”) with the Colorado Housing and Finance Authority (“CHFA”), which provided the Company borrowing availability of up to $7.5 million for the building and building improvements. In 2009, the Construction Loan was converted to a permanent loan pursuant to a Loan Modification Agreement between the Company and CHFA (the “Permanent Loan”). The Permanent Loan, collateralized by the building, has an interest rate of 6.6% and the principal will be amortized through its term to January 2028. Further, pursuant to certain negative covenants in the Permanent Loan, the Company may not, among other things, without CHFA’s prior written consent (which by the terms of the deed of trust is subject to a reasonableness requirement): create or incur additional indebtedness (other than obligations created or incurred in the ordinary course of business); merge or consolidate with any other entity; or make loans or advances to the Company’s officers, shareholders, directors or employees. The outstanding principal balance of the Permanent Loan was $5,651,939 and $5,704,932 as of June 30, 2017 and December 31, 2016 , respectively. On November 1, 2016, the Company and the CFHA agreed to modify the original agreement described above with the addition of a forbearance period. Per the modification agreement, no payments of principal and interest shall be due under the note during the forbearance period commencing on November 1, 2016 and continuing through April 1, 2017. The amount of interest that should have been paid by the Company during the forbearance period in the total amount of $180,043 shall be added to the outstanding principal balance of the note. As a result, on May 1, 2017, the principal balance of the note was $5,704,932 . Commencing on May 1, 2017, the monthly payments of principal and interest due under the note resumed at $57,801 , and the Company shall continue to make such monthly payments over the remaining term of the note ending on February 1, 2028. As of June 30, 2017 , remaining future principal payments on long-term debt are due as follows: 2017 $ 190,121 2018 343,395 2019 366,757 2020 391,709 2021 418,358 Thereafter 3,941,599 $ 5,651,939 |
NOTES PAYABLE
NOTES PAYABLE | 6 Months Ended |
Jun. 30, 2017 | |
Debt Disclosure [Abstract] | |
NOTES PAYABLE | NOTES PAYABLE On February 24, 2017 , the Company entered into an agreement with a vendor to convert the balance of their account into three notes payable in the aggregate amount of $ 765,784 . The notes bear interest of 6% per annum and mature on February 24, 2018 ; all outstanding principal and accrued interest is due and payable upon maturity. As of June 30, 2017 , the Company had not made any payments on these notes and the accrued interest was $ 16,081 . On February 27, 2017 , the Company entered into an agreement with a vendor to convert the balance of their account into a note payable in the amount of $ 49,500 . The note bears interest of 6% per annum and matures on September 27, 2017 ; all outstanding principal and accrued interest is due and payable upon maturity. As of June 30, 2017 , the Company had not made any payments on the note and the accrued interest was $ 1,001 . On March 23, 2017 , the Company entered into an agreement with a vendor to convert the balance of their account into a note payable in the amount of $ 356,742 . The note bears interest of 5% per annum and matures on October 23, 2017 ; all outstanding principal and accrued interest is due and payable upon maturity. As of June 30, 2017 , the Company had not made any payments on the note and the accrued interest was $ 4,838 . On June 30, 2017 , the Company entered into an agreement with a vendor to convert the balance of their account into a note payable in the amount of $ 250,000 . The note bears interest of 5% per annum and matures on February 28, 2018 ; all outstanding principal and accrued interest is due and payable upon maturity. PROMISSORY NOTES Tertius Financial Group Notes and Exchange On August 29, 2016, the Company entered into a note purchase agreement with Tertius Financial Group Pte. Ltd. ("TFG”) for the private placement of $330,000 of the Company’s original issue discount notes with an original maturity date of November 26, 2016. The notes bear interest of 6% per annum and principal and interest on the notes are payable upon maturity. The notes are unsecured and not convertible into equity shares of the Company. On December 6, 2016, the Company issued a new $600,000 original issue discount note to TFG in exchange for (i) $200,000 of additional gross proceeds and (ii) cancellation of the existing outstanding $330,000 note. The new TFG note bears interest at a rate of 6% per annum and matures on December 31, 2017. Principal and interest on the new TFG note is payable at maturity. Following the transaction, the outstanding balance of the new note was $602,000 (including accrued and unpaid interest) with a discount of $60,000 as of December 31, 2016 . On January 19, 2017, the Company issued 333,333,333 shares of unregistered common stock in a private placement to TFG pursuant to a Securities Purchase Agreement (the “SPA”). Pursuant to the SPA, the Company issued the 333,333,333 shares to TFG in exchange for cancellation of its $600,000 promissory note (including accrued interest of approximately $4,340 ) that was issued by the Company on December 6, 2016. The SPA does not provide any registration rights for the shares issued to TFG. TFG is a Singapore based entity controlled and 50% owned by Ascent’s President & CEO, Victor Lee, and owns less than 5% of the Company's outstanding shares at June 30, 2017 . Offering of Unsecured Non-Convertible Notes Between December 2016 and April 2017, the Company initiated eleven non-convertible, unsecured promissory notes with a private investor with varying principal amounts. The promissory notes bear interest of 12% per annum and mature six months from the respective dates of issuance ranging from June 2, 2017 to October 21, 2017. Unless paid in advance, the principal and interest of these promissory notes are payable upon maturity. The notes are not convertible into equity shares of the Company and are unsecured. During June 2017, three of the promissory notes described above matured. The Company and the private investor agreed to pay the interest accrued on these notes, as of the maturity dates, and extend the notes another three months without the Company being in default. During June 2017, $60,434 interest was paid. As of June 30, 2017 and December 31, 2016 the outstanding principal balance on these promissory notes was $3,400,000 and $1,010,000 , respectively. The accrued interest outstanding on these notes was $ 105,349 as of June 30, 2017 . During October 2016, the Company received $420,000 from a separate private investor. These funds were rolled into a promissory note, executed on January 17, 2017, in the amount of $700,000 issued with a discount of $30,000 which will be charged to interest expense ratably over the term of the note. The note bears interest at 12% per annum and matures on July 17, 2017 . Principal and interest on this note are payable at maturity. This note is not convertible into equity shares of the Company and is unsecured. On June 30, 2017, the Company and the private investor agreed to a 12 month payment plan on the balance of this promissory note. Interest will continue to accrue on this note at 12% per annum and payments of approximately $62,000 will be made monthly beginning in July 2017. As of June 30, 2017 the outstanding principal and accrued interest balances on the note were $700,000 and $ 52,022 , respectively. During April 2017, the Company initiated a non-convertible, unsecured promissory note with a private investor for $103,000 in exchange for proceeds of $100,000 . The discount of $3,000 will be charged to interest expense ratably over the term of the note, The promissory note bears interest of 10% per annum and matures on October 6, 2017 . As of June 30, 2017 , the principal and accrued interest outstanding on the promissory note was $103,000 and $2,432 , respectively. During May 2017, the Company initiated a non-convertible, unsecured promissory note with a private investor for $125,000 . The promissory note bears interest of 12% per annum and matures on August 8, 2017 . As of June 30, 2017 , the principal and accrued interest outstanding on the promissory note was $125,000 and $2,208 , respectively. |
PROMISSORY NOTES
PROMISSORY NOTES | 6 Months Ended |
Jun. 30, 2017 | |
Debt Disclosure [Abstract] | |
PROMISSORY NOTE | NOTES PAYABLE On February 24, 2017 , the Company entered into an agreement with a vendor to convert the balance of their account into three notes payable in the aggregate amount of $ 765,784 . The notes bear interest of 6% per annum and mature on February 24, 2018 ; all outstanding principal and accrued interest is due and payable upon maturity. As of June 30, 2017 , the Company had not made any payments on these notes and the accrued interest was $ 16,081 . On February 27, 2017 , the Company entered into an agreement with a vendor to convert the balance of their account into a note payable in the amount of $ 49,500 . The note bears interest of 6% per annum and matures on September 27, 2017 ; all outstanding principal and accrued interest is due and payable upon maturity. As of June 30, 2017 , the Company had not made any payments on the note and the accrued interest was $ 1,001 . On March 23, 2017 , the Company entered into an agreement with a vendor to convert the balance of their account into a note payable in the amount of $ 356,742 . The note bears interest of 5% per annum and matures on October 23, 2017 ; all outstanding principal and accrued interest is due and payable upon maturity. As of June 30, 2017 , the Company had not made any payments on the note and the accrued interest was $ 4,838 . On June 30, 2017 , the Company entered into an agreement with a vendor to convert the balance of their account into a note payable in the amount of $ 250,000 . The note bears interest of 5% per annum and matures on February 28, 2018 ; all outstanding principal and accrued interest is due and payable upon maturity. PROMISSORY NOTES Tertius Financial Group Notes and Exchange On August 29, 2016, the Company entered into a note purchase agreement with Tertius Financial Group Pte. Ltd. ("TFG”) for the private placement of $330,000 of the Company’s original issue discount notes with an original maturity date of November 26, 2016. The notes bear interest of 6% per annum and principal and interest on the notes are payable upon maturity. The notes are unsecured and not convertible into equity shares of the Company. On December 6, 2016, the Company issued a new $600,000 original issue discount note to TFG in exchange for (i) $200,000 of additional gross proceeds and (ii) cancellation of the existing outstanding $330,000 note. The new TFG note bears interest at a rate of 6% per annum and matures on December 31, 2017. Principal and interest on the new TFG note is payable at maturity. Following the transaction, the outstanding balance of the new note was $602,000 (including accrued and unpaid interest) with a discount of $60,000 as of December 31, 2016 . On January 19, 2017, the Company issued 333,333,333 shares of unregistered common stock in a private placement to TFG pursuant to a Securities Purchase Agreement (the “SPA”). Pursuant to the SPA, the Company issued the 333,333,333 shares to TFG in exchange for cancellation of its $600,000 promissory note (including accrued interest of approximately $4,340 ) that was issued by the Company on December 6, 2016. The SPA does not provide any registration rights for the shares issued to TFG. TFG is a Singapore based entity controlled and 50% owned by Ascent’s President & CEO, Victor Lee, and owns less than 5% of the Company's outstanding shares at June 30, 2017 . Offering of Unsecured Non-Convertible Notes Between December 2016 and April 2017, the Company initiated eleven non-convertible, unsecured promissory notes with a private investor with varying principal amounts. The promissory notes bear interest of 12% per annum and mature six months from the respective dates of issuance ranging from June 2, 2017 to October 21, 2017. Unless paid in advance, the principal and interest of these promissory notes are payable upon maturity. The notes are not convertible into equity shares of the Company and are unsecured. During June 2017, three of the promissory notes described above matured. The Company and the private investor agreed to pay the interest accrued on these notes, as of the maturity dates, and extend the notes another three months without the Company being in default. During June 2017, $60,434 interest was paid. As of June 30, 2017 and December 31, 2016 the outstanding principal balance on these promissory notes was $3,400,000 and $1,010,000 , respectively. The accrued interest outstanding on these notes was $ 105,349 as of June 30, 2017 . During October 2016, the Company received $420,000 from a separate private investor. These funds were rolled into a promissory note, executed on January 17, 2017, in the amount of $700,000 issued with a discount of $30,000 which will be charged to interest expense ratably over the term of the note. The note bears interest at 12% per annum and matures on July 17, 2017 . Principal and interest on this note are payable at maturity. This note is not convertible into equity shares of the Company and is unsecured. On June 30, 2017, the Company and the private investor agreed to a 12 month payment plan on the balance of this promissory note. Interest will continue to accrue on this note at 12% per annum and payments of approximately $62,000 will be made monthly beginning in July 2017. As of June 30, 2017 the outstanding principal and accrued interest balances on the note were $700,000 and $ 52,022 , respectively. During April 2017, the Company initiated a non-convertible, unsecured promissory note with a private investor for $103,000 in exchange for proceeds of $100,000 . The discount of $3,000 will be charged to interest expense ratably over the term of the note, The promissory note bears interest of 10% per annum and matures on October 6, 2017 . As of June 30, 2017 , the principal and accrued interest outstanding on the promissory note was $103,000 and $2,432 , respectively. During May 2017, the Company initiated a non-convertible, unsecured promissory note with a private investor for $125,000 . The promissory note bears interest of 12% per annum and matures on August 8, 2017 . As of June 30, 2017 , the principal and accrued interest outstanding on the promissory note was $125,000 and $2,208 , respectively. |
SERIES A PREFERRED STOCK
SERIES A PREFERRED STOCK | 6 Months Ended |
Jun. 30, 2017 | |
Equity [Abstract] | |
PREFERRED STOCK | SERIES A PREFERRED STOCK In June 2013, the Company entered into a Securities Purchase Agreement with an investor to sell an aggregate of 750,000 shares of Series A Preferred Stock at a price of $8.00 per share, resulting in gross proceeds of $6,000,000 . This purchase agreement included warrants to purchase up to 13,125 shares of common stock of the Company. The transfer of cash and securities took place incrementally, the first closing occurring on June 17, 2013 with the transfer of 125,000 shares of Series A Preferred Stock and a warrant to purchase 2,187 shares of common stock for $1,000,000 . The final closings took place in August 2013, with the transfer of 625,000 shares of Series A Preferred Stock and a warrant to purchase 10,938 shares of common stock for $5,000,000 . Holders of Series A Preferred Stock are entitled to cumulative dividends at a rate of 8% per annum when and if declared by the Board of Directors in its sole discretion. The dividends may be paid in cash or in the form of common stock (valued at 10% below market price, but not to exceed the lowest closing price during the applicable measurement period), at the discretion of the Board of Directors. The dividend rate on the Series A Preferred Stock is indexed to the Company's stock price and subject to adjustment. In addition, the Series A Preferred Stock contains a make-whole provision whereby, conversion or redemption of the preferred stock within 4 years of issuance will require dividends for the full four year period to be paid by the Company in cash or common stock (valued at 10% below market price, but not to exceed the lowest closing price during the applicable measurement period). The Series A Preferred Stock may be converted into shares of common stock at the option of the Company if the closing price of the common stock exceeds $232 , as adjusted, for 20 consecutive trading days, or by the holder at any time. The Company has the right to redeem the Series A Preferred Stock at a price of $8.00 per share, plus any accrued and unpaid dividends, plus the make-whole amount (if applicable). At June 30, 2017 , the preferred shares were not eligible for conversion to common shares at the option of the Company. The holder of the preferred shares may convert to common shares at any time, at no cost, at a ratio of 1 preferred share into 1 common share (subject to standard ratable anti-dilution adjustments). Upon any conversion (whether at the option of the Company or the holder), the holder is entitled to receive any accrued but unpaid dividends and also any make-whole amount (if applicable). See Note 19. Make-Whole Dividend Liability. On October 6, 2016, the Series A Holder entered into an exchange agreement (the “Exchange Agreement”) with Adar Bays. Pursuant to the exchange agreement, beginning December 5, 2016, Adar Bays has the option to exchange, from time to time, all or any portion of the October 2016 Convertible Notes (see Note 17) for outstanding shares of Series A Preferred Stock from the Series A Holder. As of June 30, 2017 , Adar Bays had elected to exchange all outstanding October 2016 Convertible Notes, in accordance with the exchange agreement, resulting in the exchange of 104,785 shares of Series A Preferred Stock. As of June 30, 2017 , Adar Bays had also converted their 104,785 shares of Series A Preferred Stock, and the related make whole dividend, which resulted in the issuance of 173,946,250 shares of common stock. Except as otherwise required by law (or with respect to approval of certain actions), the Series A Preferred Stock shall have no voting rights. Upon any liquidation, dissolution or winding up of the Company, after payment or provision for payment of debts and other liabilities of the Company, the holders of Series A Preferred Stock shall be entitled to receive, pari passu with any distribution to the holders of common stock of the Company, an amount equal to $8.00 per share of Series A Preferred Stock plus any accrued and unpaid dividends. As of June 30, 2017 , there were 60,756 shares of Series A Preferred Stock outstanding. SERIES E PREFERRED STOCK AND THE COMMITTED EQUITY LINE Series E Preferred Stock On November 4, 2015, the Company entered into a securities purchase agreement with a private investor to issue 2,800 shares of Series E Preferred Stock in exchange for $2,800,000 . Shares of the Series E Preferred Stock (including the amount of any accrued and unpaid dividends thereon) are convertible, at the option of the holder, into common stock at a variable conversion price equal to 80% of the average of the two lowest VWAPs of the Company's common stock for the ten consecutive trading day period prior to the conversion date. If certain defined default events occur, the conversion price would thereafter be reduced (and only reduced), to equal 70% of the average of the two lowest VWAPs of the Company's common stock for the twenty consecutive trading day period prior to the conversion date. The private investor had available to them a new conversion price beginning on June 9, 2016 as a result of the Series H Preferred Stock transaction further described in Note 14. Shares of the Series E Preferred Stock are now convertible, at the option of the private investor, into common stock at a variable conversion price equal to 70% of (i) the lowest VWAP of our common stock for the ten consecutive trading day period prior to the conversion date or (ii) the lowest closing bid price of our common stock for the ten consecutive trading day period prior to the conversion date. The following table summarizes the conversion activity of the Series E Preferred Stock: Conversion Period Preferred Series E Shares Converted Value of Series E Preferred Shares (inclusive of accrued dividends) Common Shares Issued Q4 2015 478 $ 481,500 250,000 Q1 2016 1,220 1,239,436 1,132,000 Q2 2016 365 381,414 7,979,568 Q3 2016 523 548,896 21,973,747 Q4 2016 94 101,018 13,089,675 Q1 2017 15 16,248 8,289,962 Q2 2017 35 38,886 134,927,207 2,730 $ 2,807,398 187,642,159 Holders of the Series E Preferred Stock will be entitled to dividends in the amount of 7% per annum. During the six months ended June 30, 2017 , the holder converted dividends in the amount of $5,134 on the Series E Preferred Stock, resulting in the issuance of 14,135,538 shares of common stock. The Company has issued 18,000 shares of common stock to the private investor as a commitment fee relating to the Series E Preferred Stock. Costs associated with the Series E Preferred Stock, such as legal fees and commitment shares are capitalized and reported as deferred financing costs on the Condensed Consolidated Balance Sheets. The total gross debt issuance cost incurred by the Company related to the Series E Preferred Stock was $104,000 . These debt issuance costs will be recognized as additional interest expense over the life of the Series E Preferred Stock. At any time after March 31, 2016, the private investor has the option to redeem for cash all or any portion of the outstanding shares of the Series E Preferred Stock at a price per share equal to $1,250 plus any accrued but unpaid dividends thereon. At any time after the third anniversary of the date of the initial issuance of Series E Preferred Stock, the Company will have the option to redeem for cash all outstanding shares of the Series E Preferred Stock at a price per share equal to $1,250 plus any accrued but unpaid dividends thereon. The Company classified the Series E Preferred Stock as a liability pursuant to ASC 480 on the closing date due to the structure of the financing agreement, whereby the Company has an unconditional obligation that the Company may settle by issuing a variable number of common shares with a monetary value that is fixed and known at inception. There are 70 shares of Series E Preferred Stock outstanding, representing a value of $70,000 , as of June 30, 2017 . Pursuant to a number of factors outlined in ASC Topic 815, Derivatives and Hedging , the conversion option in the Series E Preferred Stock was deemed to include an embedded derivative that required bifurcation and separate accounting. As such, the Company ascertained the value of the conversion option as if separate from the convertible issuance and appropriately recorded that value as a derivative liability. At December 31, 2016 , the derivative liability associated with the Series E Preferred Stock was $141,000 . The derivative liability associated with the Series E Preferred Stock is subject to revaluation on a quarterly basis to reflect the market value change of the embedded conversion option. At March 31, 2017 and June 30, 2017 , the Company conducted a fair value assessment of the embedded derivative associated with the Series E Preferred Stock. As a result of the fair value assessment, the Company recorded a $40,016 loss as "Change in fair value of derivatives and gain/(loss) on extinguishment of liabilities, net" in the Condensed Consolidated Statements of Operations, for the three months ended June 30, 2017 . The net gain recorded for the six months ended June 30, 2017 was $19,358 , to properly reflect the fair value of the embedded derivative of $121,390 as of June 30, 2017 . The fair value measurements rely primarily on Company-specific inputs and the Company’s own assumptions. With the absence of observable inputs, the Company determined these recurring fair value measurements reside primarily within Level 3 of the fair value hierarchy. The derivative associated with the Series E Preferred Stock approximates management’s estimate of the fair value of the embedded derivative liability at June 30, 2017 based on using a Monte Carlo simulation following a Geometric Brownian Motion with the following assumptions: annual volatility of 70% , present value discount rate of 12% and dividend yield of 0% . The Committed Equity Line On November 10, 2015, the Company and the private investor entered into a committed equity line purchase agreement (the "CEL"). Under the terms and subject to the conditions of the CEL purchase agreement, at its option the Company has the right to sell to the private investor, and the private investor is obligated to purchase from the Company, up to $32.2 million of the Company’s common stock, subject to certain limitations, from time to time, over the 36 -month period commencing on December 18, 2015, the date that the registration statement was declared effective by the SEC. From time to time, the Company may direct the private investor, at its sole discretion and subject to certain conditions, to purchase an amount of shares of common stock up to the lesser of (i) $1,000,000 or (ii) 300% of the average daily trading volume of the Company’s common stock over the preceding ten trading day period. The per share purchase price for shares of common stock to be sold by the Company under the CEL purchase agreement shall be equal to 80% of the average of the two lowest VWAPs of the common stock for the ten consecutive trading day period prior to the purchase date. As of June 30, 2017 , the Company had directed the private investor to purchase 3,056,147 of common stock which resulted in the issuance of 1,368,000 shares of common stock The Company may not direct the private investor to purchase shares of common stock more frequently than once each ten business days. The Company’s sales of shares of common stock to the private investor under the CEL purchase agreement are limited to no more than the number of shares that would result in the beneficial ownership by the private investor and its affiliates, at any single point in time, of more than 9.99% of the Company’s then outstanding shares of common stock. As consideration for entering into the CEL purchase agreement, the Company agreed to issue to the private investor 132,000 shares of common stock (the “Commitment Shares”). The Commitment Shares were issued to the private investor commencing upon the date that the registration statement was declared effective by the SEC. SERIES F PREFERRED STOCK On January 19, 2016, the Company entered into a securities purchase agreement with a private investor for the sale of $7,000,000 of the Company’s newly designated Series F 7% Convertible Preferred Stock (the “Series F Preferred Stock”). On January 20, 2016, the Company sold and issued 7,000 shares of Series F Preferred Stock to the private investor. The aggregate purchase price of the Series F Preferred shares was $7,000,000 . On January 20, 2016, the private investor paid $500,000 to the Company. The remaining $6,500,000 was paid by the private investor to the Company in 14 weekly increments of $500,000 or $250,000 beginning January 25, 2016 and ending April 28, 2016. Shares of the Series F Preferred Stock (including the amount of any accrued and unpaid dividends thereon) are convertible, at the option of the holder, into common stock at a fixed conversion price equal to $5.00 per share. If certain defined default events occur, the conversion price would thereafter be reduced (and only reduced), to equal 70% of the average of the two lowest VWAPs of our common stock for the twenty consecutive trading day period prior to the conversion date. If requested by the private investor, the Company will make weekly redemptions of shares of Series F Preferred Stock (including any accrued and unpaid dividends thereon). If the redemption price is paid by the Company in cash, the number of shares to be redeemed in each weekly increment is 250 shares of Series F Preferred Stock, and the redemption price is a price per share equal to $1,250 plus any accrued but unpaid dividends thereon. The Company has the option to make such redemption payments in shares of common stock provided certain specified equity conditions are satisfied at the time of payment. The number of shares of common stock to be issued would be calculated using a per share price equal to 80% of the one lowest VWAP of our common stock for the ten consecutive trading day period prior to the payment date. For redemption payments made in shares of common stock, the Company will redeem either (i) 250 shares of Series F Preferred Stock or (ii) such greater number of shares of Series F Preferred Stock (and also including any accrued and unpaid dividends) that would result upon redemption in the issuance of a number of shares of common stock equal to 12% of the aggregate composite trading volume for the Company’s common stock during the preceding calendar week. The private investor had available to them a new conversion price beginning on June 9, 2016 as a result of the Series H Preferred Stock transaction further described in Note 14. Shares of the Series F Preferred Stock are now convertible, at the option of the private investor, into common stock at a variable conversion price equal to 70% of (i) the lowest VWAP of our common stock for the ten consecutive trading day period prior to the conversion date or (ii) the lowest closing bid price of our common stock for the ten consecutive trading day period prior to the conversion date. Amendment of Outstanding Series F Preferred Stock Conversion Price On October 5, 2016, the Company filed a Certificate of Amendment to the Certificate of Designations of Preferences, Rights and Limitations of Series F Preferred Stock with the Secretary of State of the State of Delaware. The Certificate of Amendment amends the conversion price at which the Series F Preferred Stock can be converted into shares of common stock. The Company had approximately $336,000 of Series F Preferred Stock remaining outstanding as of October 5, 2016. As amended, the conversion price will now be equal to the lowest of (i) 50% of the lowest weighted average price (“VWAP”) of our common stock for the ten consecutive trading day period prior to the conversion date or (ii) 50% of the lowest closing bid price of our common stock for the ten consecutive trading day period prior to the conversion date. If certain “Triggering Events” specified in the terms of the Series F Preferred Stock occur, then the conversion price of the Series F Preferred Stock shall be thereafter reduced, and only reduced, to equal 50% of the average of the lowest traded price of the common stock for the twenty consecutive trading day period prior to the conversion date. The following table summarizes the conversion activity of the Series F Preferred Stock: Conversion Period Preferred Series F Shares Converted Value of Series F Preferred Shares (inclusive of accrued dividends) Common Shares Issued Q1 2016 2,168 $ 2,188,298 2,183,992 Q2 2016 3,234 3,300,931 6,649,741 Q3 2016 1,262 1,315,743 81,917,364 Q4 2016 176 185,118 27,276,005 6,840 $ 6,990,090 118,027,102 Holders of the Series F Preferred Stock are entitled to dividends in the amount of 7% per annum. During the quarter ended June 30, 2017 , the Company did not pay any dividends or issue any shares in relation to accrued dividends. The Company classified the Series F Preferred Stock as a liability pursuant to ASC 480 on the closing date due to the structure of the financing agreement, whereby the Company has an unconditional obligation that the Company may settle by issuing a variable number of common shares with a monetary value that is fixed and known at inception. There are 160 shares of Series F Preferred Stock, representing a value of $160,000 , outstanding as of June 30, 2017 . Pursuant to a number of factors outlined in ASC Topic 815, Derivatives and Hedging , the conversion option in the Series F Preferred Stock was deemed to include an embedded derivative that required bifurcation and separate accounting. As such, the Company ascertained the value of the conversion option as if separate from the convertible issuance and appropriately recorded that value as a derivative liability. At closing, a derivative liability and a corresponding debt discount in the amount of $1,666,000 were recorded. The debt discount will be charged to interest expense ratably over the life of the Series F Preferred Stock. The derivative liability associated with the Series F Preferred Stock is subject to revaluation on a quarterly basis to reflect the market value change of the embedded conversion option. At June 30, 2017 , the Company conducted a fair value assessment of the embedded derivative associated with the Series F Preferred Stock. As a result of the fair value assessment, the Company recorded a $209,613 loss as "Change in fair value of derivatives and gain/(loss) on extinguishment of liabilities, net" in the Condensed Consolidated Statements of Operations, for the three months ended June 30, 2017 . The net loss recorded for the six months ended June 30, 2017 was $85,557 , to properly reflect the fair value of the embedded derivative of $340,881 as of June 30, 2017 . The fair value measurements rely primarily on Company-specific inputs and the Company’s own assumptions. With the absence of observable inputs, the Company determined these recurring fair value measurements reside primarily within Level 3 of the fair value hierarchy. The derivative associated with the Series F Preferred Stock approximates management’s estimate of the fair value of the embedded derivative liability at June 30, 2017 based on using a Monte Carlo simulation following a Geometric Brownian Motion with the following assumptions: annual volatility of 66% , present value discount rate of 12% and dividend yield of 0% . SERIES G PREFERRED STOCK On April 29, 2016, the Company entered into a securities purchase agreement with private investors to issue 2,000 shares of Series G Preferred Stock for $2,000,000 . At Closing, the Company issued a total of 500 shares of Series G Preferred Stock to the private investors in exchange for $500,000 . The Company issued an additional 1,500 shares of Series G Preferred Stock to the private investors during the months of May and June 2016, which resulted in additional gross proceeds to the Company of $1,500,000 . Holders of the Series G Preferred Stock will be entitled to dividends in the amount of 10% per annum. One year after issuance, the Company is required to redeem for cash all or any portion of the outstanding shares of the Series G Preferred Stock at a price per share equal to $1,000 plus any accrued but unpaid dividends thereon. Assignment of Series G Preferred Stock Beginning September 19, 2016, the two private investors (the “Series G Sellers”) entered into assignment agreements with accredited investors (the “Series G Purchasers”). Under the terms of the assignment agreements, the Series G Sellers may sell all 2,000 outstanding shares of Series G Preferred Stock to the Series G Purchasers for a purchase price of $1,000 per share of Series G Preferred Stock (plus the amount of any accrued and unpaid dividends thereon). As of June 30, 2017 , the Series G Sellers had sold 1,835 shares of Series G Preferred Stock, representing a value of $1,835,000 , to the Series G Purchasers. On September 21, 2016, the Company filed a Certificate of Amendment to the Certificate of Designations of Preferences, Rights and Limitations of Series G Preferred Stock with the Secretary of State of the State of Delaware. The Certificate of Amendment amends the conversion price at which the Series G Preferred Stock can be converted into shares of common stock. Shares of the Series G Preferred Stock (including the amount of any accrued and unpaid dividends thereon) were previously convertible at the option of the private investors into common stock at a fixed conversion price of $1.00 per share. As amended, the conversion price is equal to the lowest of (i) $0.045 , (ii) 70% of the lowest volume weighted average price of the Company’s common stock for the ten consecutive trading day period prior to the conversion date or (iii) 70% of the lowest closing bid price of the Company’s common stock for the ten consecutive trading day period prior to the conversion date. The following table summarizes the conversion activity of the Series G Preferred Stock: Conversion Period Preferred Series G Shares Converted Value of Series G Preferred Shares (inclusive of accrued dividends) Common Shares Issued Q4 2016 892 929,895 245,726,283 Q1 2017 372 397,970 327,718,386 Q2 2017 526 575,096 1,337,776,821 1,790 $ 1,902,961 1,911,221,490 Holders of the Series G Preferred Stock will be entitled to dividends in the amount of 10% per annum. During the six months ended June 30, 2017 , the Company converted dividends in the amount of $49,096 on the Series G Preferred Stock, resulting in the issuance of 114,854,745 shares of common stock. On June 29, and June 30, 2017, the Company redeemed the remaining 210 outstanding shares, and the related accrued dividends for cash payments in the amount of $232,440 . Due to international wire cut off times, $182,715 of that amount was not actually paid until July 3, 2017, and the resulting liability is included in accounts payable on the Condensed Consolidated Balance Sheet for the six months ended June 30, 2017 . As of June 30, 2017 , all Series G Preferred Stock Shares, and the related accrued dividends, had either been converted or redeemed. Pursuant to a number of factors outlined in ASC Topic 815, Derivatives and Hedging , the conversion option in the Series G Preferred Stock were deemed to include an embedded derivative that required bifurcation and separate accounting. As such, the Company ascertained the value of the conversion option as if separate from the convertible issuance and appropriately recorded that value as a derivative liability. At December 31, 2016 the fair value of the derivative liability was $361,831 and was $219,347 prior to the redemption. At June 30, 2017 , the Company recorded the reduction of the remaining embedded derivative associated with the Series G Preferred Stock of $219,347 as a gain in the "Change in fair value of derivatives and gain/(loss) on extinguishment of liabilities, net" in the Condensed Consolidated Statements of Operations for the three months ended June 30, 2017 . The net gain recorded for the six months ended June 30, 2017 was $361,831 , to properly reflect the elimination of the embedded derivative as of June 30, 2017 . Conversion Inducement and Disposal Price Guarantee On January 17, 2017, one of the Series G Preferred Stock holders (“Holder A”) requested a conversion of 100 shares of Series G Preferred Stock, $100,000 face value, including accrued dividends of $6,416.67 for a total conversion value of $106,416.67 into common stock of the Company at a conversion price of $0.00112 which would have resulted in the issuance of 95,014,884 shares of common stock. At the date of the request the Company did not have enough authorized shares to execute the conversion request and therefore entered into an agreement with Holder A to honor the conversion price of $0.00112 and issue the 95,014,884 shares of common stock upon the increase of the authorized common shares of the Company. The actual conversion occurred on March 17, 2017 which would have been a conversion price of $0.00168 . In conjunction with the conversion price agreement the Company agreed to provide a minimum disposal price guarantee to the Holder A of $0.003 on the tranche of 95,014,884 shares. If Holder A fails to dispose of these shares at $0.003 or above the Company will issue additional shares of common stock to make up the difference between the minimum disposal price of $0.003 and the price that Holder A disposed of the shares. During the six months ended June 30, 2017 , in accordance with ASC 470-20-40-16, the Company recorded expense of $79,179 related to the conversion inducement and expense of $134,566 related to the disposal price guarantee. The amount related to the disposal price guarantee was also recorded as a corresponding liability in the Condensed Consolidated Balance Sheet as of June 30, 2017 . JULY 2016 CONVERTIBLE NOTES Series H Preferred Stock On June 9, 2016, the Company entered into a securities purchase agreement with a private investor to issue 2,500 shares of Series H Preferred Stock for $2,500,000 . The Company received gross proceeds of $250,000 at Closing. Additional gross proceeds of $580,000 were received by the Company through July 7, 2016. The Company agreed to exchange outstanding Series H Preferred Stock for Senior Secured Convertible Notes (“July 2016 Notes”) on July 13, 2016. At the date of the exchange, the Company had sold and issued 830 shares of Series H Preferred Stock to the private investor in exchange for $830,000 of gross proceeds. Refer to the section below for details of the exchange. July 2016 Convertible Notes On July 13, 2016, the Company entered into a securities purchase agreement (the “Note SPA”) with the private investor for the private placement of up to $2,082,600 of the Company’s 4% Original Issue Discount Senior Secured Convertible Promissory Notes (the “July 2016 Convertible Notes”). On July 13, 2016, the Company sold and issued $364,000 principal amount of notes to the investor in exchange for $350,000 of gross proceeds. The Company sold and issued the remaining $1,718,600 principal amount of July 2016 Convertible Notes to the investor in exchange for $1,650,000 of gross proceeds in weekly tranches between July and September 2016. The Company and the private investor also entered into an Exchange Agreement dated July 13, 2016 (the “Exchange Agreement”). Under the terms of the Exchange Agreement, the outstanding shares of Series H Preferred Stock (approximately $833,000 of capital and accrued dividends) were canceled. In exchange, the Company issued to the private investor approximately $866,000 of July 2016 Convertible Notes. There were 830 shares of Series H Preferred Stock outstanding as of the date of the Exchange Agreement. Unless earlier converted or prepaid, all of the July 2016 Convertible Notes will mature July 13, 2017 (the “Maturity Date”). The July 2016 Convertible Notes bear interest at a rate of 10% per annum, subject to increase to 24% per annum upon the occurrence and continuance of an event of default. Principal on the July 2016 Convertible Notes is payable on the Maturity Date. Interest on the July 2016 Convertible Notes is payable quarterly. Principal and interest are payable in cash or, if specified equity conditions are met, shares of Common Stock. The July 2016 Convertible Notes are secured by a security interest in substantially all of the Company’s assets. The subsidiaries of the Company have guaranteed the Company’s obligations under the July 2016 Convertible Notes. The July 2016 Convertible Notes contain standard and customary events of default including but not limited to: (i) failure to make payments when due under the July 2016 Convertible Notes; (ii) bankruptcy or insolvency of the Company; and (iii) failure to file a registration statement by October 9, 2016. On October 10, 2016 the Company had not been successful in filing the registration statement triggering an event of default per the July 2016 Note Agreement. Upon default the interest rate increases to 24% per annum and the holder of the July 2016 Notes has the option to accelerate the Note and demand cash payment of the Mandatory Default Amount consisting of a 25% premium of the principal balance plus any accrued and unpaid interest. The Company began accruing interest at the rate of 24% on October 10, 2016. Forbearance and Settlement Agreement on July 2016 Convertible Notes On May 5, 2017, the Company entered into a Forbearance and Settlement Agreement ("Forbearance Agreement") with a holder of certain secured convertible notes that are in default due to various triggering events. The holder and the Company agreed to forbear from taking any action provided for under the secured convertible notes in exchange for the following terms provided in this agreement: • The Company agreed to redeem for cash all secured convertible notes of the Company held by the holder no later than September 1, 2017 . • The Company affirmed that the current balance of owed principal and accrued and unpaid interest to the holder is $1,790,214 as of May 2, 2017. • The redemption price for such secured convertible notes shall be 120% (if redeemed on or prior to August 15, 2017) or 125% (if redeemed after August 15, 2017) of the then outstanding principal, plus any accrued and unpaid interest. • During the month of May 2017, the Holder agreed to limit its conversions of outstanding Company secured convertible notes to $50,000 per calendar week of principal/interest. • During the months of June, July and August 2017, the holder agreed to limit its conversions of outstanding Company secured convertible notes to $75,000 per calendar week of principal/interest. • During the months of May, June, July and August 2017, the holder agreed that all outstanding Company secured convertible notes shall bear interest at the normal stated rate of 10% , rather than default rate of 24% . • All conversions during the months of May, June, July and August 2017 will be at the “triggering event” discount conversion price as stated in the secured convertible notes, and will continue at the “triggering event” discount price until, if and when the notes are redeemed. • Should the Company fail to redeem for cash all secured convertible notes on or before September 1, 2017 , default interest and normal stated interest will accrue from the date of execution of this agreement. All principal and accrued interest on the July 2016 Convertible Notes are convertible at any time, in whole or in part, at the option of the private investor, into shares of Common Stock at a variable conversion price equal to the lowest of (i) $0.045 (the “Fixed Conversion Price”), (ii) 70% of the lowest volume weighted average price (“VWAP”) of the Company's common stock for the ten consecutive trading day period prior to the conversion date or (iii) 70% of the lowest closing bid price of the Company's common stock for the ten consecutive trading day period prior to the conversion date. If certain defined triggering events occur, the conversion price would thereafter be reduced (and only reduced), to equal 60% of the lower of (i) the lowest closing bid price of the Company's common stock for the thirty consecutive trading day period prior to the conversion date or (ii) the lowest VWAP of the the Company's common stock for the thirty consecutive trading day period prior to the conversion date. In addition, on the 90th day and also on the 180th day from the date of the Note SPA, the private investor may reset the Fixed Conversion Price to thereafter be equal to the VWAP of the Common Stock for such day or if such 90th or 180th day is not a trading day, then the |
SERIES E PREFERRED STOCK AND TH
SERIES E PREFERRED STOCK AND THE COMMITTED EQUITY LINE | 6 Months Ended |
Jun. 30, 2017 | |
Equity [Abstract] | |
PREFERRED STOCK | SERIES A PREFERRED STOCK In June 2013, the Company entered into a Securities Purchase Agreement with an investor to sell an aggregate of 750,000 shares of Series A Preferred Stock at a price of $8.00 per share, resulting in gross proceeds of $6,000,000 . This purchase agreement included warrants to purchase up to 13,125 shares of common stock of the Company. The transfer of cash and securities took place incrementally, the first closing occurring on June 17, 2013 with the transfer of 125,000 shares of Series A Preferred Stock and a warrant to purchase 2,187 shares of common stock for $1,000,000 . The final closings took place in August 2013, with the transfer of 625,000 shares of Series A Preferred Stock and a warrant to purchase 10,938 shares of common stock for $5,000,000 . Holders of Series A Preferred Stock are entitled to cumulative dividends at a rate of 8% per annum when and if declared by the Board of Directors in its sole discretion. The dividends may be paid in cash or in the form of common stock (valued at 10% below market price, but not to exceed the lowest closing price during the applicable measurement period), at the discretion of the Board of Directors. The dividend rate on the Series A Preferred Stock is indexed to the Company's stock price and subject to adjustment. In addition, the Series A Preferred Stock contains a make-whole provision whereby, conversion or redemption of the preferred stock within 4 years of issuance will require dividends for the full four year period to be paid by the Company in cash or common stock (valued at 10% below market price, but not to exceed the lowest closing price during the applicable measurement period). The Series A Preferred Stock may be converted into shares of common stock at the option of the Company if the closing price of the common stock exceeds $232 , as adjusted, for 20 consecutive trading days, or by the holder at any time. The Company has the right to redeem the Series A Preferred Stock at a price of $8.00 per share, plus any accrued and unpaid dividends, plus the make-whole amount (if applicable). At June 30, 2017 , the preferred shares were not eligible for conversion to common shares at the option of the Company. The holder of the preferred shares may convert to common shares at any time, at no cost, at a ratio of 1 preferred share into 1 common share (subject to standard ratable anti-dilution adjustments). Upon any conversion (whether at the option of the Company or the holder), the holder is entitled to receive any accrued but unpaid dividends and also any make-whole amount (if applicable). See Note 19. Make-Whole Dividend Liability. On October 6, 2016, the Series A Holder entered into an exchange agreement (the “Exchange Agreement”) with Adar Bays. Pursuant to the exchange agreement, beginning December 5, 2016, Adar Bays has the option to exchange, from time to time, all or any portion of the October 2016 Convertible Notes (see Note 17) for outstanding shares of Series A Preferred Stock from the Series A Holder. As of June 30, 2017 , Adar Bays had elected to exchange all outstanding October 2016 Convertible Notes, in accordance with the exchange agreement, resulting in the exchange of 104,785 shares of Series A Preferred Stock. As of June 30, 2017 , Adar Bays had also converted their 104,785 shares of Series A Preferred Stock, and the related make whole dividend, which resulted in the issuance of 173,946,250 shares of common stock. Except as otherwise required by law (or with respect to approval of certain actions), the Series A Preferred Stock shall have no voting rights. Upon any liquidation, dissolution or winding up of the Company, after payment or provision for payment of debts and other liabilities of the Company, the holders of Series A Preferred Stock shall be entitled to receive, pari passu with any distribution to the holders of common stock of the Company, an amount equal to $8.00 per share of Series A Preferred Stock plus any accrued and unpaid dividends. As of June 30, 2017 , there were 60,756 shares of Series A Preferred Stock outstanding. SERIES E PREFERRED STOCK AND THE COMMITTED EQUITY LINE Series E Preferred Stock On November 4, 2015, the Company entered into a securities purchase agreement with a private investor to issue 2,800 shares of Series E Preferred Stock in exchange for $2,800,000 . Shares of the Series E Preferred Stock (including the amount of any accrued and unpaid dividends thereon) are convertible, at the option of the holder, into common stock at a variable conversion price equal to 80% of the average of the two lowest VWAPs of the Company's common stock for the ten consecutive trading day period prior to the conversion date. If certain defined default events occur, the conversion price would thereafter be reduced (and only reduced), to equal 70% of the average of the two lowest VWAPs of the Company's common stock for the twenty consecutive trading day period prior to the conversion date. The private investor had available to them a new conversion price beginning on June 9, 2016 as a result of the Series H Preferred Stock transaction further described in Note 14. Shares of the Series E Preferred Stock are now convertible, at the option of the private investor, into common stock at a variable conversion price equal to 70% of (i) the lowest VWAP of our common stock for the ten consecutive trading day period prior to the conversion date or (ii) the lowest closing bid price of our common stock for the ten consecutive trading day period prior to the conversion date. The following table summarizes the conversion activity of the Series E Preferred Stock: Conversion Period Preferred Series E Shares Converted Value of Series E Preferred Shares (inclusive of accrued dividends) Common Shares Issued Q4 2015 478 $ 481,500 250,000 Q1 2016 1,220 1,239,436 1,132,000 Q2 2016 365 381,414 7,979,568 Q3 2016 523 548,896 21,973,747 Q4 2016 94 101,018 13,089,675 Q1 2017 15 16,248 8,289,962 Q2 2017 35 38,886 134,927,207 2,730 $ 2,807,398 187,642,159 Holders of the Series E Preferred Stock will be entitled to dividends in the amount of 7% per annum. During the six months ended June 30, 2017 , the holder converted dividends in the amount of $5,134 on the Series E Preferred Stock, resulting in the issuance of 14,135,538 shares of common stock. The Company has issued 18,000 shares of common stock to the private investor as a commitment fee relating to the Series E Preferred Stock. Costs associated with the Series E Preferred Stock, such as legal fees and commitment shares are capitalized and reported as deferred financing costs on the Condensed Consolidated Balance Sheets. The total gross debt issuance cost incurred by the Company related to the Series E Preferred Stock was $104,000 . These debt issuance costs will be recognized as additional interest expense over the life of the Series E Preferred Stock. At any time after March 31, 2016, the private investor has the option to redeem for cash all or any portion of the outstanding shares of the Series E Preferred Stock at a price per share equal to $1,250 plus any accrued but unpaid dividends thereon. At any time after the third anniversary of the date of the initial issuance of Series E Preferred Stock, the Company will have the option to redeem for cash all outstanding shares of the Series E Preferred Stock at a price per share equal to $1,250 plus any accrued but unpaid dividends thereon. The Company classified the Series E Preferred Stock as a liability pursuant to ASC 480 on the closing date due to the structure of the financing agreement, whereby the Company has an unconditional obligation that the Company may settle by issuing a variable number of common shares with a monetary value that is fixed and known at inception. There are 70 shares of Series E Preferred Stock outstanding, representing a value of $70,000 , as of June 30, 2017 . Pursuant to a number of factors outlined in ASC Topic 815, Derivatives and Hedging , the conversion option in the Series E Preferred Stock was deemed to include an embedded derivative that required bifurcation and separate accounting. As such, the Company ascertained the value of the conversion option as if separate from the convertible issuance and appropriately recorded that value as a derivative liability. At December 31, 2016 , the derivative liability associated with the Series E Preferred Stock was $141,000 . The derivative liability associated with the Series E Preferred Stock is subject to revaluation on a quarterly basis to reflect the market value change of the embedded conversion option. At March 31, 2017 and June 30, 2017 , the Company conducted a fair value assessment of the embedded derivative associated with the Series E Preferred Stock. As a result of the fair value assessment, the Company recorded a $40,016 loss as "Change in fair value of derivatives and gain/(loss) on extinguishment of liabilities, net" in the Condensed Consolidated Statements of Operations, for the three months ended June 30, 2017 . The net gain recorded for the six months ended June 30, 2017 was $19,358 , to properly reflect the fair value of the embedded derivative of $121,390 as of June 30, 2017 . The fair value measurements rely primarily on Company-specific inputs and the Company’s own assumptions. With the absence of observable inputs, the Company determined these recurring fair value measurements reside primarily within Level 3 of the fair value hierarchy. The derivative associated with the Series E Preferred Stock approximates management’s estimate of the fair value of the embedded derivative liability at June 30, 2017 based on using a Monte Carlo simulation following a Geometric Brownian Motion with the following assumptions: annual volatility of 70% , present value discount rate of 12% and dividend yield of 0% . The Committed Equity Line On November 10, 2015, the Company and the private investor entered into a committed equity line purchase agreement (the "CEL"). Under the terms and subject to the conditions of the CEL purchase agreement, at its option the Company has the right to sell to the private investor, and the private investor is obligated to purchase from the Company, up to $32.2 million of the Company’s common stock, subject to certain limitations, from time to time, over the 36 -month period commencing on December 18, 2015, the date that the registration statement was declared effective by the SEC. From time to time, the Company may direct the private investor, at its sole discretion and subject to certain conditions, to purchase an amount of shares of common stock up to the lesser of (i) $1,000,000 or (ii) 300% of the average daily trading volume of the Company’s common stock over the preceding ten trading day period. The per share purchase price for shares of common stock to be sold by the Company under the CEL purchase agreement shall be equal to 80% of the average of the two lowest VWAPs of the common stock for the ten consecutive trading day period prior to the purchase date. As of June 30, 2017 , the Company had directed the private investor to purchase 3,056,147 of common stock which resulted in the issuance of 1,368,000 shares of common stock The Company may not direct the private investor to purchase shares of common stock more frequently than once each ten business days. The Company’s sales of shares of common stock to the private investor under the CEL purchase agreement are limited to no more than the number of shares that would result in the beneficial ownership by the private investor and its affiliates, at any single point in time, of more than 9.99% of the Company’s then outstanding shares of common stock. As consideration for entering into the CEL purchase agreement, the Company agreed to issue to the private investor 132,000 shares of common stock (the “Commitment Shares”). The Commitment Shares were issued to the private investor commencing upon the date that the registration statement was declared effective by the SEC. SERIES F PREFERRED STOCK On January 19, 2016, the Company entered into a securities purchase agreement with a private investor for the sale of $7,000,000 of the Company’s newly designated Series F 7% Convertible Preferred Stock (the “Series F Preferred Stock”). On January 20, 2016, the Company sold and issued 7,000 shares of Series F Preferred Stock to the private investor. The aggregate purchase price of the Series F Preferred shares was $7,000,000 . On January 20, 2016, the private investor paid $500,000 to the Company. The remaining $6,500,000 was paid by the private investor to the Company in 14 weekly increments of $500,000 or $250,000 beginning January 25, 2016 and ending April 28, 2016. Shares of the Series F Preferred Stock (including the amount of any accrued and unpaid dividends thereon) are convertible, at the option of the holder, into common stock at a fixed conversion price equal to $5.00 per share. If certain defined default events occur, the conversion price would thereafter be reduced (and only reduced), to equal 70% of the average of the two lowest VWAPs of our common stock for the twenty consecutive trading day period prior to the conversion date. If requested by the private investor, the Company will make weekly redemptions of shares of Series F Preferred Stock (including any accrued and unpaid dividends thereon). If the redemption price is paid by the Company in cash, the number of shares to be redeemed in each weekly increment is 250 shares of Series F Preferred Stock, and the redemption price is a price per share equal to $1,250 plus any accrued but unpaid dividends thereon. The Company has the option to make such redemption payments in shares of common stock provided certain specified equity conditions are satisfied at the time of payment. The number of shares of common stock to be issued would be calculated using a per share price equal to 80% of the one lowest VWAP of our common stock for the ten consecutive trading day period prior to the payment date. For redemption payments made in shares of common stock, the Company will redeem either (i) 250 shares of Series F Preferred Stock or (ii) such greater number of shares of Series F Preferred Stock (and also including any accrued and unpaid dividends) that would result upon redemption in the issuance of a number of shares of common stock equal to 12% of the aggregate composite trading volume for the Company’s common stock during the preceding calendar week. The private investor had available to them a new conversion price beginning on June 9, 2016 as a result of the Series H Preferred Stock transaction further described in Note 14. Shares of the Series F Preferred Stock are now convertible, at the option of the private investor, into common stock at a variable conversion price equal to 70% of (i) the lowest VWAP of our common stock for the ten consecutive trading day period prior to the conversion date or (ii) the lowest closing bid price of our common stock for the ten consecutive trading day period prior to the conversion date. Amendment of Outstanding Series F Preferred Stock Conversion Price On October 5, 2016, the Company filed a Certificate of Amendment to the Certificate of Designations of Preferences, Rights and Limitations of Series F Preferred Stock with the Secretary of State of the State of Delaware. The Certificate of Amendment amends the conversion price at which the Series F Preferred Stock can be converted into shares of common stock. The Company had approximately $336,000 of Series F Preferred Stock remaining outstanding as of October 5, 2016. As amended, the conversion price will now be equal to the lowest of (i) 50% of the lowest weighted average price (“VWAP”) of our common stock for the ten consecutive trading day period prior to the conversion date or (ii) 50% of the lowest closing bid price of our common stock for the ten consecutive trading day period prior to the conversion date. If certain “Triggering Events” specified in the terms of the Series F Preferred Stock occur, then the conversion price of the Series F Preferred Stock shall be thereafter reduced, and only reduced, to equal 50% of the average of the lowest traded price of the common stock for the twenty consecutive trading day period prior to the conversion date. The following table summarizes the conversion activity of the Series F Preferred Stock: Conversion Period Preferred Series F Shares Converted Value of Series F Preferred Shares (inclusive of accrued dividends) Common Shares Issued Q1 2016 2,168 $ 2,188,298 2,183,992 Q2 2016 3,234 3,300,931 6,649,741 Q3 2016 1,262 1,315,743 81,917,364 Q4 2016 176 185,118 27,276,005 6,840 $ 6,990,090 118,027,102 Holders of the Series F Preferred Stock are entitled to dividends in the amount of 7% per annum. During the quarter ended June 30, 2017 , the Company did not pay any dividends or issue any shares in relation to accrued dividends. The Company classified the Series F Preferred Stock as a liability pursuant to ASC 480 on the closing date due to the structure of the financing agreement, whereby the Company has an unconditional obligation that the Company may settle by issuing a variable number of common shares with a monetary value that is fixed and known at inception. There are 160 shares of Series F Preferred Stock, representing a value of $160,000 , outstanding as of June 30, 2017 . Pursuant to a number of factors outlined in ASC Topic 815, Derivatives and Hedging , the conversion option in the Series F Preferred Stock was deemed to include an embedded derivative that required bifurcation and separate accounting. As such, the Company ascertained the value of the conversion option as if separate from the convertible issuance and appropriately recorded that value as a derivative liability. At closing, a derivative liability and a corresponding debt discount in the amount of $1,666,000 were recorded. The debt discount will be charged to interest expense ratably over the life of the Series F Preferred Stock. The derivative liability associated with the Series F Preferred Stock is subject to revaluation on a quarterly basis to reflect the market value change of the embedded conversion option. At June 30, 2017 , the Company conducted a fair value assessment of the embedded derivative associated with the Series F Preferred Stock. As a result of the fair value assessment, the Company recorded a $209,613 loss as "Change in fair value of derivatives and gain/(loss) on extinguishment of liabilities, net" in the Condensed Consolidated Statements of Operations, for the three months ended June 30, 2017 . The net loss recorded for the six months ended June 30, 2017 was $85,557 , to properly reflect the fair value of the embedded derivative of $340,881 as of June 30, 2017 . The fair value measurements rely primarily on Company-specific inputs and the Company’s own assumptions. With the absence of observable inputs, the Company determined these recurring fair value measurements reside primarily within Level 3 of the fair value hierarchy. The derivative associated with the Series F Preferred Stock approximates management’s estimate of the fair value of the embedded derivative liability at June 30, 2017 based on using a Monte Carlo simulation following a Geometric Brownian Motion with the following assumptions: annual volatility of 66% , present value discount rate of 12% and dividend yield of 0% . SERIES G PREFERRED STOCK On April 29, 2016, the Company entered into a securities purchase agreement with private investors to issue 2,000 shares of Series G Preferred Stock for $2,000,000 . At Closing, the Company issued a total of 500 shares of Series G Preferred Stock to the private investors in exchange for $500,000 . The Company issued an additional 1,500 shares of Series G Preferred Stock to the private investors during the months of May and June 2016, which resulted in additional gross proceeds to the Company of $1,500,000 . Holders of the Series G Preferred Stock will be entitled to dividends in the amount of 10% per annum. One year after issuance, the Company is required to redeem for cash all or any portion of the outstanding shares of the Series G Preferred Stock at a price per share equal to $1,000 plus any accrued but unpaid dividends thereon. Assignment of Series G Preferred Stock Beginning September 19, 2016, the two private investors (the “Series G Sellers”) entered into assignment agreements with accredited investors (the “Series G Purchasers”). Under the terms of the assignment agreements, the Series G Sellers may sell all 2,000 outstanding shares of Series G Preferred Stock to the Series G Purchasers for a purchase price of $1,000 per share of Series G Preferred Stock (plus the amount of any accrued and unpaid dividends thereon). As of June 30, 2017 , the Series G Sellers had sold 1,835 shares of Series G Preferred Stock, representing a value of $1,835,000 , to the Series G Purchasers. On September 21, 2016, the Company filed a Certificate of Amendment to the Certificate of Designations of Preferences, Rights and Limitations of Series G Preferred Stock with the Secretary of State of the State of Delaware. The Certificate of Amendment amends the conversion price at which the Series G Preferred Stock can be converted into shares of common stock. Shares of the Series G Preferred Stock (including the amount of any accrued and unpaid dividends thereon) were previously convertible at the option of the private investors into common stock at a fixed conversion price of $1.00 per share. As amended, the conversion price is equal to the lowest of (i) $0.045 , (ii) 70% of the lowest volume weighted average price of the Company’s common stock for the ten consecutive trading day period prior to the conversion date or (iii) 70% of the lowest closing bid price of the Company’s common stock for the ten consecutive trading day period prior to the conversion date. The following table summarizes the conversion activity of the Series G Preferred Stock: Conversion Period Preferred Series G Shares Converted Value of Series G Preferred Shares (inclusive of accrued dividends) Common Shares Issued Q4 2016 892 929,895 245,726,283 Q1 2017 372 397,970 327,718,386 Q2 2017 526 575,096 1,337,776,821 1,790 $ 1,902,961 1,911,221,490 Holders of the Series G Preferred Stock will be entitled to dividends in the amount of 10% per annum. During the six months ended June 30, 2017 , the Company converted dividends in the amount of $49,096 on the Series G Preferred Stock, resulting in the issuance of 114,854,745 shares of common stock. On June 29, and June 30, 2017, the Company redeemed the remaining 210 outstanding shares, and the related accrued dividends for cash payments in the amount of $232,440 . Due to international wire cut off times, $182,715 of that amount was not actually paid until July 3, 2017, and the resulting liability is included in accounts payable on the Condensed Consolidated Balance Sheet for the six months ended June 30, 2017 . As of June 30, 2017 , all Series G Preferred Stock Shares, and the related accrued dividends, had either been converted or redeemed. Pursuant to a number of factors outlined in ASC Topic 815, Derivatives and Hedging , the conversion option in the Series G Preferred Stock were deemed to include an embedded derivative that required bifurcation and separate accounting. As such, the Company ascertained the value of the conversion option as if separate from the convertible issuance and appropriately recorded that value as a derivative liability. At December 31, 2016 the fair value of the derivative liability was $361,831 and was $219,347 prior to the redemption. At June 30, 2017 , the Company recorded the reduction of the remaining embedded derivative associated with the Series G Preferred Stock of $219,347 as a gain in the "Change in fair value of derivatives and gain/(loss) on extinguishment of liabilities, net" in the Condensed Consolidated Statements of Operations for the three months ended June 30, 2017 . The net gain recorded for the six months ended June 30, 2017 was $361,831 , to properly reflect the elimination of the embedded derivative as of June 30, 2017 . Conversion Inducement and Disposal Price Guarantee On January 17, 2017, one of the Series G Preferred Stock holders (“Holder A”) requested a conversion of 100 shares of Series G Preferred Stock, $100,000 face value, including accrued dividends of $6,416.67 for a total conversion value of $106,416.67 into common stock of the Company at a conversion price of $0.00112 which would have resulted in the issuance of 95,014,884 shares of common stock. At the date of the request the Company did not have enough authorized shares to execute the conversion request and therefore entered into an agreement with Holder A to honor the conversion price of $0.00112 and issue the 95,014,884 shares of common stock upon the increase of the authorized common shares of the Company. The actual conversion occurred on March 17, 2017 which would have been a conversion price of $0.00168 . In conjunction with the conversion price agreement the Company agreed to provide a minimum disposal price guarantee to the Holder A of $0.003 on the tranche of 95,014,884 shares. If Holder A fails to dispose of these shares at $0.003 or above the Company will issue additional shares of common stock to make up the difference between the minimum disposal price of $0.003 and the price that Holder A disposed of the shares. During the six months ended June 30, 2017 , in accordance with ASC 470-20-40-16, the Company recorded expense of $79,179 related to the conversion inducement and expense of $134,566 related to the disposal price guarantee. The amount related to the disposal price guarantee was also recorded as a corresponding liability in the Condensed Consolidated Balance Sheet as of June 30, 2017 . JULY 2016 CONVERTIBLE NOTES Series H Preferred Stock On June 9, 2016, the Company entered into a securities purchase agreement with a private investor to issue 2,500 shares of Series H Preferred Stock for $2,500,000 . The Company received gross proceeds of $250,000 at Closing. Additional gross proceeds of $580,000 were received by the Company through July 7, 2016. The Company agreed to exchange outstanding Series H Preferred Stock for Senior Secured Convertible Notes (“July 2016 Notes”) on July 13, 2016. At the date of the exchange, the Company had sold and issued 830 shares of Series H Preferred Stock to the private investor in exchange for $830,000 of gross proceeds. Refer to the section below for details of the exchange. July 2016 Convertible Notes On July 13, 2016, the Company entered into a securities purchase agreement (the “Note SPA”) with the private investor for the private placement of up to $2,082,600 of the Company’s 4% Original Issue Discount Senior Secured Convertible Promissory Notes (the “July 2016 Convertible Notes”). On July 13, 2016, the Company sold and issued $364,000 principal amount of notes to the investor in exchange for $350,000 of gross proceeds. The Company sold and issued the remaining $1,718,600 principal amount of July 2016 Convertible Notes to the investor in exchange for $1,650,000 of gross proceeds in weekly tranches between July and September 2016. The Company and the private investor also entered into an Exchange Agreement dated July 13, 2016 (the “Exchange Agreement”). Under the terms of the Exchange Agreement, the outstanding shares of Series H Preferred Stock (approximately $833,000 of capital and accrued dividends) were canceled. In exchange, the Company issued to the private investor approximately $866,000 of July 2016 Convertible Notes. There were 830 shares of Series H Preferred Stock outstanding as of the date of the Exchange Agreement. Unless earlier converted or prepaid, all of the July 2016 Convertible Notes will mature July 13, 2017 (the “Maturity Date”). The July 2016 Convertible Notes bear interest at a rate of 10% per annum, subject to increase to 24% per annum upon the occurrence and continuance of an event of default. Principal on the July 2016 Convertible Notes is payable on the Maturity Date. Interest on the July 2016 Convertible Notes is payable quarterly. Principal and interest are payable in cash or, if specified equity conditions are met, shares of Common Stock. The July 2016 Convertible Notes are secured by a security interest in substantially all of the Company’s assets. The subsidiaries of the Company have guaranteed the Company’s obligations under the July 2016 Convertible Notes. The July 2016 Convertible Notes contain standard and customary events of default including but not limited to: (i) failure to make payments when due under the July 2016 Convertible Notes; (ii) bankruptcy or insolvency of the Company; and (iii) failure to file a registration statement by October 9, 2016. On October 10, 2016 the Company had not been successful in filing the registration statement triggering an event of default per the July 2016 Note Agreement. Upon default the interest rate increases to 24% per annum and the holder of the July 2016 Notes has the option to accelerate the Note and demand cash payment of the Mandatory Default Amount consisting of a 25% premium of the principal balance plus any accrued and unpaid interest. The Company began accruing interest at the rate of 24% on October 10, 2016. Forbearance and Settlement Agreement on July 2016 Convertible Notes On May 5, 2017, the Company entered into a Forbearance and Settlement Agreement ("Forbearance Agreement") with a holder of certain secured convertible notes that are in default due to various triggering events. The holder and the Company agreed to forbear from taking any action provided for under the secured convertible notes in exchange for the following terms provided in this agreement: • The Company agreed to redeem for cash all secured convertible notes of the Company held by the holder no later than September 1, 2017 . • The Company affirmed that the current balance of owed principal and accrued and unpaid interest to the holder is $1,790,214 as of May 2, 2017. • The redemption price for such secured convertible notes shall be 120% (if redeemed on or prior to August 15, 2017) or 125% (if redeemed after August 15, 2017) of the then outstanding principal, plus any accrued and unpaid interest. • During the month of May 2017, the Holder agreed to limit its conversions of outstanding Company secured convertible notes to $50,000 per calendar week of principal/interest. • During the months of June, July and August 2017, the holder agreed to limit its conversions of outstanding Company secured convertible notes to $75,000 per calendar week of principal/interest. • During the months of May, June, July and August 2017, the holder agreed that all outstanding Company secured convertible notes shall bear interest at the normal stated rate of 10% , rather than default rate of 24% . • All conversions during the months of May, June, July and August 2017 will be at the “triggering event” discount conversion price as stated in the secured convertible notes, and will continue at the “triggering event” discount price until, if and when the notes are redeemed. • Should the Company fail to redeem for cash all secured convertible notes on or before September 1, 2017 , default interest and normal stated interest will accrue from the date of execution of this agreement. All principal and accrued interest on the July 2016 Convertible Notes are convertible at any time, in whole or in part, at the option of the private investor, into shares of Common Stock at a variable conversion price equal to the lowest of (i) $0.045 (the “Fixed Conversion Price”), (ii) 70% of the lowest volume weighted average price (“VWAP”) of the Company's common stock for the ten consecutive trading day period prior to the conversion date or (iii) 70% of the lowest closing bid price of the Company's common stock for the ten consecutive trading day period prior to the conversion date. If certain defined triggering events occur, the conversion price would thereafter be reduced (and only reduced), to equal 60% of the lower of (i) the lowest closing bid price of the Company's common stock for the thirty consecutive trading day period prior to the conversion date or (ii) the lowest VWAP of the the Company's common stock for the thirty consecutive trading day period prior to the conversion date. In addition, on the 90th day and also on the 180th day from the date of the Note SPA, the private investor may reset the Fixed Conversion Price to thereafter be equal to the VWAP of the Common Stock for such day or if such 90th or 180th day is not a trading day, then the |
SERIES F PREFERRED STOCK
SERIES F PREFERRED STOCK | 6 Months Ended |
Jun. 30, 2017 | |
Equity [Abstract] | |
PREFERRED STOCK | SERIES A PREFERRED STOCK In June 2013, the Company entered into a Securities Purchase Agreement with an investor to sell an aggregate of 750,000 shares of Series A Preferred Stock at a price of $8.00 per share, resulting in gross proceeds of $6,000,000 . This purchase agreement included warrants to purchase up to 13,125 shares of common stock of the Company. The transfer of cash and securities took place incrementally, the first closing occurring on June 17, 2013 with the transfer of 125,000 shares of Series A Preferred Stock and a warrant to purchase 2,187 shares of common stock for $1,000,000 . The final closings took place in August 2013, with the transfer of 625,000 shares of Series A Preferred Stock and a warrant to purchase 10,938 shares of common stock for $5,000,000 . Holders of Series A Preferred Stock are entitled to cumulative dividends at a rate of 8% per annum when and if declared by the Board of Directors in its sole discretion. The dividends may be paid in cash or in the form of common stock (valued at 10% below market price, but not to exceed the lowest closing price during the applicable measurement period), at the discretion of the Board of Directors. The dividend rate on the Series A Preferred Stock is indexed to the Company's stock price and subject to adjustment. In addition, the Series A Preferred Stock contains a make-whole provision whereby, conversion or redemption of the preferred stock within 4 years of issuance will require dividends for the full four year period to be paid by the Company in cash or common stock (valued at 10% below market price, but not to exceed the lowest closing price during the applicable measurement period). The Series A Preferred Stock may be converted into shares of common stock at the option of the Company if the closing price of the common stock exceeds $232 , as adjusted, for 20 consecutive trading days, or by the holder at any time. The Company has the right to redeem the Series A Preferred Stock at a price of $8.00 per share, plus any accrued and unpaid dividends, plus the make-whole amount (if applicable). At June 30, 2017 , the preferred shares were not eligible for conversion to common shares at the option of the Company. The holder of the preferred shares may convert to common shares at any time, at no cost, at a ratio of 1 preferred share into 1 common share (subject to standard ratable anti-dilution adjustments). Upon any conversion (whether at the option of the Company or the holder), the holder is entitled to receive any accrued but unpaid dividends and also any make-whole amount (if applicable). See Note 19. Make-Whole Dividend Liability. On October 6, 2016, the Series A Holder entered into an exchange agreement (the “Exchange Agreement”) with Adar Bays. Pursuant to the exchange agreement, beginning December 5, 2016, Adar Bays has the option to exchange, from time to time, all or any portion of the October 2016 Convertible Notes (see Note 17) for outstanding shares of Series A Preferred Stock from the Series A Holder. As of June 30, 2017 , Adar Bays had elected to exchange all outstanding October 2016 Convertible Notes, in accordance with the exchange agreement, resulting in the exchange of 104,785 shares of Series A Preferred Stock. As of June 30, 2017 , Adar Bays had also converted their 104,785 shares of Series A Preferred Stock, and the related make whole dividend, which resulted in the issuance of 173,946,250 shares of common stock. Except as otherwise required by law (or with respect to approval of certain actions), the Series A Preferred Stock shall have no voting rights. Upon any liquidation, dissolution or winding up of the Company, after payment or provision for payment of debts and other liabilities of the Company, the holders of Series A Preferred Stock shall be entitled to receive, pari passu with any distribution to the holders of common stock of the Company, an amount equal to $8.00 per share of Series A Preferred Stock plus any accrued and unpaid dividends. As of June 30, 2017 , there were 60,756 shares of Series A Preferred Stock outstanding. SERIES E PREFERRED STOCK AND THE COMMITTED EQUITY LINE Series E Preferred Stock On November 4, 2015, the Company entered into a securities purchase agreement with a private investor to issue 2,800 shares of Series E Preferred Stock in exchange for $2,800,000 . Shares of the Series E Preferred Stock (including the amount of any accrued and unpaid dividends thereon) are convertible, at the option of the holder, into common stock at a variable conversion price equal to 80% of the average of the two lowest VWAPs of the Company's common stock for the ten consecutive trading day period prior to the conversion date. If certain defined default events occur, the conversion price would thereafter be reduced (and only reduced), to equal 70% of the average of the two lowest VWAPs of the Company's common stock for the twenty consecutive trading day period prior to the conversion date. The private investor had available to them a new conversion price beginning on June 9, 2016 as a result of the Series H Preferred Stock transaction further described in Note 14. Shares of the Series E Preferred Stock are now convertible, at the option of the private investor, into common stock at a variable conversion price equal to 70% of (i) the lowest VWAP of our common stock for the ten consecutive trading day period prior to the conversion date or (ii) the lowest closing bid price of our common stock for the ten consecutive trading day period prior to the conversion date. The following table summarizes the conversion activity of the Series E Preferred Stock: Conversion Period Preferred Series E Shares Converted Value of Series E Preferred Shares (inclusive of accrued dividends) Common Shares Issued Q4 2015 478 $ 481,500 250,000 Q1 2016 1,220 1,239,436 1,132,000 Q2 2016 365 381,414 7,979,568 Q3 2016 523 548,896 21,973,747 Q4 2016 94 101,018 13,089,675 Q1 2017 15 16,248 8,289,962 Q2 2017 35 38,886 134,927,207 2,730 $ 2,807,398 187,642,159 Holders of the Series E Preferred Stock will be entitled to dividends in the amount of 7% per annum. During the six months ended June 30, 2017 , the holder converted dividends in the amount of $5,134 on the Series E Preferred Stock, resulting in the issuance of 14,135,538 shares of common stock. The Company has issued 18,000 shares of common stock to the private investor as a commitment fee relating to the Series E Preferred Stock. Costs associated with the Series E Preferred Stock, such as legal fees and commitment shares are capitalized and reported as deferred financing costs on the Condensed Consolidated Balance Sheets. The total gross debt issuance cost incurred by the Company related to the Series E Preferred Stock was $104,000 . These debt issuance costs will be recognized as additional interest expense over the life of the Series E Preferred Stock. At any time after March 31, 2016, the private investor has the option to redeem for cash all or any portion of the outstanding shares of the Series E Preferred Stock at a price per share equal to $1,250 plus any accrued but unpaid dividends thereon. At any time after the third anniversary of the date of the initial issuance of Series E Preferred Stock, the Company will have the option to redeem for cash all outstanding shares of the Series E Preferred Stock at a price per share equal to $1,250 plus any accrued but unpaid dividends thereon. The Company classified the Series E Preferred Stock as a liability pursuant to ASC 480 on the closing date due to the structure of the financing agreement, whereby the Company has an unconditional obligation that the Company may settle by issuing a variable number of common shares with a monetary value that is fixed and known at inception. There are 70 shares of Series E Preferred Stock outstanding, representing a value of $70,000 , as of June 30, 2017 . Pursuant to a number of factors outlined in ASC Topic 815, Derivatives and Hedging , the conversion option in the Series E Preferred Stock was deemed to include an embedded derivative that required bifurcation and separate accounting. As such, the Company ascertained the value of the conversion option as if separate from the convertible issuance and appropriately recorded that value as a derivative liability. At December 31, 2016 , the derivative liability associated with the Series E Preferred Stock was $141,000 . The derivative liability associated with the Series E Preferred Stock is subject to revaluation on a quarterly basis to reflect the market value change of the embedded conversion option. At March 31, 2017 and June 30, 2017 , the Company conducted a fair value assessment of the embedded derivative associated with the Series E Preferred Stock. As a result of the fair value assessment, the Company recorded a $40,016 loss as "Change in fair value of derivatives and gain/(loss) on extinguishment of liabilities, net" in the Condensed Consolidated Statements of Operations, for the three months ended June 30, 2017 . The net gain recorded for the six months ended June 30, 2017 was $19,358 , to properly reflect the fair value of the embedded derivative of $121,390 as of June 30, 2017 . The fair value measurements rely primarily on Company-specific inputs and the Company’s own assumptions. With the absence of observable inputs, the Company determined these recurring fair value measurements reside primarily within Level 3 of the fair value hierarchy. The derivative associated with the Series E Preferred Stock approximates management’s estimate of the fair value of the embedded derivative liability at June 30, 2017 based on using a Monte Carlo simulation following a Geometric Brownian Motion with the following assumptions: annual volatility of 70% , present value discount rate of 12% and dividend yield of 0% . The Committed Equity Line On November 10, 2015, the Company and the private investor entered into a committed equity line purchase agreement (the "CEL"). Under the terms and subject to the conditions of the CEL purchase agreement, at its option the Company has the right to sell to the private investor, and the private investor is obligated to purchase from the Company, up to $32.2 million of the Company’s common stock, subject to certain limitations, from time to time, over the 36 -month period commencing on December 18, 2015, the date that the registration statement was declared effective by the SEC. From time to time, the Company may direct the private investor, at its sole discretion and subject to certain conditions, to purchase an amount of shares of common stock up to the lesser of (i) $1,000,000 or (ii) 300% of the average daily trading volume of the Company’s common stock over the preceding ten trading day period. The per share purchase price for shares of common stock to be sold by the Company under the CEL purchase agreement shall be equal to 80% of the average of the two lowest VWAPs of the common stock for the ten consecutive trading day period prior to the purchase date. As of June 30, 2017 , the Company had directed the private investor to purchase 3,056,147 of common stock which resulted in the issuance of 1,368,000 shares of common stock The Company may not direct the private investor to purchase shares of common stock more frequently than once each ten business days. The Company’s sales of shares of common stock to the private investor under the CEL purchase agreement are limited to no more than the number of shares that would result in the beneficial ownership by the private investor and its affiliates, at any single point in time, of more than 9.99% of the Company’s then outstanding shares of common stock. As consideration for entering into the CEL purchase agreement, the Company agreed to issue to the private investor 132,000 shares of common stock (the “Commitment Shares”). The Commitment Shares were issued to the private investor commencing upon the date that the registration statement was declared effective by the SEC. SERIES F PREFERRED STOCK On January 19, 2016, the Company entered into a securities purchase agreement with a private investor for the sale of $7,000,000 of the Company’s newly designated Series F 7% Convertible Preferred Stock (the “Series F Preferred Stock”). On January 20, 2016, the Company sold and issued 7,000 shares of Series F Preferred Stock to the private investor. The aggregate purchase price of the Series F Preferred shares was $7,000,000 . On January 20, 2016, the private investor paid $500,000 to the Company. The remaining $6,500,000 was paid by the private investor to the Company in 14 weekly increments of $500,000 or $250,000 beginning January 25, 2016 and ending April 28, 2016. Shares of the Series F Preferred Stock (including the amount of any accrued and unpaid dividends thereon) are convertible, at the option of the holder, into common stock at a fixed conversion price equal to $5.00 per share. If certain defined default events occur, the conversion price would thereafter be reduced (and only reduced), to equal 70% of the average of the two lowest VWAPs of our common stock for the twenty consecutive trading day period prior to the conversion date. If requested by the private investor, the Company will make weekly redemptions of shares of Series F Preferred Stock (including any accrued and unpaid dividends thereon). If the redemption price is paid by the Company in cash, the number of shares to be redeemed in each weekly increment is 250 shares of Series F Preferred Stock, and the redemption price is a price per share equal to $1,250 plus any accrued but unpaid dividends thereon. The Company has the option to make such redemption payments in shares of common stock provided certain specified equity conditions are satisfied at the time of payment. The number of shares of common stock to be issued would be calculated using a per share price equal to 80% of the one lowest VWAP of our common stock for the ten consecutive trading day period prior to the payment date. For redemption payments made in shares of common stock, the Company will redeem either (i) 250 shares of Series F Preferred Stock or (ii) such greater number of shares of Series F Preferred Stock (and also including any accrued and unpaid dividends) that would result upon redemption in the issuance of a number of shares of common stock equal to 12% of the aggregate composite trading volume for the Company’s common stock during the preceding calendar week. The private investor had available to them a new conversion price beginning on June 9, 2016 as a result of the Series H Preferred Stock transaction further described in Note 14. Shares of the Series F Preferred Stock are now convertible, at the option of the private investor, into common stock at a variable conversion price equal to 70% of (i) the lowest VWAP of our common stock for the ten consecutive trading day period prior to the conversion date or (ii) the lowest closing bid price of our common stock for the ten consecutive trading day period prior to the conversion date. Amendment of Outstanding Series F Preferred Stock Conversion Price On October 5, 2016, the Company filed a Certificate of Amendment to the Certificate of Designations of Preferences, Rights and Limitations of Series F Preferred Stock with the Secretary of State of the State of Delaware. The Certificate of Amendment amends the conversion price at which the Series F Preferred Stock can be converted into shares of common stock. The Company had approximately $336,000 of Series F Preferred Stock remaining outstanding as of October 5, 2016. As amended, the conversion price will now be equal to the lowest of (i) 50% of the lowest weighted average price (“VWAP”) of our common stock for the ten consecutive trading day period prior to the conversion date or (ii) 50% of the lowest closing bid price of our common stock for the ten consecutive trading day period prior to the conversion date. If certain “Triggering Events” specified in the terms of the Series F Preferred Stock occur, then the conversion price of the Series F Preferred Stock shall be thereafter reduced, and only reduced, to equal 50% of the average of the lowest traded price of the common stock for the twenty consecutive trading day period prior to the conversion date. The following table summarizes the conversion activity of the Series F Preferred Stock: Conversion Period Preferred Series F Shares Converted Value of Series F Preferred Shares (inclusive of accrued dividends) Common Shares Issued Q1 2016 2,168 $ 2,188,298 2,183,992 Q2 2016 3,234 3,300,931 6,649,741 Q3 2016 1,262 1,315,743 81,917,364 Q4 2016 176 185,118 27,276,005 6,840 $ 6,990,090 118,027,102 Holders of the Series F Preferred Stock are entitled to dividends in the amount of 7% per annum. During the quarter ended June 30, 2017 , the Company did not pay any dividends or issue any shares in relation to accrued dividends. The Company classified the Series F Preferred Stock as a liability pursuant to ASC 480 on the closing date due to the structure of the financing agreement, whereby the Company has an unconditional obligation that the Company may settle by issuing a variable number of common shares with a monetary value that is fixed and known at inception. There are 160 shares of Series F Preferred Stock, representing a value of $160,000 , outstanding as of June 30, 2017 . Pursuant to a number of factors outlined in ASC Topic 815, Derivatives and Hedging , the conversion option in the Series F Preferred Stock was deemed to include an embedded derivative that required bifurcation and separate accounting. As such, the Company ascertained the value of the conversion option as if separate from the convertible issuance and appropriately recorded that value as a derivative liability. At closing, a derivative liability and a corresponding debt discount in the amount of $1,666,000 were recorded. The debt discount will be charged to interest expense ratably over the life of the Series F Preferred Stock. The derivative liability associated with the Series F Preferred Stock is subject to revaluation on a quarterly basis to reflect the market value change of the embedded conversion option. At June 30, 2017 , the Company conducted a fair value assessment of the embedded derivative associated with the Series F Preferred Stock. As a result of the fair value assessment, the Company recorded a $209,613 loss as "Change in fair value of derivatives and gain/(loss) on extinguishment of liabilities, net" in the Condensed Consolidated Statements of Operations, for the three months ended June 30, 2017 . The net loss recorded for the six months ended June 30, 2017 was $85,557 , to properly reflect the fair value of the embedded derivative of $340,881 as of June 30, 2017 . The fair value measurements rely primarily on Company-specific inputs and the Company’s own assumptions. With the absence of observable inputs, the Company determined these recurring fair value measurements reside primarily within Level 3 of the fair value hierarchy. The derivative associated with the Series F Preferred Stock approximates management’s estimate of the fair value of the embedded derivative liability at June 30, 2017 based on using a Monte Carlo simulation following a Geometric Brownian Motion with the following assumptions: annual volatility of 66% , present value discount rate of 12% and dividend yield of 0% . SERIES G PREFERRED STOCK On April 29, 2016, the Company entered into a securities purchase agreement with private investors to issue 2,000 shares of Series G Preferred Stock for $2,000,000 . At Closing, the Company issued a total of 500 shares of Series G Preferred Stock to the private investors in exchange for $500,000 . The Company issued an additional 1,500 shares of Series G Preferred Stock to the private investors during the months of May and June 2016, which resulted in additional gross proceeds to the Company of $1,500,000 . Holders of the Series G Preferred Stock will be entitled to dividends in the amount of 10% per annum. One year after issuance, the Company is required to redeem for cash all or any portion of the outstanding shares of the Series G Preferred Stock at a price per share equal to $1,000 plus any accrued but unpaid dividends thereon. Assignment of Series G Preferred Stock Beginning September 19, 2016, the two private investors (the “Series G Sellers”) entered into assignment agreements with accredited investors (the “Series G Purchasers”). Under the terms of the assignment agreements, the Series G Sellers may sell all 2,000 outstanding shares of Series G Preferred Stock to the Series G Purchasers for a purchase price of $1,000 per share of Series G Preferred Stock (plus the amount of any accrued and unpaid dividends thereon). As of June 30, 2017 , the Series G Sellers had sold 1,835 shares of Series G Preferred Stock, representing a value of $1,835,000 , to the Series G Purchasers. On September 21, 2016, the Company filed a Certificate of Amendment to the Certificate of Designations of Preferences, Rights and Limitations of Series G Preferred Stock with the Secretary of State of the State of Delaware. The Certificate of Amendment amends the conversion price at which the Series G Preferred Stock can be converted into shares of common stock. Shares of the Series G Preferred Stock (including the amount of any accrued and unpaid dividends thereon) were previously convertible at the option of the private investors into common stock at a fixed conversion price of $1.00 per share. As amended, the conversion price is equal to the lowest of (i) $0.045 , (ii) 70% of the lowest volume weighted average price of the Company’s common stock for the ten consecutive trading day period prior to the conversion date or (iii) 70% of the lowest closing bid price of the Company’s common stock for the ten consecutive trading day period prior to the conversion date. The following table summarizes the conversion activity of the Series G Preferred Stock: Conversion Period Preferred Series G Shares Converted Value of Series G Preferred Shares (inclusive of accrued dividends) Common Shares Issued Q4 2016 892 929,895 245,726,283 Q1 2017 372 397,970 327,718,386 Q2 2017 526 575,096 1,337,776,821 1,790 $ 1,902,961 1,911,221,490 Holders of the Series G Preferred Stock will be entitled to dividends in the amount of 10% per annum. During the six months ended June 30, 2017 , the Company converted dividends in the amount of $49,096 on the Series G Preferred Stock, resulting in the issuance of 114,854,745 shares of common stock. On June 29, and June 30, 2017, the Company redeemed the remaining 210 outstanding shares, and the related accrued dividends for cash payments in the amount of $232,440 . Due to international wire cut off times, $182,715 of that amount was not actually paid until July 3, 2017, and the resulting liability is included in accounts payable on the Condensed Consolidated Balance Sheet for the six months ended June 30, 2017 . As of June 30, 2017 , all Series G Preferred Stock Shares, and the related accrued dividends, had either been converted or redeemed. Pursuant to a number of factors outlined in ASC Topic 815, Derivatives and Hedging , the conversion option in the Series G Preferred Stock were deemed to include an embedded derivative that required bifurcation and separate accounting. As such, the Company ascertained the value of the conversion option as if separate from the convertible issuance and appropriately recorded that value as a derivative liability. At December 31, 2016 the fair value of the derivative liability was $361,831 and was $219,347 prior to the redemption. At June 30, 2017 , the Company recorded the reduction of the remaining embedded derivative associated with the Series G Preferred Stock of $219,347 as a gain in the "Change in fair value of derivatives and gain/(loss) on extinguishment of liabilities, net" in the Condensed Consolidated Statements of Operations for the three months ended June 30, 2017 . The net gain recorded for the six months ended June 30, 2017 was $361,831 , to properly reflect the elimination of the embedded derivative as of June 30, 2017 . Conversion Inducement and Disposal Price Guarantee On January 17, 2017, one of the Series G Preferred Stock holders (“Holder A”) requested a conversion of 100 shares of Series G Preferred Stock, $100,000 face value, including accrued dividends of $6,416.67 for a total conversion value of $106,416.67 into common stock of the Company at a conversion price of $0.00112 which would have resulted in the issuance of 95,014,884 shares of common stock. At the date of the request the Company did not have enough authorized shares to execute the conversion request and therefore entered into an agreement with Holder A to honor the conversion price of $0.00112 and issue the 95,014,884 shares of common stock upon the increase of the authorized common shares of the Company. The actual conversion occurred on March 17, 2017 which would have been a conversion price of $0.00168 . In conjunction with the conversion price agreement the Company agreed to provide a minimum disposal price guarantee to the Holder A of $0.003 on the tranche of 95,014,884 shares. If Holder A fails to dispose of these shares at $0.003 or above the Company will issue additional shares of common stock to make up the difference between the minimum disposal price of $0.003 and the price that Holder A disposed of the shares. During the six months ended June 30, 2017 , in accordance with ASC 470-20-40-16, the Company recorded expense of $79,179 related to the conversion inducement and expense of $134,566 related to the disposal price guarantee. The amount related to the disposal price guarantee was also recorded as a corresponding liability in the Condensed Consolidated Balance Sheet as of June 30, 2017 . JULY 2016 CONVERTIBLE NOTES Series H Preferred Stock On June 9, 2016, the Company entered into a securities purchase agreement with a private investor to issue 2,500 shares of Series H Preferred Stock for $2,500,000 . The Company received gross proceeds of $250,000 at Closing. Additional gross proceeds of $580,000 were received by the Company through July 7, 2016. The Company agreed to exchange outstanding Series H Preferred Stock for Senior Secured Convertible Notes (“July 2016 Notes”) on July 13, 2016. At the date of the exchange, the Company had sold and issued 830 shares of Series H Preferred Stock to the private investor in exchange for $830,000 of gross proceeds. Refer to the section below for details of the exchange. July 2016 Convertible Notes On July 13, 2016, the Company entered into a securities purchase agreement (the “Note SPA”) with the private investor for the private placement of up to $2,082,600 of the Company’s 4% Original Issue Discount Senior Secured Convertible Promissory Notes (the “July 2016 Convertible Notes”). On July 13, 2016, the Company sold and issued $364,000 principal amount of notes to the investor in exchange for $350,000 of gross proceeds. The Company sold and issued the remaining $1,718,600 principal amount of July 2016 Convertible Notes to the investor in exchange for $1,650,000 of gross proceeds in weekly tranches between July and September 2016. The Company and the private investor also entered into an Exchange Agreement dated July 13, 2016 (the “Exchange Agreement”). Under the terms of the Exchange Agreement, the outstanding shares of Series H Preferred Stock (approximately $833,000 of capital and accrued dividends) were canceled. In exchange, the Company issued to the private investor approximately $866,000 of July 2016 Convertible Notes. There were 830 shares of Series H Preferred Stock outstanding as of the date of the Exchange Agreement. Unless earlier converted or prepaid, all of the July 2016 Convertible Notes will mature July 13, 2017 (the “Maturity Date”). The July 2016 Convertible Notes bear interest at a rate of 10% per annum, subject to increase to 24% per annum upon the occurrence and continuance of an event of default. Principal on the July 2016 Convertible Notes is payable on the Maturity Date. Interest on the July 2016 Convertible Notes is payable quarterly. Principal and interest are payable in cash or, if specified equity conditions are met, shares of Common Stock. The July 2016 Convertible Notes are secured by a security interest in substantially all of the Company’s assets. The subsidiaries of the Company have guaranteed the Company’s obligations under the July 2016 Convertible Notes. The July 2016 Convertible Notes contain standard and customary events of default including but not limited to: (i) failure to make payments when due under the July 2016 Convertible Notes; (ii) bankruptcy or insolvency of the Company; and (iii) failure to file a registration statement by October 9, 2016. On October 10, 2016 the Company had not been successful in filing the registration statement triggering an event of default per the July 2016 Note Agreement. Upon default the interest rate increases to 24% per annum and the holder of the July 2016 Notes has the option to accelerate the Note and demand cash payment of the Mandatory Default Amount consisting of a 25% premium of the principal balance plus any accrued and unpaid interest. The Company began accruing interest at the rate of 24% on October 10, 2016. Forbearance and Settlement Agreement on July 2016 Convertible Notes On May 5, 2017, the Company entered into a Forbearance and Settlement Agreement ("Forbearance Agreement") with a holder of certain secured convertible notes that are in default due to various triggering events. The holder and the Company agreed to forbear from taking any action provided for under the secured convertible notes in exchange for the following terms provided in this agreement: • The Company agreed to redeem for cash all secured convertible notes of the Company held by the holder no later than September 1, 2017 . • The Company affirmed that the current balance of owed principal and accrued and unpaid interest to the holder is $1,790,214 as of May 2, 2017. • The redemption price for such secured convertible notes shall be 120% (if redeemed on or prior to August 15, 2017) or 125% (if redeemed after August 15, 2017) of the then outstanding principal, plus any accrued and unpaid interest. • During the month of May 2017, the Holder agreed to limit its conversions of outstanding Company secured convertible notes to $50,000 per calendar week of principal/interest. • During the months of June, July and August 2017, the holder agreed to limit its conversions of outstanding Company secured convertible notes to $75,000 per calendar week of principal/interest. • During the months of May, June, July and August 2017, the holder agreed that all outstanding Company secured convertible notes shall bear interest at the normal stated rate of 10% , rather than default rate of 24% . • All conversions during the months of May, June, July and August 2017 will be at the “triggering event” discount conversion price as stated in the secured convertible notes, and will continue at the “triggering event” discount price until, if and when the notes are redeemed. • Should the Company fail to redeem for cash all secured convertible notes on or before September 1, 2017 , default interest and normal stated interest will accrue from the date of execution of this agreement. All principal and accrued interest on the July 2016 Convertible Notes are convertible at any time, in whole or in part, at the option of the private investor, into shares of Common Stock at a variable conversion price equal to the lowest of (i) $0.045 (the “Fixed Conversion Price”), (ii) 70% of the lowest volume weighted average price (“VWAP”) of the Company's common stock for the ten consecutive trading day period prior to the conversion date or (iii) 70% of the lowest closing bid price of the Company's common stock for the ten consecutive trading day period prior to the conversion date. If certain defined triggering events occur, the conversion price would thereafter be reduced (and only reduced), to equal 60% of the lower of (i) the lowest closing bid price of the Company's common stock for the thirty consecutive trading day period prior to the conversion date or (ii) the lowest VWAP of the the Company's common stock for the thirty consecutive trading day period prior to the conversion date. In addition, on the 90th day and also on the 180th day from the date of the Note SPA, the private investor may reset the Fixed Conversion Price to thereafter be equal to the VWAP of the Common Stock for such day or if such 90th or 180th day is not a trading day, then the |
SERIES G PREFERRED STOCK
SERIES G PREFERRED STOCK | 6 Months Ended |
Jun. 30, 2017 | |
Equity [Abstract] | |
PREFERRED STOCK | SERIES A PREFERRED STOCK In June 2013, the Company entered into a Securities Purchase Agreement with an investor to sell an aggregate of 750,000 shares of Series A Preferred Stock at a price of $8.00 per share, resulting in gross proceeds of $6,000,000 . This purchase agreement included warrants to purchase up to 13,125 shares of common stock of the Company. The transfer of cash and securities took place incrementally, the first closing occurring on June 17, 2013 with the transfer of 125,000 shares of Series A Preferred Stock and a warrant to purchase 2,187 shares of common stock for $1,000,000 . The final closings took place in August 2013, with the transfer of 625,000 shares of Series A Preferred Stock and a warrant to purchase 10,938 shares of common stock for $5,000,000 . Holders of Series A Preferred Stock are entitled to cumulative dividends at a rate of 8% per annum when and if declared by the Board of Directors in its sole discretion. The dividends may be paid in cash or in the form of common stock (valued at 10% below market price, but not to exceed the lowest closing price during the applicable measurement period), at the discretion of the Board of Directors. The dividend rate on the Series A Preferred Stock is indexed to the Company's stock price and subject to adjustment. In addition, the Series A Preferred Stock contains a make-whole provision whereby, conversion or redemption of the preferred stock within 4 years of issuance will require dividends for the full four year period to be paid by the Company in cash or common stock (valued at 10% below market price, but not to exceed the lowest closing price during the applicable measurement period). The Series A Preferred Stock may be converted into shares of common stock at the option of the Company if the closing price of the common stock exceeds $232 , as adjusted, for 20 consecutive trading days, or by the holder at any time. The Company has the right to redeem the Series A Preferred Stock at a price of $8.00 per share, plus any accrued and unpaid dividends, plus the make-whole amount (if applicable). At June 30, 2017 , the preferred shares were not eligible for conversion to common shares at the option of the Company. The holder of the preferred shares may convert to common shares at any time, at no cost, at a ratio of 1 preferred share into 1 common share (subject to standard ratable anti-dilution adjustments). Upon any conversion (whether at the option of the Company or the holder), the holder is entitled to receive any accrued but unpaid dividends and also any make-whole amount (if applicable). See Note 19. Make-Whole Dividend Liability. On October 6, 2016, the Series A Holder entered into an exchange agreement (the “Exchange Agreement”) with Adar Bays. Pursuant to the exchange agreement, beginning December 5, 2016, Adar Bays has the option to exchange, from time to time, all or any portion of the October 2016 Convertible Notes (see Note 17) for outstanding shares of Series A Preferred Stock from the Series A Holder. As of June 30, 2017 , Adar Bays had elected to exchange all outstanding October 2016 Convertible Notes, in accordance with the exchange agreement, resulting in the exchange of 104,785 shares of Series A Preferred Stock. As of June 30, 2017 , Adar Bays had also converted their 104,785 shares of Series A Preferred Stock, and the related make whole dividend, which resulted in the issuance of 173,946,250 shares of common stock. Except as otherwise required by law (or with respect to approval of certain actions), the Series A Preferred Stock shall have no voting rights. Upon any liquidation, dissolution or winding up of the Company, after payment or provision for payment of debts and other liabilities of the Company, the holders of Series A Preferred Stock shall be entitled to receive, pari passu with any distribution to the holders of common stock of the Company, an amount equal to $8.00 per share of Series A Preferred Stock plus any accrued and unpaid dividends. As of June 30, 2017 , there were 60,756 shares of Series A Preferred Stock outstanding. SERIES E PREFERRED STOCK AND THE COMMITTED EQUITY LINE Series E Preferred Stock On November 4, 2015, the Company entered into a securities purchase agreement with a private investor to issue 2,800 shares of Series E Preferred Stock in exchange for $2,800,000 . Shares of the Series E Preferred Stock (including the amount of any accrued and unpaid dividends thereon) are convertible, at the option of the holder, into common stock at a variable conversion price equal to 80% of the average of the two lowest VWAPs of the Company's common stock for the ten consecutive trading day period prior to the conversion date. If certain defined default events occur, the conversion price would thereafter be reduced (and only reduced), to equal 70% of the average of the two lowest VWAPs of the Company's common stock for the twenty consecutive trading day period prior to the conversion date. The private investor had available to them a new conversion price beginning on June 9, 2016 as a result of the Series H Preferred Stock transaction further described in Note 14. Shares of the Series E Preferred Stock are now convertible, at the option of the private investor, into common stock at a variable conversion price equal to 70% of (i) the lowest VWAP of our common stock for the ten consecutive trading day period prior to the conversion date or (ii) the lowest closing bid price of our common stock for the ten consecutive trading day period prior to the conversion date. The following table summarizes the conversion activity of the Series E Preferred Stock: Conversion Period Preferred Series E Shares Converted Value of Series E Preferred Shares (inclusive of accrued dividends) Common Shares Issued Q4 2015 478 $ 481,500 250,000 Q1 2016 1,220 1,239,436 1,132,000 Q2 2016 365 381,414 7,979,568 Q3 2016 523 548,896 21,973,747 Q4 2016 94 101,018 13,089,675 Q1 2017 15 16,248 8,289,962 Q2 2017 35 38,886 134,927,207 2,730 $ 2,807,398 187,642,159 Holders of the Series E Preferred Stock will be entitled to dividends in the amount of 7% per annum. During the six months ended June 30, 2017 , the holder converted dividends in the amount of $5,134 on the Series E Preferred Stock, resulting in the issuance of 14,135,538 shares of common stock. The Company has issued 18,000 shares of common stock to the private investor as a commitment fee relating to the Series E Preferred Stock. Costs associated with the Series E Preferred Stock, such as legal fees and commitment shares are capitalized and reported as deferred financing costs on the Condensed Consolidated Balance Sheets. The total gross debt issuance cost incurred by the Company related to the Series E Preferred Stock was $104,000 . These debt issuance costs will be recognized as additional interest expense over the life of the Series E Preferred Stock. At any time after March 31, 2016, the private investor has the option to redeem for cash all or any portion of the outstanding shares of the Series E Preferred Stock at a price per share equal to $1,250 plus any accrued but unpaid dividends thereon. At any time after the third anniversary of the date of the initial issuance of Series E Preferred Stock, the Company will have the option to redeem for cash all outstanding shares of the Series E Preferred Stock at a price per share equal to $1,250 plus any accrued but unpaid dividends thereon. The Company classified the Series E Preferred Stock as a liability pursuant to ASC 480 on the closing date due to the structure of the financing agreement, whereby the Company has an unconditional obligation that the Company may settle by issuing a variable number of common shares with a monetary value that is fixed and known at inception. There are 70 shares of Series E Preferred Stock outstanding, representing a value of $70,000 , as of June 30, 2017 . Pursuant to a number of factors outlined in ASC Topic 815, Derivatives and Hedging , the conversion option in the Series E Preferred Stock was deemed to include an embedded derivative that required bifurcation and separate accounting. As such, the Company ascertained the value of the conversion option as if separate from the convertible issuance and appropriately recorded that value as a derivative liability. At December 31, 2016 , the derivative liability associated with the Series E Preferred Stock was $141,000 . The derivative liability associated with the Series E Preferred Stock is subject to revaluation on a quarterly basis to reflect the market value change of the embedded conversion option. At March 31, 2017 and June 30, 2017 , the Company conducted a fair value assessment of the embedded derivative associated with the Series E Preferred Stock. As a result of the fair value assessment, the Company recorded a $40,016 loss as "Change in fair value of derivatives and gain/(loss) on extinguishment of liabilities, net" in the Condensed Consolidated Statements of Operations, for the three months ended June 30, 2017 . The net gain recorded for the six months ended June 30, 2017 was $19,358 , to properly reflect the fair value of the embedded derivative of $121,390 as of June 30, 2017 . The fair value measurements rely primarily on Company-specific inputs and the Company’s own assumptions. With the absence of observable inputs, the Company determined these recurring fair value measurements reside primarily within Level 3 of the fair value hierarchy. The derivative associated with the Series E Preferred Stock approximates management’s estimate of the fair value of the embedded derivative liability at June 30, 2017 based on using a Monte Carlo simulation following a Geometric Brownian Motion with the following assumptions: annual volatility of 70% , present value discount rate of 12% and dividend yield of 0% . The Committed Equity Line On November 10, 2015, the Company and the private investor entered into a committed equity line purchase agreement (the "CEL"). Under the terms and subject to the conditions of the CEL purchase agreement, at its option the Company has the right to sell to the private investor, and the private investor is obligated to purchase from the Company, up to $32.2 million of the Company’s common stock, subject to certain limitations, from time to time, over the 36 -month period commencing on December 18, 2015, the date that the registration statement was declared effective by the SEC. From time to time, the Company may direct the private investor, at its sole discretion and subject to certain conditions, to purchase an amount of shares of common stock up to the lesser of (i) $1,000,000 or (ii) 300% of the average daily trading volume of the Company’s common stock over the preceding ten trading day period. The per share purchase price for shares of common stock to be sold by the Company under the CEL purchase agreement shall be equal to 80% of the average of the two lowest VWAPs of the common stock for the ten consecutive trading day period prior to the purchase date. As of June 30, 2017 , the Company had directed the private investor to purchase 3,056,147 of common stock which resulted in the issuance of 1,368,000 shares of common stock The Company may not direct the private investor to purchase shares of common stock more frequently than once each ten business days. The Company’s sales of shares of common stock to the private investor under the CEL purchase agreement are limited to no more than the number of shares that would result in the beneficial ownership by the private investor and its affiliates, at any single point in time, of more than 9.99% of the Company’s then outstanding shares of common stock. As consideration for entering into the CEL purchase agreement, the Company agreed to issue to the private investor 132,000 shares of common stock (the “Commitment Shares”). The Commitment Shares were issued to the private investor commencing upon the date that the registration statement was declared effective by the SEC. SERIES F PREFERRED STOCK On January 19, 2016, the Company entered into a securities purchase agreement with a private investor for the sale of $7,000,000 of the Company’s newly designated Series F 7% Convertible Preferred Stock (the “Series F Preferred Stock”). On January 20, 2016, the Company sold and issued 7,000 shares of Series F Preferred Stock to the private investor. The aggregate purchase price of the Series F Preferred shares was $7,000,000 . On January 20, 2016, the private investor paid $500,000 to the Company. The remaining $6,500,000 was paid by the private investor to the Company in 14 weekly increments of $500,000 or $250,000 beginning January 25, 2016 and ending April 28, 2016. Shares of the Series F Preferred Stock (including the amount of any accrued and unpaid dividends thereon) are convertible, at the option of the holder, into common stock at a fixed conversion price equal to $5.00 per share. If certain defined default events occur, the conversion price would thereafter be reduced (and only reduced), to equal 70% of the average of the two lowest VWAPs of our common stock for the twenty consecutive trading day period prior to the conversion date. If requested by the private investor, the Company will make weekly redemptions of shares of Series F Preferred Stock (including any accrued and unpaid dividends thereon). If the redemption price is paid by the Company in cash, the number of shares to be redeemed in each weekly increment is 250 shares of Series F Preferred Stock, and the redemption price is a price per share equal to $1,250 plus any accrued but unpaid dividends thereon. The Company has the option to make such redemption payments in shares of common stock provided certain specified equity conditions are satisfied at the time of payment. The number of shares of common stock to be issued would be calculated using a per share price equal to 80% of the one lowest VWAP of our common stock for the ten consecutive trading day period prior to the payment date. For redemption payments made in shares of common stock, the Company will redeem either (i) 250 shares of Series F Preferred Stock or (ii) such greater number of shares of Series F Preferred Stock (and also including any accrued and unpaid dividends) that would result upon redemption in the issuance of a number of shares of common stock equal to 12% of the aggregate composite trading volume for the Company’s common stock during the preceding calendar week. The private investor had available to them a new conversion price beginning on June 9, 2016 as a result of the Series H Preferred Stock transaction further described in Note 14. Shares of the Series F Preferred Stock are now convertible, at the option of the private investor, into common stock at a variable conversion price equal to 70% of (i) the lowest VWAP of our common stock for the ten consecutive trading day period prior to the conversion date or (ii) the lowest closing bid price of our common stock for the ten consecutive trading day period prior to the conversion date. Amendment of Outstanding Series F Preferred Stock Conversion Price On October 5, 2016, the Company filed a Certificate of Amendment to the Certificate of Designations of Preferences, Rights and Limitations of Series F Preferred Stock with the Secretary of State of the State of Delaware. The Certificate of Amendment amends the conversion price at which the Series F Preferred Stock can be converted into shares of common stock. The Company had approximately $336,000 of Series F Preferred Stock remaining outstanding as of October 5, 2016. As amended, the conversion price will now be equal to the lowest of (i) 50% of the lowest weighted average price (“VWAP”) of our common stock for the ten consecutive trading day period prior to the conversion date or (ii) 50% of the lowest closing bid price of our common stock for the ten consecutive trading day period prior to the conversion date. If certain “Triggering Events” specified in the terms of the Series F Preferred Stock occur, then the conversion price of the Series F Preferred Stock shall be thereafter reduced, and only reduced, to equal 50% of the average of the lowest traded price of the common stock for the twenty consecutive trading day period prior to the conversion date. The following table summarizes the conversion activity of the Series F Preferred Stock: Conversion Period Preferred Series F Shares Converted Value of Series F Preferred Shares (inclusive of accrued dividends) Common Shares Issued Q1 2016 2,168 $ 2,188,298 2,183,992 Q2 2016 3,234 3,300,931 6,649,741 Q3 2016 1,262 1,315,743 81,917,364 Q4 2016 176 185,118 27,276,005 6,840 $ 6,990,090 118,027,102 Holders of the Series F Preferred Stock are entitled to dividends in the amount of 7% per annum. During the quarter ended June 30, 2017 , the Company did not pay any dividends or issue any shares in relation to accrued dividends. The Company classified the Series F Preferred Stock as a liability pursuant to ASC 480 on the closing date due to the structure of the financing agreement, whereby the Company has an unconditional obligation that the Company may settle by issuing a variable number of common shares with a monetary value that is fixed and known at inception. There are 160 shares of Series F Preferred Stock, representing a value of $160,000 , outstanding as of June 30, 2017 . Pursuant to a number of factors outlined in ASC Topic 815, Derivatives and Hedging , the conversion option in the Series F Preferred Stock was deemed to include an embedded derivative that required bifurcation and separate accounting. As such, the Company ascertained the value of the conversion option as if separate from the convertible issuance and appropriately recorded that value as a derivative liability. At closing, a derivative liability and a corresponding debt discount in the amount of $1,666,000 were recorded. The debt discount will be charged to interest expense ratably over the life of the Series F Preferred Stock. The derivative liability associated with the Series F Preferred Stock is subject to revaluation on a quarterly basis to reflect the market value change of the embedded conversion option. At June 30, 2017 , the Company conducted a fair value assessment of the embedded derivative associated with the Series F Preferred Stock. As a result of the fair value assessment, the Company recorded a $209,613 loss as "Change in fair value of derivatives and gain/(loss) on extinguishment of liabilities, net" in the Condensed Consolidated Statements of Operations, for the three months ended June 30, 2017 . The net loss recorded for the six months ended June 30, 2017 was $85,557 , to properly reflect the fair value of the embedded derivative of $340,881 as of June 30, 2017 . The fair value measurements rely primarily on Company-specific inputs and the Company’s own assumptions. With the absence of observable inputs, the Company determined these recurring fair value measurements reside primarily within Level 3 of the fair value hierarchy. The derivative associated with the Series F Preferred Stock approximates management’s estimate of the fair value of the embedded derivative liability at June 30, 2017 based on using a Monte Carlo simulation following a Geometric Brownian Motion with the following assumptions: annual volatility of 66% , present value discount rate of 12% and dividend yield of 0% . SERIES G PREFERRED STOCK On April 29, 2016, the Company entered into a securities purchase agreement with private investors to issue 2,000 shares of Series G Preferred Stock for $2,000,000 . At Closing, the Company issued a total of 500 shares of Series G Preferred Stock to the private investors in exchange for $500,000 . The Company issued an additional 1,500 shares of Series G Preferred Stock to the private investors during the months of May and June 2016, which resulted in additional gross proceeds to the Company of $1,500,000 . Holders of the Series G Preferred Stock will be entitled to dividends in the amount of 10% per annum. One year after issuance, the Company is required to redeem for cash all or any portion of the outstanding shares of the Series G Preferred Stock at a price per share equal to $1,000 plus any accrued but unpaid dividends thereon. Assignment of Series G Preferred Stock Beginning September 19, 2016, the two private investors (the “Series G Sellers”) entered into assignment agreements with accredited investors (the “Series G Purchasers”). Under the terms of the assignment agreements, the Series G Sellers may sell all 2,000 outstanding shares of Series G Preferred Stock to the Series G Purchasers for a purchase price of $1,000 per share of Series G Preferred Stock (plus the amount of any accrued and unpaid dividends thereon). As of June 30, 2017 , the Series G Sellers had sold 1,835 shares of Series G Preferred Stock, representing a value of $1,835,000 , to the Series G Purchasers. On September 21, 2016, the Company filed a Certificate of Amendment to the Certificate of Designations of Preferences, Rights and Limitations of Series G Preferred Stock with the Secretary of State of the State of Delaware. The Certificate of Amendment amends the conversion price at which the Series G Preferred Stock can be converted into shares of common stock. Shares of the Series G Preferred Stock (including the amount of any accrued and unpaid dividends thereon) were previously convertible at the option of the private investors into common stock at a fixed conversion price of $1.00 per share. As amended, the conversion price is equal to the lowest of (i) $0.045 , (ii) 70% of the lowest volume weighted average price of the Company’s common stock for the ten consecutive trading day period prior to the conversion date or (iii) 70% of the lowest closing bid price of the Company’s common stock for the ten consecutive trading day period prior to the conversion date. The following table summarizes the conversion activity of the Series G Preferred Stock: Conversion Period Preferred Series G Shares Converted Value of Series G Preferred Shares (inclusive of accrued dividends) Common Shares Issued Q4 2016 892 929,895 245,726,283 Q1 2017 372 397,970 327,718,386 Q2 2017 526 575,096 1,337,776,821 1,790 $ 1,902,961 1,911,221,490 Holders of the Series G Preferred Stock will be entitled to dividends in the amount of 10% per annum. During the six months ended June 30, 2017 , the Company converted dividends in the amount of $49,096 on the Series G Preferred Stock, resulting in the issuance of 114,854,745 shares of common stock. On June 29, and June 30, 2017, the Company redeemed the remaining 210 outstanding shares, and the related accrued dividends for cash payments in the amount of $232,440 . Due to international wire cut off times, $182,715 of that amount was not actually paid until July 3, 2017, and the resulting liability is included in accounts payable on the Condensed Consolidated Balance Sheet for the six months ended June 30, 2017 . As of June 30, 2017 , all Series G Preferred Stock Shares, and the related accrued dividends, had either been converted or redeemed. Pursuant to a number of factors outlined in ASC Topic 815, Derivatives and Hedging , the conversion option in the Series G Preferred Stock were deemed to include an embedded derivative that required bifurcation and separate accounting. As such, the Company ascertained the value of the conversion option as if separate from the convertible issuance and appropriately recorded that value as a derivative liability. At December 31, 2016 the fair value of the derivative liability was $361,831 and was $219,347 prior to the redemption. At June 30, 2017 , the Company recorded the reduction of the remaining embedded derivative associated with the Series G Preferred Stock of $219,347 as a gain in the "Change in fair value of derivatives and gain/(loss) on extinguishment of liabilities, net" in the Condensed Consolidated Statements of Operations for the three months ended June 30, 2017 . The net gain recorded for the six months ended June 30, 2017 was $361,831 , to properly reflect the elimination of the embedded derivative as of June 30, 2017 . Conversion Inducement and Disposal Price Guarantee On January 17, 2017, one of the Series G Preferred Stock holders (“Holder A”) requested a conversion of 100 shares of Series G Preferred Stock, $100,000 face value, including accrued dividends of $6,416.67 for a total conversion value of $106,416.67 into common stock of the Company at a conversion price of $0.00112 which would have resulted in the issuance of 95,014,884 shares of common stock. At the date of the request the Company did not have enough authorized shares to execute the conversion request and therefore entered into an agreement with Holder A to honor the conversion price of $0.00112 and issue the 95,014,884 shares of common stock upon the increase of the authorized common shares of the Company. The actual conversion occurred on March 17, 2017 which would have been a conversion price of $0.00168 . In conjunction with the conversion price agreement the Company agreed to provide a minimum disposal price guarantee to the Holder A of $0.003 on the tranche of 95,014,884 shares. If Holder A fails to dispose of these shares at $0.003 or above the Company will issue additional shares of common stock to make up the difference between the minimum disposal price of $0.003 and the price that Holder A disposed of the shares. During the six months ended June 30, 2017 , in accordance with ASC 470-20-40-16, the Company recorded expense of $79,179 related to the conversion inducement and expense of $134,566 related to the disposal price guarantee. The amount related to the disposal price guarantee was also recorded as a corresponding liability in the Condensed Consolidated Balance Sheet as of June 30, 2017 . JULY 2016 CONVERTIBLE NOTES Series H Preferred Stock On June 9, 2016, the Company entered into a securities purchase agreement with a private investor to issue 2,500 shares of Series H Preferred Stock for $2,500,000 . The Company received gross proceeds of $250,000 at Closing. Additional gross proceeds of $580,000 were received by the Company through July 7, 2016. The Company agreed to exchange outstanding Series H Preferred Stock for Senior Secured Convertible Notes (“July 2016 Notes”) on July 13, 2016. At the date of the exchange, the Company had sold and issued 830 shares of Series H Preferred Stock to the private investor in exchange for $830,000 of gross proceeds. Refer to the section below for details of the exchange. July 2016 Convertible Notes On July 13, 2016, the Company entered into a securities purchase agreement (the “Note SPA”) with the private investor for the private placement of up to $2,082,600 of the Company’s 4% Original Issue Discount Senior Secured Convertible Promissory Notes (the “July 2016 Convertible Notes”). On July 13, 2016, the Company sold and issued $364,000 principal amount of notes to the investor in exchange for $350,000 of gross proceeds. The Company sold and issued the remaining $1,718,600 principal amount of July 2016 Convertible Notes to the investor in exchange for $1,650,000 of gross proceeds in weekly tranches between July and September 2016. The Company and the private investor also entered into an Exchange Agreement dated July 13, 2016 (the “Exchange Agreement”). Under the terms of the Exchange Agreement, the outstanding shares of Series H Preferred Stock (approximately $833,000 of capital and accrued dividends) were canceled. In exchange, the Company issued to the private investor approximately $866,000 of July 2016 Convertible Notes. There were 830 shares of Series H Preferred Stock outstanding as of the date of the Exchange Agreement. Unless earlier converted or prepaid, all of the July 2016 Convertible Notes will mature July 13, 2017 (the “Maturity Date”). The July 2016 Convertible Notes bear interest at a rate of 10% per annum, subject to increase to 24% per annum upon the occurrence and continuance of an event of default. Principal on the July 2016 Convertible Notes is payable on the Maturity Date. Interest on the July 2016 Convertible Notes is payable quarterly. Principal and interest are payable in cash or, if specified equity conditions are met, shares of Common Stock. The July 2016 Convertible Notes are secured by a security interest in substantially all of the Company’s assets. The subsidiaries of the Company have guaranteed the Company’s obligations under the July 2016 Convertible Notes. The July 2016 Convertible Notes contain standard and customary events of default including but not limited to: (i) failure to make payments when due under the July 2016 Convertible Notes; (ii) bankruptcy or insolvency of the Company; and (iii) failure to file a registration statement by October 9, 2016. On October 10, 2016 the Company had not been successful in filing the registration statement triggering an event of default per the July 2016 Note Agreement. Upon default the interest rate increases to 24% per annum and the holder of the July 2016 Notes has the option to accelerate the Note and demand cash payment of the Mandatory Default Amount consisting of a 25% premium of the principal balance plus any accrued and unpaid interest. The Company began accruing interest at the rate of 24% on October 10, 2016. Forbearance and Settlement Agreement on July 2016 Convertible Notes On May 5, 2017, the Company entered into a Forbearance and Settlement Agreement ("Forbearance Agreement") with a holder of certain secured convertible notes that are in default due to various triggering events. The holder and the Company agreed to forbear from taking any action provided for under the secured convertible notes in exchange for the following terms provided in this agreement: • The Company agreed to redeem for cash all secured convertible notes of the Company held by the holder no later than September 1, 2017 . • The Company affirmed that the current balance of owed principal and accrued and unpaid interest to the holder is $1,790,214 as of May 2, 2017. • The redemption price for such secured convertible notes shall be 120% (if redeemed on or prior to August 15, 2017) or 125% (if redeemed after August 15, 2017) of the then outstanding principal, plus any accrued and unpaid interest. • During the month of May 2017, the Holder agreed to limit its conversions of outstanding Company secured convertible notes to $50,000 per calendar week of principal/interest. • During the months of June, July and August 2017, the holder agreed to limit its conversions of outstanding Company secured convertible notes to $75,000 per calendar week of principal/interest. • During the months of May, June, July and August 2017, the holder agreed that all outstanding Company secured convertible notes shall bear interest at the normal stated rate of 10% , rather than default rate of 24% . • All conversions during the months of May, June, July and August 2017 will be at the “triggering event” discount conversion price as stated in the secured convertible notes, and will continue at the “triggering event” discount price until, if and when the notes are redeemed. • Should the Company fail to redeem for cash all secured convertible notes on or before September 1, 2017 , default interest and normal stated interest will accrue from the date of execution of this agreement. All principal and accrued interest on the July 2016 Convertible Notes are convertible at any time, in whole or in part, at the option of the private investor, into shares of Common Stock at a variable conversion price equal to the lowest of (i) $0.045 (the “Fixed Conversion Price”), (ii) 70% of the lowest volume weighted average price (“VWAP”) of the Company's common stock for the ten consecutive trading day period prior to the conversion date or (iii) 70% of the lowest closing bid price of the Company's common stock for the ten consecutive trading day period prior to the conversion date. If certain defined triggering events occur, the conversion price would thereafter be reduced (and only reduced), to equal 60% of the lower of (i) the lowest closing bid price of the Company's common stock for the thirty consecutive trading day period prior to the conversion date or (ii) the lowest VWAP of the the Company's common stock for the thirty consecutive trading day period prior to the conversion date. In addition, on the 90th day and also on the 180th day from the date of the Note SPA, the private investor may reset the Fixed Conversion Price to thereafter be equal to the VWAP of the Common Stock for such day or if such 90th or 180th day is not a trading day, then the |
SERIES H PREFERRED STOCK AND CO
SERIES H PREFERRED STOCK AND CONVERTIBLE NOTES | 6 Months Ended |
Jun. 30, 2017 | |
Equity [Abstract] | |
PREFERRED STOCK | SERIES A PREFERRED STOCK In June 2013, the Company entered into a Securities Purchase Agreement with an investor to sell an aggregate of 750,000 shares of Series A Preferred Stock at a price of $8.00 per share, resulting in gross proceeds of $6,000,000 . This purchase agreement included warrants to purchase up to 13,125 shares of common stock of the Company. The transfer of cash and securities took place incrementally, the first closing occurring on June 17, 2013 with the transfer of 125,000 shares of Series A Preferred Stock and a warrant to purchase 2,187 shares of common stock for $1,000,000 . The final closings took place in August 2013, with the transfer of 625,000 shares of Series A Preferred Stock and a warrant to purchase 10,938 shares of common stock for $5,000,000 . Holders of Series A Preferred Stock are entitled to cumulative dividends at a rate of 8% per annum when and if declared by the Board of Directors in its sole discretion. The dividends may be paid in cash or in the form of common stock (valued at 10% below market price, but not to exceed the lowest closing price during the applicable measurement period), at the discretion of the Board of Directors. The dividend rate on the Series A Preferred Stock is indexed to the Company's stock price and subject to adjustment. In addition, the Series A Preferred Stock contains a make-whole provision whereby, conversion or redemption of the preferred stock within 4 years of issuance will require dividends for the full four year period to be paid by the Company in cash or common stock (valued at 10% below market price, but not to exceed the lowest closing price during the applicable measurement period). The Series A Preferred Stock may be converted into shares of common stock at the option of the Company if the closing price of the common stock exceeds $232 , as adjusted, for 20 consecutive trading days, or by the holder at any time. The Company has the right to redeem the Series A Preferred Stock at a price of $8.00 per share, plus any accrued and unpaid dividends, plus the make-whole amount (if applicable). At June 30, 2017 , the preferred shares were not eligible for conversion to common shares at the option of the Company. The holder of the preferred shares may convert to common shares at any time, at no cost, at a ratio of 1 preferred share into 1 common share (subject to standard ratable anti-dilution adjustments). Upon any conversion (whether at the option of the Company or the holder), the holder is entitled to receive any accrued but unpaid dividends and also any make-whole amount (if applicable). See Note 19. Make-Whole Dividend Liability. On October 6, 2016, the Series A Holder entered into an exchange agreement (the “Exchange Agreement”) with Adar Bays. Pursuant to the exchange agreement, beginning December 5, 2016, Adar Bays has the option to exchange, from time to time, all or any portion of the October 2016 Convertible Notes (see Note 17) for outstanding shares of Series A Preferred Stock from the Series A Holder. As of June 30, 2017 , Adar Bays had elected to exchange all outstanding October 2016 Convertible Notes, in accordance with the exchange agreement, resulting in the exchange of 104,785 shares of Series A Preferred Stock. As of June 30, 2017 , Adar Bays had also converted their 104,785 shares of Series A Preferred Stock, and the related make whole dividend, which resulted in the issuance of 173,946,250 shares of common stock. Except as otherwise required by law (or with respect to approval of certain actions), the Series A Preferred Stock shall have no voting rights. Upon any liquidation, dissolution or winding up of the Company, after payment or provision for payment of debts and other liabilities of the Company, the holders of Series A Preferred Stock shall be entitled to receive, pari passu with any distribution to the holders of common stock of the Company, an amount equal to $8.00 per share of Series A Preferred Stock plus any accrued and unpaid dividends. As of June 30, 2017 , there were 60,756 shares of Series A Preferred Stock outstanding. SERIES E PREFERRED STOCK AND THE COMMITTED EQUITY LINE Series E Preferred Stock On November 4, 2015, the Company entered into a securities purchase agreement with a private investor to issue 2,800 shares of Series E Preferred Stock in exchange for $2,800,000 . Shares of the Series E Preferred Stock (including the amount of any accrued and unpaid dividends thereon) are convertible, at the option of the holder, into common stock at a variable conversion price equal to 80% of the average of the two lowest VWAPs of the Company's common stock for the ten consecutive trading day period prior to the conversion date. If certain defined default events occur, the conversion price would thereafter be reduced (and only reduced), to equal 70% of the average of the two lowest VWAPs of the Company's common stock for the twenty consecutive trading day period prior to the conversion date. The private investor had available to them a new conversion price beginning on June 9, 2016 as a result of the Series H Preferred Stock transaction further described in Note 14. Shares of the Series E Preferred Stock are now convertible, at the option of the private investor, into common stock at a variable conversion price equal to 70% of (i) the lowest VWAP of our common stock for the ten consecutive trading day period prior to the conversion date or (ii) the lowest closing bid price of our common stock for the ten consecutive trading day period prior to the conversion date. The following table summarizes the conversion activity of the Series E Preferred Stock: Conversion Period Preferred Series E Shares Converted Value of Series E Preferred Shares (inclusive of accrued dividends) Common Shares Issued Q4 2015 478 $ 481,500 250,000 Q1 2016 1,220 1,239,436 1,132,000 Q2 2016 365 381,414 7,979,568 Q3 2016 523 548,896 21,973,747 Q4 2016 94 101,018 13,089,675 Q1 2017 15 16,248 8,289,962 Q2 2017 35 38,886 134,927,207 2,730 $ 2,807,398 187,642,159 Holders of the Series E Preferred Stock will be entitled to dividends in the amount of 7% per annum. During the six months ended June 30, 2017 , the holder converted dividends in the amount of $5,134 on the Series E Preferred Stock, resulting in the issuance of 14,135,538 shares of common stock. The Company has issued 18,000 shares of common stock to the private investor as a commitment fee relating to the Series E Preferred Stock. Costs associated with the Series E Preferred Stock, such as legal fees and commitment shares are capitalized and reported as deferred financing costs on the Condensed Consolidated Balance Sheets. The total gross debt issuance cost incurred by the Company related to the Series E Preferred Stock was $104,000 . These debt issuance costs will be recognized as additional interest expense over the life of the Series E Preferred Stock. At any time after March 31, 2016, the private investor has the option to redeem for cash all or any portion of the outstanding shares of the Series E Preferred Stock at a price per share equal to $1,250 plus any accrued but unpaid dividends thereon. At any time after the third anniversary of the date of the initial issuance of Series E Preferred Stock, the Company will have the option to redeem for cash all outstanding shares of the Series E Preferred Stock at a price per share equal to $1,250 plus any accrued but unpaid dividends thereon. The Company classified the Series E Preferred Stock as a liability pursuant to ASC 480 on the closing date due to the structure of the financing agreement, whereby the Company has an unconditional obligation that the Company may settle by issuing a variable number of common shares with a monetary value that is fixed and known at inception. There are 70 shares of Series E Preferred Stock outstanding, representing a value of $70,000 , as of June 30, 2017 . Pursuant to a number of factors outlined in ASC Topic 815, Derivatives and Hedging , the conversion option in the Series E Preferred Stock was deemed to include an embedded derivative that required bifurcation and separate accounting. As such, the Company ascertained the value of the conversion option as if separate from the convertible issuance and appropriately recorded that value as a derivative liability. At December 31, 2016 , the derivative liability associated with the Series E Preferred Stock was $141,000 . The derivative liability associated with the Series E Preferred Stock is subject to revaluation on a quarterly basis to reflect the market value change of the embedded conversion option. At March 31, 2017 and June 30, 2017 , the Company conducted a fair value assessment of the embedded derivative associated with the Series E Preferred Stock. As a result of the fair value assessment, the Company recorded a $40,016 loss as "Change in fair value of derivatives and gain/(loss) on extinguishment of liabilities, net" in the Condensed Consolidated Statements of Operations, for the three months ended June 30, 2017 . The net gain recorded for the six months ended June 30, 2017 was $19,358 , to properly reflect the fair value of the embedded derivative of $121,390 as of June 30, 2017 . The fair value measurements rely primarily on Company-specific inputs and the Company’s own assumptions. With the absence of observable inputs, the Company determined these recurring fair value measurements reside primarily within Level 3 of the fair value hierarchy. The derivative associated with the Series E Preferred Stock approximates management’s estimate of the fair value of the embedded derivative liability at June 30, 2017 based on using a Monte Carlo simulation following a Geometric Brownian Motion with the following assumptions: annual volatility of 70% , present value discount rate of 12% and dividend yield of 0% . The Committed Equity Line On November 10, 2015, the Company and the private investor entered into a committed equity line purchase agreement (the "CEL"). Under the terms and subject to the conditions of the CEL purchase agreement, at its option the Company has the right to sell to the private investor, and the private investor is obligated to purchase from the Company, up to $32.2 million of the Company’s common stock, subject to certain limitations, from time to time, over the 36 -month period commencing on December 18, 2015, the date that the registration statement was declared effective by the SEC. From time to time, the Company may direct the private investor, at its sole discretion and subject to certain conditions, to purchase an amount of shares of common stock up to the lesser of (i) $1,000,000 or (ii) 300% of the average daily trading volume of the Company’s common stock over the preceding ten trading day period. The per share purchase price for shares of common stock to be sold by the Company under the CEL purchase agreement shall be equal to 80% of the average of the two lowest VWAPs of the common stock for the ten consecutive trading day period prior to the purchase date. As of June 30, 2017 , the Company had directed the private investor to purchase 3,056,147 of common stock which resulted in the issuance of 1,368,000 shares of common stock The Company may not direct the private investor to purchase shares of common stock more frequently than once each ten business days. The Company’s sales of shares of common stock to the private investor under the CEL purchase agreement are limited to no more than the number of shares that would result in the beneficial ownership by the private investor and its affiliates, at any single point in time, of more than 9.99% of the Company’s then outstanding shares of common stock. As consideration for entering into the CEL purchase agreement, the Company agreed to issue to the private investor 132,000 shares of common stock (the “Commitment Shares”). The Commitment Shares were issued to the private investor commencing upon the date that the registration statement was declared effective by the SEC. SERIES F PREFERRED STOCK On January 19, 2016, the Company entered into a securities purchase agreement with a private investor for the sale of $7,000,000 of the Company’s newly designated Series F 7% Convertible Preferred Stock (the “Series F Preferred Stock”). On January 20, 2016, the Company sold and issued 7,000 shares of Series F Preferred Stock to the private investor. The aggregate purchase price of the Series F Preferred shares was $7,000,000 . On January 20, 2016, the private investor paid $500,000 to the Company. The remaining $6,500,000 was paid by the private investor to the Company in 14 weekly increments of $500,000 or $250,000 beginning January 25, 2016 and ending April 28, 2016. Shares of the Series F Preferred Stock (including the amount of any accrued and unpaid dividends thereon) are convertible, at the option of the holder, into common stock at a fixed conversion price equal to $5.00 per share. If certain defined default events occur, the conversion price would thereafter be reduced (and only reduced), to equal 70% of the average of the two lowest VWAPs of our common stock for the twenty consecutive trading day period prior to the conversion date. If requested by the private investor, the Company will make weekly redemptions of shares of Series F Preferred Stock (including any accrued and unpaid dividends thereon). If the redemption price is paid by the Company in cash, the number of shares to be redeemed in each weekly increment is 250 shares of Series F Preferred Stock, and the redemption price is a price per share equal to $1,250 plus any accrued but unpaid dividends thereon. The Company has the option to make such redemption payments in shares of common stock provided certain specified equity conditions are satisfied at the time of payment. The number of shares of common stock to be issued would be calculated using a per share price equal to 80% of the one lowest VWAP of our common stock for the ten consecutive trading day period prior to the payment date. For redemption payments made in shares of common stock, the Company will redeem either (i) 250 shares of Series F Preferred Stock or (ii) such greater number of shares of Series F Preferred Stock (and also including any accrued and unpaid dividends) that would result upon redemption in the issuance of a number of shares of common stock equal to 12% of the aggregate composite trading volume for the Company’s common stock during the preceding calendar week. The private investor had available to them a new conversion price beginning on June 9, 2016 as a result of the Series H Preferred Stock transaction further described in Note 14. Shares of the Series F Preferred Stock are now convertible, at the option of the private investor, into common stock at a variable conversion price equal to 70% of (i) the lowest VWAP of our common stock for the ten consecutive trading day period prior to the conversion date or (ii) the lowest closing bid price of our common stock for the ten consecutive trading day period prior to the conversion date. Amendment of Outstanding Series F Preferred Stock Conversion Price On October 5, 2016, the Company filed a Certificate of Amendment to the Certificate of Designations of Preferences, Rights and Limitations of Series F Preferred Stock with the Secretary of State of the State of Delaware. The Certificate of Amendment amends the conversion price at which the Series F Preferred Stock can be converted into shares of common stock. The Company had approximately $336,000 of Series F Preferred Stock remaining outstanding as of October 5, 2016. As amended, the conversion price will now be equal to the lowest of (i) 50% of the lowest weighted average price (“VWAP”) of our common stock for the ten consecutive trading day period prior to the conversion date or (ii) 50% of the lowest closing bid price of our common stock for the ten consecutive trading day period prior to the conversion date. If certain “Triggering Events” specified in the terms of the Series F Preferred Stock occur, then the conversion price of the Series F Preferred Stock shall be thereafter reduced, and only reduced, to equal 50% of the average of the lowest traded price of the common stock for the twenty consecutive trading day period prior to the conversion date. The following table summarizes the conversion activity of the Series F Preferred Stock: Conversion Period Preferred Series F Shares Converted Value of Series F Preferred Shares (inclusive of accrued dividends) Common Shares Issued Q1 2016 2,168 $ 2,188,298 2,183,992 Q2 2016 3,234 3,300,931 6,649,741 Q3 2016 1,262 1,315,743 81,917,364 Q4 2016 176 185,118 27,276,005 6,840 $ 6,990,090 118,027,102 Holders of the Series F Preferred Stock are entitled to dividends in the amount of 7% per annum. During the quarter ended June 30, 2017 , the Company did not pay any dividends or issue any shares in relation to accrued dividends. The Company classified the Series F Preferred Stock as a liability pursuant to ASC 480 on the closing date due to the structure of the financing agreement, whereby the Company has an unconditional obligation that the Company may settle by issuing a variable number of common shares with a monetary value that is fixed and known at inception. There are 160 shares of Series F Preferred Stock, representing a value of $160,000 , outstanding as of June 30, 2017 . Pursuant to a number of factors outlined in ASC Topic 815, Derivatives and Hedging , the conversion option in the Series F Preferred Stock was deemed to include an embedded derivative that required bifurcation and separate accounting. As such, the Company ascertained the value of the conversion option as if separate from the convertible issuance and appropriately recorded that value as a derivative liability. At closing, a derivative liability and a corresponding debt discount in the amount of $1,666,000 were recorded. The debt discount will be charged to interest expense ratably over the life of the Series F Preferred Stock. The derivative liability associated with the Series F Preferred Stock is subject to revaluation on a quarterly basis to reflect the market value change of the embedded conversion option. At June 30, 2017 , the Company conducted a fair value assessment of the embedded derivative associated with the Series F Preferred Stock. As a result of the fair value assessment, the Company recorded a $209,613 loss as "Change in fair value of derivatives and gain/(loss) on extinguishment of liabilities, net" in the Condensed Consolidated Statements of Operations, for the three months ended June 30, 2017 . The net loss recorded for the six months ended June 30, 2017 was $85,557 , to properly reflect the fair value of the embedded derivative of $340,881 as of June 30, 2017 . The fair value measurements rely primarily on Company-specific inputs and the Company’s own assumptions. With the absence of observable inputs, the Company determined these recurring fair value measurements reside primarily within Level 3 of the fair value hierarchy. The derivative associated with the Series F Preferred Stock approximates management’s estimate of the fair value of the embedded derivative liability at June 30, 2017 based on using a Monte Carlo simulation following a Geometric Brownian Motion with the following assumptions: annual volatility of 66% , present value discount rate of 12% and dividend yield of 0% . SERIES G PREFERRED STOCK On April 29, 2016, the Company entered into a securities purchase agreement with private investors to issue 2,000 shares of Series G Preferred Stock for $2,000,000 . At Closing, the Company issued a total of 500 shares of Series G Preferred Stock to the private investors in exchange for $500,000 . The Company issued an additional 1,500 shares of Series G Preferred Stock to the private investors during the months of May and June 2016, which resulted in additional gross proceeds to the Company of $1,500,000 . Holders of the Series G Preferred Stock will be entitled to dividends in the amount of 10% per annum. One year after issuance, the Company is required to redeem for cash all or any portion of the outstanding shares of the Series G Preferred Stock at a price per share equal to $1,000 plus any accrued but unpaid dividends thereon. Assignment of Series G Preferred Stock Beginning September 19, 2016, the two private investors (the “Series G Sellers”) entered into assignment agreements with accredited investors (the “Series G Purchasers”). Under the terms of the assignment agreements, the Series G Sellers may sell all 2,000 outstanding shares of Series G Preferred Stock to the Series G Purchasers for a purchase price of $1,000 per share of Series G Preferred Stock (plus the amount of any accrued and unpaid dividends thereon). As of June 30, 2017 , the Series G Sellers had sold 1,835 shares of Series G Preferred Stock, representing a value of $1,835,000 , to the Series G Purchasers. On September 21, 2016, the Company filed a Certificate of Amendment to the Certificate of Designations of Preferences, Rights and Limitations of Series G Preferred Stock with the Secretary of State of the State of Delaware. The Certificate of Amendment amends the conversion price at which the Series G Preferred Stock can be converted into shares of common stock. Shares of the Series G Preferred Stock (including the amount of any accrued and unpaid dividends thereon) were previously convertible at the option of the private investors into common stock at a fixed conversion price of $1.00 per share. As amended, the conversion price is equal to the lowest of (i) $0.045 , (ii) 70% of the lowest volume weighted average price of the Company’s common stock for the ten consecutive trading day period prior to the conversion date or (iii) 70% of the lowest closing bid price of the Company’s common stock for the ten consecutive trading day period prior to the conversion date. The following table summarizes the conversion activity of the Series G Preferred Stock: Conversion Period Preferred Series G Shares Converted Value of Series G Preferred Shares (inclusive of accrued dividends) Common Shares Issued Q4 2016 892 929,895 245,726,283 Q1 2017 372 397,970 327,718,386 Q2 2017 526 575,096 1,337,776,821 1,790 $ 1,902,961 1,911,221,490 Holders of the Series G Preferred Stock will be entitled to dividends in the amount of 10% per annum. During the six months ended June 30, 2017 , the Company converted dividends in the amount of $49,096 on the Series G Preferred Stock, resulting in the issuance of 114,854,745 shares of common stock. On June 29, and June 30, 2017, the Company redeemed the remaining 210 outstanding shares, and the related accrued dividends for cash payments in the amount of $232,440 . Due to international wire cut off times, $182,715 of that amount was not actually paid until July 3, 2017, and the resulting liability is included in accounts payable on the Condensed Consolidated Balance Sheet for the six months ended June 30, 2017 . As of June 30, 2017 , all Series G Preferred Stock Shares, and the related accrued dividends, had either been converted or redeemed. Pursuant to a number of factors outlined in ASC Topic 815, Derivatives and Hedging , the conversion option in the Series G Preferred Stock were deemed to include an embedded derivative that required bifurcation and separate accounting. As such, the Company ascertained the value of the conversion option as if separate from the convertible issuance and appropriately recorded that value as a derivative liability. At December 31, 2016 the fair value of the derivative liability was $361,831 and was $219,347 prior to the redemption. At June 30, 2017 , the Company recorded the reduction of the remaining embedded derivative associated with the Series G Preferred Stock of $219,347 as a gain in the "Change in fair value of derivatives and gain/(loss) on extinguishment of liabilities, net" in the Condensed Consolidated Statements of Operations for the three months ended June 30, 2017 . The net gain recorded for the six months ended June 30, 2017 was $361,831 , to properly reflect the elimination of the embedded derivative as of June 30, 2017 . Conversion Inducement and Disposal Price Guarantee On January 17, 2017, one of the Series G Preferred Stock holders (“Holder A”) requested a conversion of 100 shares of Series G Preferred Stock, $100,000 face value, including accrued dividends of $6,416.67 for a total conversion value of $106,416.67 into common stock of the Company at a conversion price of $0.00112 which would have resulted in the issuance of 95,014,884 shares of common stock. At the date of the request the Company did not have enough authorized shares to execute the conversion request and therefore entered into an agreement with Holder A to honor the conversion price of $0.00112 and issue the 95,014,884 shares of common stock upon the increase of the authorized common shares of the Company. The actual conversion occurred on March 17, 2017 which would have been a conversion price of $0.00168 . In conjunction with the conversion price agreement the Company agreed to provide a minimum disposal price guarantee to the Holder A of $0.003 on the tranche of 95,014,884 shares. If Holder A fails to dispose of these shares at $0.003 or above the Company will issue additional shares of common stock to make up the difference between the minimum disposal price of $0.003 and the price that Holder A disposed of the shares. During the six months ended June 30, 2017 , in accordance with ASC 470-20-40-16, the Company recorded expense of $79,179 related to the conversion inducement and expense of $134,566 related to the disposal price guarantee. The amount related to the disposal price guarantee was also recorded as a corresponding liability in the Condensed Consolidated Balance Sheet as of June 30, 2017 . JULY 2016 CONVERTIBLE NOTES Series H Preferred Stock On June 9, 2016, the Company entered into a securities purchase agreement with a private investor to issue 2,500 shares of Series H Preferred Stock for $2,500,000 . The Company received gross proceeds of $250,000 at Closing. Additional gross proceeds of $580,000 were received by the Company through July 7, 2016. The Company agreed to exchange outstanding Series H Preferred Stock for Senior Secured Convertible Notes (“July 2016 Notes”) on July 13, 2016. At the date of the exchange, the Company had sold and issued 830 shares of Series H Preferred Stock to the private investor in exchange for $830,000 of gross proceeds. Refer to the section below for details of the exchange. July 2016 Convertible Notes On July 13, 2016, the Company entered into a securities purchase agreement (the “Note SPA”) with the private investor for the private placement of up to $2,082,600 of the Company’s 4% Original Issue Discount Senior Secured Convertible Promissory Notes (the “July 2016 Convertible Notes”). On July 13, 2016, the Company sold and issued $364,000 principal amount of notes to the investor in exchange for $350,000 of gross proceeds. The Company sold and issued the remaining $1,718,600 principal amount of July 2016 Convertible Notes to the investor in exchange for $1,650,000 of gross proceeds in weekly tranches between July and September 2016. The Company and the private investor also entered into an Exchange Agreement dated July 13, 2016 (the “Exchange Agreement”). Under the terms of the Exchange Agreement, the outstanding shares of Series H Preferred Stock (approximately $833,000 of capital and accrued dividends) were canceled. In exchange, the Company issued to the private investor approximately $866,000 of July 2016 Convertible Notes. There were 830 shares of Series H Preferred Stock outstanding as of the date of the Exchange Agreement. Unless earlier converted or prepaid, all of the July 2016 Convertible Notes will mature July 13, 2017 (the “Maturity Date”). The July 2016 Convertible Notes bear interest at a rate of 10% per annum, subject to increase to 24% per annum upon the occurrence and continuance of an event of default. Principal on the July 2016 Convertible Notes is payable on the Maturity Date. Interest on the July 2016 Convertible Notes is payable quarterly. Principal and interest are payable in cash or, if specified equity conditions are met, shares of Common Stock. The July 2016 Convertible Notes are secured by a security interest in substantially all of the Company’s assets. The subsidiaries of the Company have guaranteed the Company’s obligations under the July 2016 Convertible Notes. The July 2016 Convertible Notes contain standard and customary events of default including but not limited to: (i) failure to make payments when due under the July 2016 Convertible Notes; (ii) bankruptcy or insolvency of the Company; and (iii) failure to file a registration statement by October 9, 2016. On October 10, 2016 the Company had not been successful in filing the registration statement triggering an event of default per the July 2016 Note Agreement. Upon default the interest rate increases to 24% per annum and the holder of the July 2016 Notes has the option to accelerate the Note and demand cash payment of the Mandatory Default Amount consisting of a 25% premium of the principal balance plus any accrued and unpaid interest. The Company began accruing interest at the rate of 24% on October 10, 2016. Forbearance and Settlement Agreement on July 2016 Convertible Notes On May 5, 2017, the Company entered into a Forbearance and Settlement Agreement ("Forbearance Agreement") with a holder of certain secured convertible notes that are in default due to various triggering events. The holder and the Company agreed to forbear from taking any action provided for under the secured convertible notes in exchange for the following terms provided in this agreement: • The Company agreed to redeem for cash all secured convertible notes of the Company held by the holder no later than September 1, 2017 . • The Company affirmed that the current balance of owed principal and accrued and unpaid interest to the holder is $1,790,214 as of May 2, 2017. • The redemption price for such secured convertible notes shall be 120% (if redeemed on or prior to August 15, 2017) or 125% (if redeemed after August 15, 2017) of the then outstanding principal, plus any accrued and unpaid interest. • During the month of May 2017, the Holder agreed to limit its conversions of outstanding Company secured convertible notes to $50,000 per calendar week of principal/interest. • During the months of June, July and August 2017, the holder agreed to limit its conversions of outstanding Company secured convertible notes to $75,000 per calendar week of principal/interest. • During the months of May, June, July and August 2017, the holder agreed that all outstanding Company secured convertible notes shall bear interest at the normal stated rate of 10% , rather than default rate of 24% . • All conversions during the months of May, June, July and August 2017 will be at the “triggering event” discount conversion price as stated in the secured convertible notes, and will continue at the “triggering event” discount price until, if and when the notes are redeemed. • Should the Company fail to redeem for cash all secured convertible notes on or before September 1, 2017 , default interest and normal stated interest will accrue from the date of execution of this agreement. All principal and accrued interest on the July 2016 Convertible Notes are convertible at any time, in whole or in part, at the option of the private investor, into shares of Common Stock at a variable conversion price equal to the lowest of (i) $0.045 (the “Fixed Conversion Price”), (ii) 70% of the lowest volume weighted average price (“VWAP”) of the Company's common stock for the ten consecutive trading day period prior to the conversion date or (iii) 70% of the lowest closing bid price of the Company's common stock for the ten consecutive trading day period prior to the conversion date. If certain defined triggering events occur, the conversion price would thereafter be reduced (and only reduced), to equal 60% of the lower of (i) the lowest closing bid price of the Company's common stock for the thirty consecutive trading day period prior to the conversion date or (ii) the lowest VWAP of the the Company's common stock for the thirty consecutive trading day period prior to the conversion date. In addition, on the 90th day and also on the 180th day from the date of the Note SPA, the private investor may reset the Fixed Conversion Price to thereafter be equal to the VWAP of the Common Stock for such day or if such 90th or 180th day is not a trading day, then the |
SERIES I PREFERRED STOCK AND EX
SERIES I PREFERRED STOCK AND EXCHANGE CONVERTIBLE NOTES | 6 Months Ended |
Jun. 30, 2017 | |
Equity [Abstract] | |
PREFERRED STOCK | SERIES A PREFERRED STOCK In June 2013, the Company entered into a Securities Purchase Agreement with an investor to sell an aggregate of 750,000 shares of Series A Preferred Stock at a price of $8.00 per share, resulting in gross proceeds of $6,000,000 . This purchase agreement included warrants to purchase up to 13,125 shares of common stock of the Company. The transfer of cash and securities took place incrementally, the first closing occurring on June 17, 2013 with the transfer of 125,000 shares of Series A Preferred Stock and a warrant to purchase 2,187 shares of common stock for $1,000,000 . The final closings took place in August 2013, with the transfer of 625,000 shares of Series A Preferred Stock and a warrant to purchase 10,938 shares of common stock for $5,000,000 . Holders of Series A Preferred Stock are entitled to cumulative dividends at a rate of 8% per annum when and if declared by the Board of Directors in its sole discretion. The dividends may be paid in cash or in the form of common stock (valued at 10% below market price, but not to exceed the lowest closing price during the applicable measurement period), at the discretion of the Board of Directors. The dividend rate on the Series A Preferred Stock is indexed to the Company's stock price and subject to adjustment. In addition, the Series A Preferred Stock contains a make-whole provision whereby, conversion or redemption of the preferred stock within 4 years of issuance will require dividends for the full four year period to be paid by the Company in cash or common stock (valued at 10% below market price, but not to exceed the lowest closing price during the applicable measurement period). The Series A Preferred Stock may be converted into shares of common stock at the option of the Company if the closing price of the common stock exceeds $232 , as adjusted, for 20 consecutive trading days, or by the holder at any time. The Company has the right to redeem the Series A Preferred Stock at a price of $8.00 per share, plus any accrued and unpaid dividends, plus the make-whole amount (if applicable). At June 30, 2017 , the preferred shares were not eligible for conversion to common shares at the option of the Company. The holder of the preferred shares may convert to common shares at any time, at no cost, at a ratio of 1 preferred share into 1 common share (subject to standard ratable anti-dilution adjustments). Upon any conversion (whether at the option of the Company or the holder), the holder is entitled to receive any accrued but unpaid dividends and also any make-whole amount (if applicable). See Note 19. Make-Whole Dividend Liability. On October 6, 2016, the Series A Holder entered into an exchange agreement (the “Exchange Agreement”) with Adar Bays. Pursuant to the exchange agreement, beginning December 5, 2016, Adar Bays has the option to exchange, from time to time, all or any portion of the October 2016 Convertible Notes (see Note 17) for outstanding shares of Series A Preferred Stock from the Series A Holder. As of June 30, 2017 , Adar Bays had elected to exchange all outstanding October 2016 Convertible Notes, in accordance with the exchange agreement, resulting in the exchange of 104,785 shares of Series A Preferred Stock. As of June 30, 2017 , Adar Bays had also converted their 104,785 shares of Series A Preferred Stock, and the related make whole dividend, which resulted in the issuance of 173,946,250 shares of common stock. Except as otherwise required by law (or with respect to approval of certain actions), the Series A Preferred Stock shall have no voting rights. Upon any liquidation, dissolution or winding up of the Company, after payment or provision for payment of debts and other liabilities of the Company, the holders of Series A Preferred Stock shall be entitled to receive, pari passu with any distribution to the holders of common stock of the Company, an amount equal to $8.00 per share of Series A Preferred Stock plus any accrued and unpaid dividends. As of June 30, 2017 , there were 60,756 shares of Series A Preferred Stock outstanding. SERIES E PREFERRED STOCK AND THE COMMITTED EQUITY LINE Series E Preferred Stock On November 4, 2015, the Company entered into a securities purchase agreement with a private investor to issue 2,800 shares of Series E Preferred Stock in exchange for $2,800,000 . Shares of the Series E Preferred Stock (including the amount of any accrued and unpaid dividends thereon) are convertible, at the option of the holder, into common stock at a variable conversion price equal to 80% of the average of the two lowest VWAPs of the Company's common stock for the ten consecutive trading day period prior to the conversion date. If certain defined default events occur, the conversion price would thereafter be reduced (and only reduced), to equal 70% of the average of the two lowest VWAPs of the Company's common stock for the twenty consecutive trading day period prior to the conversion date. The private investor had available to them a new conversion price beginning on June 9, 2016 as a result of the Series H Preferred Stock transaction further described in Note 14. Shares of the Series E Preferred Stock are now convertible, at the option of the private investor, into common stock at a variable conversion price equal to 70% of (i) the lowest VWAP of our common stock for the ten consecutive trading day period prior to the conversion date or (ii) the lowest closing bid price of our common stock for the ten consecutive trading day period prior to the conversion date. The following table summarizes the conversion activity of the Series E Preferred Stock: Conversion Period Preferred Series E Shares Converted Value of Series E Preferred Shares (inclusive of accrued dividends) Common Shares Issued Q4 2015 478 $ 481,500 250,000 Q1 2016 1,220 1,239,436 1,132,000 Q2 2016 365 381,414 7,979,568 Q3 2016 523 548,896 21,973,747 Q4 2016 94 101,018 13,089,675 Q1 2017 15 16,248 8,289,962 Q2 2017 35 38,886 134,927,207 2,730 $ 2,807,398 187,642,159 Holders of the Series E Preferred Stock will be entitled to dividends in the amount of 7% per annum. During the six months ended June 30, 2017 , the holder converted dividends in the amount of $5,134 on the Series E Preferred Stock, resulting in the issuance of 14,135,538 shares of common stock. The Company has issued 18,000 shares of common stock to the private investor as a commitment fee relating to the Series E Preferred Stock. Costs associated with the Series E Preferred Stock, such as legal fees and commitment shares are capitalized and reported as deferred financing costs on the Condensed Consolidated Balance Sheets. The total gross debt issuance cost incurred by the Company related to the Series E Preferred Stock was $104,000 . These debt issuance costs will be recognized as additional interest expense over the life of the Series E Preferred Stock. At any time after March 31, 2016, the private investor has the option to redeem for cash all or any portion of the outstanding shares of the Series E Preferred Stock at a price per share equal to $1,250 plus any accrued but unpaid dividends thereon. At any time after the third anniversary of the date of the initial issuance of Series E Preferred Stock, the Company will have the option to redeem for cash all outstanding shares of the Series E Preferred Stock at a price per share equal to $1,250 plus any accrued but unpaid dividends thereon. The Company classified the Series E Preferred Stock as a liability pursuant to ASC 480 on the closing date due to the structure of the financing agreement, whereby the Company has an unconditional obligation that the Company may settle by issuing a variable number of common shares with a monetary value that is fixed and known at inception. There are 70 shares of Series E Preferred Stock outstanding, representing a value of $70,000 , as of June 30, 2017 . Pursuant to a number of factors outlined in ASC Topic 815, Derivatives and Hedging , the conversion option in the Series E Preferred Stock was deemed to include an embedded derivative that required bifurcation and separate accounting. As such, the Company ascertained the value of the conversion option as if separate from the convertible issuance and appropriately recorded that value as a derivative liability. At December 31, 2016 , the derivative liability associated with the Series E Preferred Stock was $141,000 . The derivative liability associated with the Series E Preferred Stock is subject to revaluation on a quarterly basis to reflect the market value change of the embedded conversion option. At March 31, 2017 and June 30, 2017 , the Company conducted a fair value assessment of the embedded derivative associated with the Series E Preferred Stock. As a result of the fair value assessment, the Company recorded a $40,016 loss as "Change in fair value of derivatives and gain/(loss) on extinguishment of liabilities, net" in the Condensed Consolidated Statements of Operations, for the three months ended June 30, 2017 . The net gain recorded for the six months ended June 30, 2017 was $19,358 , to properly reflect the fair value of the embedded derivative of $121,390 as of June 30, 2017 . The fair value measurements rely primarily on Company-specific inputs and the Company’s own assumptions. With the absence of observable inputs, the Company determined these recurring fair value measurements reside primarily within Level 3 of the fair value hierarchy. The derivative associated with the Series E Preferred Stock approximates management’s estimate of the fair value of the embedded derivative liability at June 30, 2017 based on using a Monte Carlo simulation following a Geometric Brownian Motion with the following assumptions: annual volatility of 70% , present value discount rate of 12% and dividend yield of 0% . The Committed Equity Line On November 10, 2015, the Company and the private investor entered into a committed equity line purchase agreement (the "CEL"). Under the terms and subject to the conditions of the CEL purchase agreement, at its option the Company has the right to sell to the private investor, and the private investor is obligated to purchase from the Company, up to $32.2 million of the Company’s common stock, subject to certain limitations, from time to time, over the 36 -month period commencing on December 18, 2015, the date that the registration statement was declared effective by the SEC. From time to time, the Company may direct the private investor, at its sole discretion and subject to certain conditions, to purchase an amount of shares of common stock up to the lesser of (i) $1,000,000 or (ii) 300% of the average daily trading volume of the Company’s common stock over the preceding ten trading day period. The per share purchase price for shares of common stock to be sold by the Company under the CEL purchase agreement shall be equal to 80% of the average of the two lowest VWAPs of the common stock for the ten consecutive trading day period prior to the purchase date. As of June 30, 2017 , the Company had directed the private investor to purchase 3,056,147 of common stock which resulted in the issuance of 1,368,000 shares of common stock The Company may not direct the private investor to purchase shares of common stock more frequently than once each ten business days. The Company’s sales of shares of common stock to the private investor under the CEL purchase agreement are limited to no more than the number of shares that would result in the beneficial ownership by the private investor and its affiliates, at any single point in time, of more than 9.99% of the Company’s then outstanding shares of common stock. As consideration for entering into the CEL purchase agreement, the Company agreed to issue to the private investor 132,000 shares of common stock (the “Commitment Shares”). The Commitment Shares were issued to the private investor commencing upon the date that the registration statement was declared effective by the SEC. SERIES F PREFERRED STOCK On January 19, 2016, the Company entered into a securities purchase agreement with a private investor for the sale of $7,000,000 of the Company’s newly designated Series F 7% Convertible Preferred Stock (the “Series F Preferred Stock”). On January 20, 2016, the Company sold and issued 7,000 shares of Series F Preferred Stock to the private investor. The aggregate purchase price of the Series F Preferred shares was $7,000,000 . On January 20, 2016, the private investor paid $500,000 to the Company. The remaining $6,500,000 was paid by the private investor to the Company in 14 weekly increments of $500,000 or $250,000 beginning January 25, 2016 and ending April 28, 2016. Shares of the Series F Preferred Stock (including the amount of any accrued and unpaid dividends thereon) are convertible, at the option of the holder, into common stock at a fixed conversion price equal to $5.00 per share. If certain defined default events occur, the conversion price would thereafter be reduced (and only reduced), to equal 70% of the average of the two lowest VWAPs of our common stock for the twenty consecutive trading day period prior to the conversion date. If requested by the private investor, the Company will make weekly redemptions of shares of Series F Preferred Stock (including any accrued and unpaid dividends thereon). If the redemption price is paid by the Company in cash, the number of shares to be redeemed in each weekly increment is 250 shares of Series F Preferred Stock, and the redemption price is a price per share equal to $1,250 plus any accrued but unpaid dividends thereon. The Company has the option to make such redemption payments in shares of common stock provided certain specified equity conditions are satisfied at the time of payment. The number of shares of common stock to be issued would be calculated using a per share price equal to 80% of the one lowest VWAP of our common stock for the ten consecutive trading day period prior to the payment date. For redemption payments made in shares of common stock, the Company will redeem either (i) 250 shares of Series F Preferred Stock or (ii) such greater number of shares of Series F Preferred Stock (and also including any accrued and unpaid dividends) that would result upon redemption in the issuance of a number of shares of common stock equal to 12% of the aggregate composite trading volume for the Company’s common stock during the preceding calendar week. The private investor had available to them a new conversion price beginning on June 9, 2016 as a result of the Series H Preferred Stock transaction further described in Note 14. Shares of the Series F Preferred Stock are now convertible, at the option of the private investor, into common stock at a variable conversion price equal to 70% of (i) the lowest VWAP of our common stock for the ten consecutive trading day period prior to the conversion date or (ii) the lowest closing bid price of our common stock for the ten consecutive trading day period prior to the conversion date. Amendment of Outstanding Series F Preferred Stock Conversion Price On October 5, 2016, the Company filed a Certificate of Amendment to the Certificate of Designations of Preferences, Rights and Limitations of Series F Preferred Stock with the Secretary of State of the State of Delaware. The Certificate of Amendment amends the conversion price at which the Series F Preferred Stock can be converted into shares of common stock. The Company had approximately $336,000 of Series F Preferred Stock remaining outstanding as of October 5, 2016. As amended, the conversion price will now be equal to the lowest of (i) 50% of the lowest weighted average price (“VWAP”) of our common stock for the ten consecutive trading day period prior to the conversion date or (ii) 50% of the lowest closing bid price of our common stock for the ten consecutive trading day period prior to the conversion date. If certain “Triggering Events” specified in the terms of the Series F Preferred Stock occur, then the conversion price of the Series F Preferred Stock shall be thereafter reduced, and only reduced, to equal 50% of the average of the lowest traded price of the common stock for the twenty consecutive trading day period prior to the conversion date. The following table summarizes the conversion activity of the Series F Preferred Stock: Conversion Period Preferred Series F Shares Converted Value of Series F Preferred Shares (inclusive of accrued dividends) Common Shares Issued Q1 2016 2,168 $ 2,188,298 2,183,992 Q2 2016 3,234 3,300,931 6,649,741 Q3 2016 1,262 1,315,743 81,917,364 Q4 2016 176 185,118 27,276,005 6,840 $ 6,990,090 118,027,102 Holders of the Series F Preferred Stock are entitled to dividends in the amount of 7% per annum. During the quarter ended June 30, 2017 , the Company did not pay any dividends or issue any shares in relation to accrued dividends. The Company classified the Series F Preferred Stock as a liability pursuant to ASC 480 on the closing date due to the structure of the financing agreement, whereby the Company has an unconditional obligation that the Company may settle by issuing a variable number of common shares with a monetary value that is fixed and known at inception. There are 160 shares of Series F Preferred Stock, representing a value of $160,000 , outstanding as of June 30, 2017 . Pursuant to a number of factors outlined in ASC Topic 815, Derivatives and Hedging , the conversion option in the Series F Preferred Stock was deemed to include an embedded derivative that required bifurcation and separate accounting. As such, the Company ascertained the value of the conversion option as if separate from the convertible issuance and appropriately recorded that value as a derivative liability. At closing, a derivative liability and a corresponding debt discount in the amount of $1,666,000 were recorded. The debt discount will be charged to interest expense ratably over the life of the Series F Preferred Stock. The derivative liability associated with the Series F Preferred Stock is subject to revaluation on a quarterly basis to reflect the market value change of the embedded conversion option. At June 30, 2017 , the Company conducted a fair value assessment of the embedded derivative associated with the Series F Preferred Stock. As a result of the fair value assessment, the Company recorded a $209,613 loss as "Change in fair value of derivatives and gain/(loss) on extinguishment of liabilities, net" in the Condensed Consolidated Statements of Operations, for the three months ended June 30, 2017 . The net loss recorded for the six months ended June 30, 2017 was $85,557 , to properly reflect the fair value of the embedded derivative of $340,881 as of June 30, 2017 . The fair value measurements rely primarily on Company-specific inputs and the Company’s own assumptions. With the absence of observable inputs, the Company determined these recurring fair value measurements reside primarily within Level 3 of the fair value hierarchy. The derivative associated with the Series F Preferred Stock approximates management’s estimate of the fair value of the embedded derivative liability at June 30, 2017 based on using a Monte Carlo simulation following a Geometric Brownian Motion with the following assumptions: annual volatility of 66% , present value discount rate of 12% and dividend yield of 0% . SERIES G PREFERRED STOCK On April 29, 2016, the Company entered into a securities purchase agreement with private investors to issue 2,000 shares of Series G Preferred Stock for $2,000,000 . At Closing, the Company issued a total of 500 shares of Series G Preferred Stock to the private investors in exchange for $500,000 . The Company issued an additional 1,500 shares of Series G Preferred Stock to the private investors during the months of May and June 2016, which resulted in additional gross proceeds to the Company of $1,500,000 . Holders of the Series G Preferred Stock will be entitled to dividends in the amount of 10% per annum. One year after issuance, the Company is required to redeem for cash all or any portion of the outstanding shares of the Series G Preferred Stock at a price per share equal to $1,000 plus any accrued but unpaid dividends thereon. Assignment of Series G Preferred Stock Beginning September 19, 2016, the two private investors (the “Series G Sellers”) entered into assignment agreements with accredited investors (the “Series G Purchasers”). Under the terms of the assignment agreements, the Series G Sellers may sell all 2,000 outstanding shares of Series G Preferred Stock to the Series G Purchasers for a purchase price of $1,000 per share of Series G Preferred Stock (plus the amount of any accrued and unpaid dividends thereon). As of June 30, 2017 , the Series G Sellers had sold 1,835 shares of Series G Preferred Stock, representing a value of $1,835,000 , to the Series G Purchasers. On September 21, 2016, the Company filed a Certificate of Amendment to the Certificate of Designations of Preferences, Rights and Limitations of Series G Preferred Stock with the Secretary of State of the State of Delaware. The Certificate of Amendment amends the conversion price at which the Series G Preferred Stock can be converted into shares of common stock. Shares of the Series G Preferred Stock (including the amount of any accrued and unpaid dividends thereon) were previously convertible at the option of the private investors into common stock at a fixed conversion price of $1.00 per share. As amended, the conversion price is equal to the lowest of (i) $0.045 , (ii) 70% of the lowest volume weighted average price of the Company’s common stock for the ten consecutive trading day period prior to the conversion date or (iii) 70% of the lowest closing bid price of the Company’s common stock for the ten consecutive trading day period prior to the conversion date. The following table summarizes the conversion activity of the Series G Preferred Stock: Conversion Period Preferred Series G Shares Converted Value of Series G Preferred Shares (inclusive of accrued dividends) Common Shares Issued Q4 2016 892 929,895 245,726,283 Q1 2017 372 397,970 327,718,386 Q2 2017 526 575,096 1,337,776,821 1,790 $ 1,902,961 1,911,221,490 Holders of the Series G Preferred Stock will be entitled to dividends in the amount of 10% per annum. During the six months ended June 30, 2017 , the Company converted dividends in the amount of $49,096 on the Series G Preferred Stock, resulting in the issuance of 114,854,745 shares of common stock. On June 29, and June 30, 2017, the Company redeemed the remaining 210 outstanding shares, and the related accrued dividends for cash payments in the amount of $232,440 . Due to international wire cut off times, $182,715 of that amount was not actually paid until July 3, 2017, and the resulting liability is included in accounts payable on the Condensed Consolidated Balance Sheet for the six months ended June 30, 2017 . As of June 30, 2017 , all Series G Preferred Stock Shares, and the related accrued dividends, had either been converted or redeemed. Pursuant to a number of factors outlined in ASC Topic 815, Derivatives and Hedging , the conversion option in the Series G Preferred Stock were deemed to include an embedded derivative that required bifurcation and separate accounting. As such, the Company ascertained the value of the conversion option as if separate from the convertible issuance and appropriately recorded that value as a derivative liability. At December 31, 2016 the fair value of the derivative liability was $361,831 and was $219,347 prior to the redemption. At June 30, 2017 , the Company recorded the reduction of the remaining embedded derivative associated with the Series G Preferred Stock of $219,347 as a gain in the "Change in fair value of derivatives and gain/(loss) on extinguishment of liabilities, net" in the Condensed Consolidated Statements of Operations for the three months ended June 30, 2017 . The net gain recorded for the six months ended June 30, 2017 was $361,831 , to properly reflect the elimination of the embedded derivative as of June 30, 2017 . Conversion Inducement and Disposal Price Guarantee On January 17, 2017, one of the Series G Preferred Stock holders (“Holder A”) requested a conversion of 100 shares of Series G Preferred Stock, $100,000 face value, including accrued dividends of $6,416.67 for a total conversion value of $106,416.67 into common stock of the Company at a conversion price of $0.00112 which would have resulted in the issuance of 95,014,884 shares of common stock. At the date of the request the Company did not have enough authorized shares to execute the conversion request and therefore entered into an agreement with Holder A to honor the conversion price of $0.00112 and issue the 95,014,884 shares of common stock upon the increase of the authorized common shares of the Company. The actual conversion occurred on March 17, 2017 which would have been a conversion price of $0.00168 . In conjunction with the conversion price agreement the Company agreed to provide a minimum disposal price guarantee to the Holder A of $0.003 on the tranche of 95,014,884 shares. If Holder A fails to dispose of these shares at $0.003 or above the Company will issue additional shares of common stock to make up the difference between the minimum disposal price of $0.003 and the price that Holder A disposed of the shares. During the six months ended June 30, 2017 , in accordance with ASC 470-20-40-16, the Company recorded expense of $79,179 related to the conversion inducement and expense of $134,566 related to the disposal price guarantee. The amount related to the disposal price guarantee was also recorded as a corresponding liability in the Condensed Consolidated Balance Sheet as of June 30, 2017 . JULY 2016 CONVERTIBLE NOTES Series H Preferred Stock On June 9, 2016, the Company entered into a securities purchase agreement with a private investor to issue 2,500 shares of Series H Preferred Stock for $2,500,000 . The Company received gross proceeds of $250,000 at Closing. Additional gross proceeds of $580,000 were received by the Company through July 7, 2016. The Company agreed to exchange outstanding Series H Preferred Stock for Senior Secured Convertible Notes (“July 2016 Notes”) on July 13, 2016. At the date of the exchange, the Company had sold and issued 830 shares of Series H Preferred Stock to the private investor in exchange for $830,000 of gross proceeds. Refer to the section below for details of the exchange. July 2016 Convertible Notes On July 13, 2016, the Company entered into a securities purchase agreement (the “Note SPA”) with the private investor for the private placement of up to $2,082,600 of the Company’s 4% Original Issue Discount Senior Secured Convertible Promissory Notes (the “July 2016 Convertible Notes”). On July 13, 2016, the Company sold and issued $364,000 principal amount of notes to the investor in exchange for $350,000 of gross proceeds. The Company sold and issued the remaining $1,718,600 principal amount of July 2016 Convertible Notes to the investor in exchange for $1,650,000 of gross proceeds in weekly tranches between July and September 2016. The Company and the private investor also entered into an Exchange Agreement dated July 13, 2016 (the “Exchange Agreement”). Under the terms of the Exchange Agreement, the outstanding shares of Series H Preferred Stock (approximately $833,000 of capital and accrued dividends) were canceled. In exchange, the Company issued to the private investor approximately $866,000 of July 2016 Convertible Notes. There were 830 shares of Series H Preferred Stock outstanding as of the date of the Exchange Agreement. Unless earlier converted or prepaid, all of the July 2016 Convertible Notes will mature July 13, 2017 (the “Maturity Date”). The July 2016 Convertible Notes bear interest at a rate of 10% per annum, subject to increase to 24% per annum upon the occurrence and continuance of an event of default. Principal on the July 2016 Convertible Notes is payable on the Maturity Date. Interest on the July 2016 Convertible Notes is payable quarterly. Principal and interest are payable in cash or, if specified equity conditions are met, shares of Common Stock. The July 2016 Convertible Notes are secured by a security interest in substantially all of the Company’s assets. The subsidiaries of the Company have guaranteed the Company’s obligations under the July 2016 Convertible Notes. The July 2016 Convertible Notes contain standard and customary events of default including but not limited to: (i) failure to make payments when due under the July 2016 Convertible Notes; (ii) bankruptcy or insolvency of the Company; and (iii) failure to file a registration statement by October 9, 2016. On October 10, 2016 the Company had not been successful in filing the registration statement triggering an event of default per the July 2016 Note Agreement. Upon default the interest rate increases to 24% per annum and the holder of the July 2016 Notes has the option to accelerate the Note and demand cash payment of the Mandatory Default Amount consisting of a 25% premium of the principal balance plus any accrued and unpaid interest. The Company began accruing interest at the rate of 24% on October 10, 2016. Forbearance and Settlement Agreement on July 2016 Convertible Notes On May 5, 2017, the Company entered into a Forbearance and Settlement Agreement ("Forbearance Agreement") with a holder of certain secured convertible notes that are in default due to various triggering events. The holder and the Company agreed to forbear from taking any action provided for under the secured convertible notes in exchange for the following terms provided in this agreement: • The Company agreed to redeem for cash all secured convertible notes of the Company held by the holder no later than September 1, 2017 . • The Company affirmed that the current balance of owed principal and accrued and unpaid interest to the holder is $1,790,214 as of May 2, 2017. • The redemption price for such secured convertible notes shall be 120% (if redeemed on or prior to August 15, 2017) or 125% (if redeemed after August 15, 2017) of the then outstanding principal, plus any accrued and unpaid interest. • During the month of May 2017, the Holder agreed to limit its conversions of outstanding Company secured convertible notes to $50,000 per calendar week of principal/interest. • During the months of June, July and August 2017, the holder agreed to limit its conversions of outstanding Company secured convertible notes to $75,000 per calendar week of principal/interest. • During the months of May, June, July and August 2017, the holder agreed that all outstanding Company secured convertible notes shall bear interest at the normal stated rate of 10% , rather than default rate of 24% . • All conversions during the months of May, June, July and August 2017 will be at the “triggering event” discount conversion price as stated in the secured convertible notes, and will continue at the “triggering event” discount price until, if and when the notes are redeemed. • Should the Company fail to redeem for cash all secured convertible notes on or before September 1, 2017 , default interest and normal stated interest will accrue from the date of execution of this agreement. All principal and accrued interest on the July 2016 Convertible Notes are convertible at any time, in whole or in part, at the option of the private investor, into shares of Common Stock at a variable conversion price equal to the lowest of (i) $0.045 (the “Fixed Conversion Price”), (ii) 70% of the lowest volume weighted average price (“VWAP”) of the Company's common stock for the ten consecutive trading day period prior to the conversion date or (iii) 70% of the lowest closing bid price of the Company's common stock for the ten consecutive trading day period prior to the conversion date. If certain defined triggering events occur, the conversion price would thereafter be reduced (and only reduced), to equal 60% of the lower of (i) the lowest closing bid price of the Company's common stock for the thirty consecutive trading day period prior to the conversion date or (ii) the lowest VWAP of the the Company's common stock for the thirty consecutive trading day period prior to the conversion date. In addition, on the 90th day and also on the 180th day from the date of the Note SPA, the private investor may reset the Fixed Conversion Price to thereafter be equal to the VWAP of the Common Stock for such day or if such 90th or 180th day is not a trading day, then the |
SERIES J PREFERRED STOCK AND SE
SERIES J PREFERRED STOCK AND SERIES J-1 PREFERRED STOCK | 6 Months Ended |
Jun. 30, 2017 | |
Equity [Abstract] | |
PREFERRED STOCK | SERIES A PREFERRED STOCK In June 2013, the Company entered into a Securities Purchase Agreement with an investor to sell an aggregate of 750,000 shares of Series A Preferred Stock at a price of $8.00 per share, resulting in gross proceeds of $6,000,000 . This purchase agreement included warrants to purchase up to 13,125 shares of common stock of the Company. The transfer of cash and securities took place incrementally, the first closing occurring on June 17, 2013 with the transfer of 125,000 shares of Series A Preferred Stock and a warrant to purchase 2,187 shares of common stock for $1,000,000 . The final closings took place in August 2013, with the transfer of 625,000 shares of Series A Preferred Stock and a warrant to purchase 10,938 shares of common stock for $5,000,000 . Holders of Series A Preferred Stock are entitled to cumulative dividends at a rate of 8% per annum when and if declared by the Board of Directors in its sole discretion. The dividends may be paid in cash or in the form of common stock (valued at 10% below market price, but not to exceed the lowest closing price during the applicable measurement period), at the discretion of the Board of Directors. The dividend rate on the Series A Preferred Stock is indexed to the Company's stock price and subject to adjustment. In addition, the Series A Preferred Stock contains a make-whole provision whereby, conversion or redemption of the preferred stock within 4 years of issuance will require dividends for the full four year period to be paid by the Company in cash or common stock (valued at 10% below market price, but not to exceed the lowest closing price during the applicable measurement period). The Series A Preferred Stock may be converted into shares of common stock at the option of the Company if the closing price of the common stock exceeds $232 , as adjusted, for 20 consecutive trading days, or by the holder at any time. The Company has the right to redeem the Series A Preferred Stock at a price of $8.00 per share, plus any accrued and unpaid dividends, plus the make-whole amount (if applicable). At June 30, 2017 , the preferred shares were not eligible for conversion to common shares at the option of the Company. The holder of the preferred shares may convert to common shares at any time, at no cost, at a ratio of 1 preferred share into 1 common share (subject to standard ratable anti-dilution adjustments). Upon any conversion (whether at the option of the Company or the holder), the holder is entitled to receive any accrued but unpaid dividends and also any make-whole amount (if applicable). See Note 19. Make-Whole Dividend Liability. On October 6, 2016, the Series A Holder entered into an exchange agreement (the “Exchange Agreement”) with Adar Bays. Pursuant to the exchange agreement, beginning December 5, 2016, Adar Bays has the option to exchange, from time to time, all or any portion of the October 2016 Convertible Notes (see Note 17) for outstanding shares of Series A Preferred Stock from the Series A Holder. As of June 30, 2017 , Adar Bays had elected to exchange all outstanding October 2016 Convertible Notes, in accordance with the exchange agreement, resulting in the exchange of 104,785 shares of Series A Preferred Stock. As of June 30, 2017 , Adar Bays had also converted their 104,785 shares of Series A Preferred Stock, and the related make whole dividend, which resulted in the issuance of 173,946,250 shares of common stock. Except as otherwise required by law (or with respect to approval of certain actions), the Series A Preferred Stock shall have no voting rights. Upon any liquidation, dissolution or winding up of the Company, after payment or provision for payment of debts and other liabilities of the Company, the holders of Series A Preferred Stock shall be entitled to receive, pari passu with any distribution to the holders of common stock of the Company, an amount equal to $8.00 per share of Series A Preferred Stock plus any accrued and unpaid dividends. As of June 30, 2017 , there were 60,756 shares of Series A Preferred Stock outstanding. SERIES E PREFERRED STOCK AND THE COMMITTED EQUITY LINE Series E Preferred Stock On November 4, 2015, the Company entered into a securities purchase agreement with a private investor to issue 2,800 shares of Series E Preferred Stock in exchange for $2,800,000 . Shares of the Series E Preferred Stock (including the amount of any accrued and unpaid dividends thereon) are convertible, at the option of the holder, into common stock at a variable conversion price equal to 80% of the average of the two lowest VWAPs of the Company's common stock for the ten consecutive trading day period prior to the conversion date. If certain defined default events occur, the conversion price would thereafter be reduced (and only reduced), to equal 70% of the average of the two lowest VWAPs of the Company's common stock for the twenty consecutive trading day period prior to the conversion date. The private investor had available to them a new conversion price beginning on June 9, 2016 as a result of the Series H Preferred Stock transaction further described in Note 14. Shares of the Series E Preferred Stock are now convertible, at the option of the private investor, into common stock at a variable conversion price equal to 70% of (i) the lowest VWAP of our common stock for the ten consecutive trading day period prior to the conversion date or (ii) the lowest closing bid price of our common stock for the ten consecutive trading day period prior to the conversion date. The following table summarizes the conversion activity of the Series E Preferred Stock: Conversion Period Preferred Series E Shares Converted Value of Series E Preferred Shares (inclusive of accrued dividends) Common Shares Issued Q4 2015 478 $ 481,500 250,000 Q1 2016 1,220 1,239,436 1,132,000 Q2 2016 365 381,414 7,979,568 Q3 2016 523 548,896 21,973,747 Q4 2016 94 101,018 13,089,675 Q1 2017 15 16,248 8,289,962 Q2 2017 35 38,886 134,927,207 2,730 $ 2,807,398 187,642,159 Holders of the Series E Preferred Stock will be entitled to dividends in the amount of 7% per annum. During the six months ended June 30, 2017 , the holder converted dividends in the amount of $5,134 on the Series E Preferred Stock, resulting in the issuance of 14,135,538 shares of common stock. The Company has issued 18,000 shares of common stock to the private investor as a commitment fee relating to the Series E Preferred Stock. Costs associated with the Series E Preferred Stock, such as legal fees and commitment shares are capitalized and reported as deferred financing costs on the Condensed Consolidated Balance Sheets. The total gross debt issuance cost incurred by the Company related to the Series E Preferred Stock was $104,000 . These debt issuance costs will be recognized as additional interest expense over the life of the Series E Preferred Stock. At any time after March 31, 2016, the private investor has the option to redeem for cash all or any portion of the outstanding shares of the Series E Preferred Stock at a price per share equal to $1,250 plus any accrued but unpaid dividends thereon. At any time after the third anniversary of the date of the initial issuance of Series E Preferred Stock, the Company will have the option to redeem for cash all outstanding shares of the Series E Preferred Stock at a price per share equal to $1,250 plus any accrued but unpaid dividends thereon. The Company classified the Series E Preferred Stock as a liability pursuant to ASC 480 on the closing date due to the structure of the financing agreement, whereby the Company has an unconditional obligation that the Company may settle by issuing a variable number of common shares with a monetary value that is fixed and known at inception. There are 70 shares of Series E Preferred Stock outstanding, representing a value of $70,000 , as of June 30, 2017 . Pursuant to a number of factors outlined in ASC Topic 815, Derivatives and Hedging , the conversion option in the Series E Preferred Stock was deemed to include an embedded derivative that required bifurcation and separate accounting. As such, the Company ascertained the value of the conversion option as if separate from the convertible issuance and appropriately recorded that value as a derivative liability. At December 31, 2016 , the derivative liability associated with the Series E Preferred Stock was $141,000 . The derivative liability associated with the Series E Preferred Stock is subject to revaluation on a quarterly basis to reflect the market value change of the embedded conversion option. At March 31, 2017 and June 30, 2017 , the Company conducted a fair value assessment of the embedded derivative associated with the Series E Preferred Stock. As a result of the fair value assessment, the Company recorded a $40,016 loss as "Change in fair value of derivatives and gain/(loss) on extinguishment of liabilities, net" in the Condensed Consolidated Statements of Operations, for the three months ended June 30, 2017 . The net gain recorded for the six months ended June 30, 2017 was $19,358 , to properly reflect the fair value of the embedded derivative of $121,390 as of June 30, 2017 . The fair value measurements rely primarily on Company-specific inputs and the Company’s own assumptions. With the absence of observable inputs, the Company determined these recurring fair value measurements reside primarily within Level 3 of the fair value hierarchy. The derivative associated with the Series E Preferred Stock approximates management’s estimate of the fair value of the embedded derivative liability at June 30, 2017 based on using a Monte Carlo simulation following a Geometric Brownian Motion with the following assumptions: annual volatility of 70% , present value discount rate of 12% and dividend yield of 0% . The Committed Equity Line On November 10, 2015, the Company and the private investor entered into a committed equity line purchase agreement (the "CEL"). Under the terms and subject to the conditions of the CEL purchase agreement, at its option the Company has the right to sell to the private investor, and the private investor is obligated to purchase from the Company, up to $32.2 million of the Company’s common stock, subject to certain limitations, from time to time, over the 36 -month period commencing on December 18, 2015, the date that the registration statement was declared effective by the SEC. From time to time, the Company may direct the private investor, at its sole discretion and subject to certain conditions, to purchase an amount of shares of common stock up to the lesser of (i) $1,000,000 or (ii) 300% of the average daily trading volume of the Company’s common stock over the preceding ten trading day period. The per share purchase price for shares of common stock to be sold by the Company under the CEL purchase agreement shall be equal to 80% of the average of the two lowest VWAPs of the common stock for the ten consecutive trading day period prior to the purchase date. As of June 30, 2017 , the Company had directed the private investor to purchase 3,056,147 of common stock which resulted in the issuance of 1,368,000 shares of common stock The Company may not direct the private investor to purchase shares of common stock more frequently than once each ten business days. The Company’s sales of shares of common stock to the private investor under the CEL purchase agreement are limited to no more than the number of shares that would result in the beneficial ownership by the private investor and its affiliates, at any single point in time, of more than 9.99% of the Company’s then outstanding shares of common stock. As consideration for entering into the CEL purchase agreement, the Company agreed to issue to the private investor 132,000 shares of common stock (the “Commitment Shares”). The Commitment Shares were issued to the private investor commencing upon the date that the registration statement was declared effective by the SEC. SERIES F PREFERRED STOCK On January 19, 2016, the Company entered into a securities purchase agreement with a private investor for the sale of $7,000,000 of the Company’s newly designated Series F 7% Convertible Preferred Stock (the “Series F Preferred Stock”). On January 20, 2016, the Company sold and issued 7,000 shares of Series F Preferred Stock to the private investor. The aggregate purchase price of the Series F Preferred shares was $7,000,000 . On January 20, 2016, the private investor paid $500,000 to the Company. The remaining $6,500,000 was paid by the private investor to the Company in 14 weekly increments of $500,000 or $250,000 beginning January 25, 2016 and ending April 28, 2016. Shares of the Series F Preferred Stock (including the amount of any accrued and unpaid dividends thereon) are convertible, at the option of the holder, into common stock at a fixed conversion price equal to $5.00 per share. If certain defined default events occur, the conversion price would thereafter be reduced (and only reduced), to equal 70% of the average of the two lowest VWAPs of our common stock for the twenty consecutive trading day period prior to the conversion date. If requested by the private investor, the Company will make weekly redemptions of shares of Series F Preferred Stock (including any accrued and unpaid dividends thereon). If the redemption price is paid by the Company in cash, the number of shares to be redeemed in each weekly increment is 250 shares of Series F Preferred Stock, and the redemption price is a price per share equal to $1,250 plus any accrued but unpaid dividends thereon. The Company has the option to make such redemption payments in shares of common stock provided certain specified equity conditions are satisfied at the time of payment. The number of shares of common stock to be issued would be calculated using a per share price equal to 80% of the one lowest VWAP of our common stock for the ten consecutive trading day period prior to the payment date. For redemption payments made in shares of common stock, the Company will redeem either (i) 250 shares of Series F Preferred Stock or (ii) such greater number of shares of Series F Preferred Stock (and also including any accrued and unpaid dividends) that would result upon redemption in the issuance of a number of shares of common stock equal to 12% of the aggregate composite trading volume for the Company’s common stock during the preceding calendar week. The private investor had available to them a new conversion price beginning on June 9, 2016 as a result of the Series H Preferred Stock transaction further described in Note 14. Shares of the Series F Preferred Stock are now convertible, at the option of the private investor, into common stock at a variable conversion price equal to 70% of (i) the lowest VWAP of our common stock for the ten consecutive trading day period prior to the conversion date or (ii) the lowest closing bid price of our common stock for the ten consecutive trading day period prior to the conversion date. Amendment of Outstanding Series F Preferred Stock Conversion Price On October 5, 2016, the Company filed a Certificate of Amendment to the Certificate of Designations of Preferences, Rights and Limitations of Series F Preferred Stock with the Secretary of State of the State of Delaware. The Certificate of Amendment amends the conversion price at which the Series F Preferred Stock can be converted into shares of common stock. The Company had approximately $336,000 of Series F Preferred Stock remaining outstanding as of October 5, 2016. As amended, the conversion price will now be equal to the lowest of (i) 50% of the lowest weighted average price (“VWAP”) of our common stock for the ten consecutive trading day period prior to the conversion date or (ii) 50% of the lowest closing bid price of our common stock for the ten consecutive trading day period prior to the conversion date. If certain “Triggering Events” specified in the terms of the Series F Preferred Stock occur, then the conversion price of the Series F Preferred Stock shall be thereafter reduced, and only reduced, to equal 50% of the average of the lowest traded price of the common stock for the twenty consecutive trading day period prior to the conversion date. The following table summarizes the conversion activity of the Series F Preferred Stock: Conversion Period Preferred Series F Shares Converted Value of Series F Preferred Shares (inclusive of accrued dividends) Common Shares Issued Q1 2016 2,168 $ 2,188,298 2,183,992 Q2 2016 3,234 3,300,931 6,649,741 Q3 2016 1,262 1,315,743 81,917,364 Q4 2016 176 185,118 27,276,005 6,840 $ 6,990,090 118,027,102 Holders of the Series F Preferred Stock are entitled to dividends in the amount of 7% per annum. During the quarter ended June 30, 2017 , the Company did not pay any dividends or issue any shares in relation to accrued dividends. The Company classified the Series F Preferred Stock as a liability pursuant to ASC 480 on the closing date due to the structure of the financing agreement, whereby the Company has an unconditional obligation that the Company may settle by issuing a variable number of common shares with a monetary value that is fixed and known at inception. There are 160 shares of Series F Preferred Stock, representing a value of $160,000 , outstanding as of June 30, 2017 . Pursuant to a number of factors outlined in ASC Topic 815, Derivatives and Hedging , the conversion option in the Series F Preferred Stock was deemed to include an embedded derivative that required bifurcation and separate accounting. As such, the Company ascertained the value of the conversion option as if separate from the convertible issuance and appropriately recorded that value as a derivative liability. At closing, a derivative liability and a corresponding debt discount in the amount of $1,666,000 were recorded. The debt discount will be charged to interest expense ratably over the life of the Series F Preferred Stock. The derivative liability associated with the Series F Preferred Stock is subject to revaluation on a quarterly basis to reflect the market value change of the embedded conversion option. At June 30, 2017 , the Company conducted a fair value assessment of the embedded derivative associated with the Series F Preferred Stock. As a result of the fair value assessment, the Company recorded a $209,613 loss as "Change in fair value of derivatives and gain/(loss) on extinguishment of liabilities, net" in the Condensed Consolidated Statements of Operations, for the three months ended June 30, 2017 . The net loss recorded for the six months ended June 30, 2017 was $85,557 , to properly reflect the fair value of the embedded derivative of $340,881 as of June 30, 2017 . The fair value measurements rely primarily on Company-specific inputs and the Company’s own assumptions. With the absence of observable inputs, the Company determined these recurring fair value measurements reside primarily within Level 3 of the fair value hierarchy. The derivative associated with the Series F Preferred Stock approximates management’s estimate of the fair value of the embedded derivative liability at June 30, 2017 based on using a Monte Carlo simulation following a Geometric Brownian Motion with the following assumptions: annual volatility of 66% , present value discount rate of 12% and dividend yield of 0% . SERIES G PREFERRED STOCK On April 29, 2016, the Company entered into a securities purchase agreement with private investors to issue 2,000 shares of Series G Preferred Stock for $2,000,000 . At Closing, the Company issued a total of 500 shares of Series G Preferred Stock to the private investors in exchange for $500,000 . The Company issued an additional 1,500 shares of Series G Preferred Stock to the private investors during the months of May and June 2016, which resulted in additional gross proceeds to the Company of $1,500,000 . Holders of the Series G Preferred Stock will be entitled to dividends in the amount of 10% per annum. One year after issuance, the Company is required to redeem for cash all or any portion of the outstanding shares of the Series G Preferred Stock at a price per share equal to $1,000 plus any accrued but unpaid dividends thereon. Assignment of Series G Preferred Stock Beginning September 19, 2016, the two private investors (the “Series G Sellers”) entered into assignment agreements with accredited investors (the “Series G Purchasers”). Under the terms of the assignment agreements, the Series G Sellers may sell all 2,000 outstanding shares of Series G Preferred Stock to the Series G Purchasers for a purchase price of $1,000 per share of Series G Preferred Stock (plus the amount of any accrued and unpaid dividends thereon). As of June 30, 2017 , the Series G Sellers had sold 1,835 shares of Series G Preferred Stock, representing a value of $1,835,000 , to the Series G Purchasers. On September 21, 2016, the Company filed a Certificate of Amendment to the Certificate of Designations of Preferences, Rights and Limitations of Series G Preferred Stock with the Secretary of State of the State of Delaware. The Certificate of Amendment amends the conversion price at which the Series G Preferred Stock can be converted into shares of common stock. Shares of the Series G Preferred Stock (including the amount of any accrued and unpaid dividends thereon) were previously convertible at the option of the private investors into common stock at a fixed conversion price of $1.00 per share. As amended, the conversion price is equal to the lowest of (i) $0.045 , (ii) 70% of the lowest volume weighted average price of the Company’s common stock for the ten consecutive trading day period prior to the conversion date or (iii) 70% of the lowest closing bid price of the Company’s common stock for the ten consecutive trading day period prior to the conversion date. The following table summarizes the conversion activity of the Series G Preferred Stock: Conversion Period Preferred Series G Shares Converted Value of Series G Preferred Shares (inclusive of accrued dividends) Common Shares Issued Q4 2016 892 929,895 245,726,283 Q1 2017 372 397,970 327,718,386 Q2 2017 526 575,096 1,337,776,821 1,790 $ 1,902,961 1,911,221,490 Holders of the Series G Preferred Stock will be entitled to dividends in the amount of 10% per annum. During the six months ended June 30, 2017 , the Company converted dividends in the amount of $49,096 on the Series G Preferred Stock, resulting in the issuance of 114,854,745 shares of common stock. On June 29, and June 30, 2017, the Company redeemed the remaining 210 outstanding shares, and the related accrued dividends for cash payments in the amount of $232,440 . Due to international wire cut off times, $182,715 of that amount was not actually paid until July 3, 2017, and the resulting liability is included in accounts payable on the Condensed Consolidated Balance Sheet for the six months ended June 30, 2017 . As of June 30, 2017 , all Series G Preferred Stock Shares, and the related accrued dividends, had either been converted or redeemed. Pursuant to a number of factors outlined in ASC Topic 815, Derivatives and Hedging , the conversion option in the Series G Preferred Stock were deemed to include an embedded derivative that required bifurcation and separate accounting. As such, the Company ascertained the value of the conversion option as if separate from the convertible issuance and appropriately recorded that value as a derivative liability. At December 31, 2016 the fair value of the derivative liability was $361,831 and was $219,347 prior to the redemption. At June 30, 2017 , the Company recorded the reduction of the remaining embedded derivative associated with the Series G Preferred Stock of $219,347 as a gain in the "Change in fair value of derivatives and gain/(loss) on extinguishment of liabilities, net" in the Condensed Consolidated Statements of Operations for the three months ended June 30, 2017 . The net gain recorded for the six months ended June 30, 2017 was $361,831 , to properly reflect the elimination of the embedded derivative as of June 30, 2017 . Conversion Inducement and Disposal Price Guarantee On January 17, 2017, one of the Series G Preferred Stock holders (“Holder A”) requested a conversion of 100 shares of Series G Preferred Stock, $100,000 face value, including accrued dividends of $6,416.67 for a total conversion value of $106,416.67 into common stock of the Company at a conversion price of $0.00112 which would have resulted in the issuance of 95,014,884 shares of common stock. At the date of the request the Company did not have enough authorized shares to execute the conversion request and therefore entered into an agreement with Holder A to honor the conversion price of $0.00112 and issue the 95,014,884 shares of common stock upon the increase of the authorized common shares of the Company. The actual conversion occurred on March 17, 2017 which would have been a conversion price of $0.00168 . In conjunction with the conversion price agreement the Company agreed to provide a minimum disposal price guarantee to the Holder A of $0.003 on the tranche of 95,014,884 shares. If Holder A fails to dispose of these shares at $0.003 or above the Company will issue additional shares of common stock to make up the difference between the minimum disposal price of $0.003 and the price that Holder A disposed of the shares. During the six months ended June 30, 2017 , in accordance with ASC 470-20-40-16, the Company recorded expense of $79,179 related to the conversion inducement and expense of $134,566 related to the disposal price guarantee. The amount related to the disposal price guarantee was also recorded as a corresponding liability in the Condensed Consolidated Balance Sheet as of June 30, 2017 . JULY 2016 CONVERTIBLE NOTES Series H Preferred Stock On June 9, 2016, the Company entered into a securities purchase agreement with a private investor to issue 2,500 shares of Series H Preferred Stock for $2,500,000 . The Company received gross proceeds of $250,000 at Closing. Additional gross proceeds of $580,000 were received by the Company through July 7, 2016. The Company agreed to exchange outstanding Series H Preferred Stock for Senior Secured Convertible Notes (“July 2016 Notes”) on July 13, 2016. At the date of the exchange, the Company had sold and issued 830 shares of Series H Preferred Stock to the private investor in exchange for $830,000 of gross proceeds. Refer to the section below for details of the exchange. July 2016 Convertible Notes On July 13, 2016, the Company entered into a securities purchase agreement (the “Note SPA”) with the private investor for the private placement of up to $2,082,600 of the Company’s 4% Original Issue Discount Senior Secured Convertible Promissory Notes (the “July 2016 Convertible Notes”). On July 13, 2016, the Company sold and issued $364,000 principal amount of notes to the investor in exchange for $350,000 of gross proceeds. The Company sold and issued the remaining $1,718,600 principal amount of July 2016 Convertible Notes to the investor in exchange for $1,650,000 of gross proceeds in weekly tranches between July and September 2016. The Company and the private investor also entered into an Exchange Agreement dated July 13, 2016 (the “Exchange Agreement”). Under the terms of the Exchange Agreement, the outstanding shares of Series H Preferred Stock (approximately $833,000 of capital and accrued dividends) were canceled. In exchange, the Company issued to the private investor approximately $866,000 of July 2016 Convertible Notes. There were 830 shares of Series H Preferred Stock outstanding as of the date of the Exchange Agreement. Unless earlier converted or prepaid, all of the July 2016 Convertible Notes will mature July 13, 2017 (the “Maturity Date”). The July 2016 Convertible Notes bear interest at a rate of 10% per annum, subject to increase to 24% per annum upon the occurrence and continuance of an event of default. Principal on the July 2016 Convertible Notes is payable on the Maturity Date. Interest on the July 2016 Convertible Notes is payable quarterly. Principal and interest are payable in cash or, if specified equity conditions are met, shares of Common Stock. The July 2016 Convertible Notes are secured by a security interest in substantially all of the Company’s assets. The subsidiaries of the Company have guaranteed the Company’s obligations under the July 2016 Convertible Notes. The July 2016 Convertible Notes contain standard and customary events of default including but not limited to: (i) failure to make payments when due under the July 2016 Convertible Notes; (ii) bankruptcy or insolvency of the Company; and (iii) failure to file a registration statement by October 9, 2016. On October 10, 2016 the Company had not been successful in filing the registration statement triggering an event of default per the July 2016 Note Agreement. Upon default the interest rate increases to 24% per annum and the holder of the July 2016 Notes has the option to accelerate the Note and demand cash payment of the Mandatory Default Amount consisting of a 25% premium of the principal balance plus any accrued and unpaid interest. The Company began accruing interest at the rate of 24% on October 10, 2016. Forbearance and Settlement Agreement on July 2016 Convertible Notes On May 5, 2017, the Company entered into a Forbearance and Settlement Agreement ("Forbearance Agreement") with a holder of certain secured convertible notes that are in default due to various triggering events. The holder and the Company agreed to forbear from taking any action provided for under the secured convertible notes in exchange for the following terms provided in this agreement: • The Company agreed to redeem for cash all secured convertible notes of the Company held by the holder no later than September 1, 2017 . • The Company affirmed that the current balance of owed principal and accrued and unpaid interest to the holder is $1,790,214 as of May 2, 2017. • The redemption price for such secured convertible notes shall be 120% (if redeemed on or prior to August 15, 2017) or 125% (if redeemed after August 15, 2017) of the then outstanding principal, plus any accrued and unpaid interest. • During the month of May 2017, the Holder agreed to limit its conversions of outstanding Company secured convertible notes to $50,000 per calendar week of principal/interest. • During the months of June, July and August 2017, the holder agreed to limit its conversions of outstanding Company secured convertible notes to $75,000 per calendar week of principal/interest. • During the months of May, June, July and August 2017, the holder agreed that all outstanding Company secured convertible notes shall bear interest at the normal stated rate of 10% , rather than default rate of 24% . • All conversions during the months of May, June, July and August 2017 will be at the “triggering event” discount conversion price as stated in the secured convertible notes, and will continue at the “triggering event” discount price until, if and when the notes are redeemed. • Should the Company fail to redeem for cash all secured convertible notes on or before September 1, 2017 , default interest and normal stated interest will accrue from the date of execution of this agreement. All principal and accrued interest on the July 2016 Convertible Notes are convertible at any time, in whole or in part, at the option of the private investor, into shares of Common Stock at a variable conversion price equal to the lowest of (i) $0.045 (the “Fixed Conversion Price”), (ii) 70% of the lowest volume weighted average price (“VWAP”) of the Company's common stock for the ten consecutive trading day period prior to the conversion date or (iii) 70% of the lowest closing bid price of the Company's common stock for the ten consecutive trading day period prior to the conversion date. If certain defined triggering events occur, the conversion price would thereafter be reduced (and only reduced), to equal 60% of the lower of (i) the lowest closing bid price of the Company's common stock for the thirty consecutive trading day period prior to the conversion date or (ii) the lowest VWAP of the the Company's common stock for the thirty consecutive trading day period prior to the conversion date. In addition, on the 90th day and also on the 180th day from the date of the Note SPA, the private investor may reset the Fixed Conversion Price to thereafter be equal to the VWAP of the Common Stock for such day or if such 90th or 180th day is not a trading day, then the |
OCTOBER 2016 CONVERTIBLE NOTES
OCTOBER 2016 CONVERTIBLE NOTES AND EXCHANGE OF SERIES A PREFERRED STOCK | 6 Months Ended |
Jun. 30, 2017 | |
Equity [Abstract] | |
PREFERRED STOCK | SERIES A PREFERRED STOCK In June 2013, the Company entered into a Securities Purchase Agreement with an investor to sell an aggregate of 750,000 shares of Series A Preferred Stock at a price of $8.00 per share, resulting in gross proceeds of $6,000,000 . This purchase agreement included warrants to purchase up to 13,125 shares of common stock of the Company. The transfer of cash and securities took place incrementally, the first closing occurring on June 17, 2013 with the transfer of 125,000 shares of Series A Preferred Stock and a warrant to purchase 2,187 shares of common stock for $1,000,000 . The final closings took place in August 2013, with the transfer of 625,000 shares of Series A Preferred Stock and a warrant to purchase 10,938 shares of common stock for $5,000,000 . Holders of Series A Preferred Stock are entitled to cumulative dividends at a rate of 8% per annum when and if declared by the Board of Directors in its sole discretion. The dividends may be paid in cash or in the form of common stock (valued at 10% below market price, but not to exceed the lowest closing price during the applicable measurement period), at the discretion of the Board of Directors. The dividend rate on the Series A Preferred Stock is indexed to the Company's stock price and subject to adjustment. In addition, the Series A Preferred Stock contains a make-whole provision whereby, conversion or redemption of the preferred stock within 4 years of issuance will require dividends for the full four year period to be paid by the Company in cash or common stock (valued at 10% below market price, but not to exceed the lowest closing price during the applicable measurement period). The Series A Preferred Stock may be converted into shares of common stock at the option of the Company if the closing price of the common stock exceeds $232 , as adjusted, for 20 consecutive trading days, or by the holder at any time. The Company has the right to redeem the Series A Preferred Stock at a price of $8.00 per share, plus any accrued and unpaid dividends, plus the make-whole amount (if applicable). At June 30, 2017 , the preferred shares were not eligible for conversion to common shares at the option of the Company. The holder of the preferred shares may convert to common shares at any time, at no cost, at a ratio of 1 preferred share into 1 common share (subject to standard ratable anti-dilution adjustments). Upon any conversion (whether at the option of the Company or the holder), the holder is entitled to receive any accrued but unpaid dividends and also any make-whole amount (if applicable). See Note 19. Make-Whole Dividend Liability. On October 6, 2016, the Series A Holder entered into an exchange agreement (the “Exchange Agreement”) with Adar Bays. Pursuant to the exchange agreement, beginning December 5, 2016, Adar Bays has the option to exchange, from time to time, all or any portion of the October 2016 Convertible Notes (see Note 17) for outstanding shares of Series A Preferred Stock from the Series A Holder. As of June 30, 2017 , Adar Bays had elected to exchange all outstanding October 2016 Convertible Notes, in accordance with the exchange agreement, resulting in the exchange of 104,785 shares of Series A Preferred Stock. As of June 30, 2017 , Adar Bays had also converted their 104,785 shares of Series A Preferred Stock, and the related make whole dividend, which resulted in the issuance of 173,946,250 shares of common stock. Except as otherwise required by law (or with respect to approval of certain actions), the Series A Preferred Stock shall have no voting rights. Upon any liquidation, dissolution or winding up of the Company, after payment or provision for payment of debts and other liabilities of the Company, the holders of Series A Preferred Stock shall be entitled to receive, pari passu with any distribution to the holders of common stock of the Company, an amount equal to $8.00 per share of Series A Preferred Stock plus any accrued and unpaid dividends. As of June 30, 2017 , there were 60,756 shares of Series A Preferred Stock outstanding. SERIES E PREFERRED STOCK AND THE COMMITTED EQUITY LINE Series E Preferred Stock On November 4, 2015, the Company entered into a securities purchase agreement with a private investor to issue 2,800 shares of Series E Preferred Stock in exchange for $2,800,000 . Shares of the Series E Preferred Stock (including the amount of any accrued and unpaid dividends thereon) are convertible, at the option of the holder, into common stock at a variable conversion price equal to 80% of the average of the two lowest VWAPs of the Company's common stock for the ten consecutive trading day period prior to the conversion date. If certain defined default events occur, the conversion price would thereafter be reduced (and only reduced), to equal 70% of the average of the two lowest VWAPs of the Company's common stock for the twenty consecutive trading day period prior to the conversion date. The private investor had available to them a new conversion price beginning on June 9, 2016 as a result of the Series H Preferred Stock transaction further described in Note 14. Shares of the Series E Preferred Stock are now convertible, at the option of the private investor, into common stock at a variable conversion price equal to 70% of (i) the lowest VWAP of our common stock for the ten consecutive trading day period prior to the conversion date or (ii) the lowest closing bid price of our common stock for the ten consecutive trading day period prior to the conversion date. The following table summarizes the conversion activity of the Series E Preferred Stock: Conversion Period Preferred Series E Shares Converted Value of Series E Preferred Shares (inclusive of accrued dividends) Common Shares Issued Q4 2015 478 $ 481,500 250,000 Q1 2016 1,220 1,239,436 1,132,000 Q2 2016 365 381,414 7,979,568 Q3 2016 523 548,896 21,973,747 Q4 2016 94 101,018 13,089,675 Q1 2017 15 16,248 8,289,962 Q2 2017 35 38,886 134,927,207 2,730 $ 2,807,398 187,642,159 Holders of the Series E Preferred Stock will be entitled to dividends in the amount of 7% per annum. During the six months ended June 30, 2017 , the holder converted dividends in the amount of $5,134 on the Series E Preferred Stock, resulting in the issuance of 14,135,538 shares of common stock. The Company has issued 18,000 shares of common stock to the private investor as a commitment fee relating to the Series E Preferred Stock. Costs associated with the Series E Preferred Stock, such as legal fees and commitment shares are capitalized and reported as deferred financing costs on the Condensed Consolidated Balance Sheets. The total gross debt issuance cost incurred by the Company related to the Series E Preferred Stock was $104,000 . These debt issuance costs will be recognized as additional interest expense over the life of the Series E Preferred Stock. At any time after March 31, 2016, the private investor has the option to redeem for cash all or any portion of the outstanding shares of the Series E Preferred Stock at a price per share equal to $1,250 plus any accrued but unpaid dividends thereon. At any time after the third anniversary of the date of the initial issuance of Series E Preferred Stock, the Company will have the option to redeem for cash all outstanding shares of the Series E Preferred Stock at a price per share equal to $1,250 plus any accrued but unpaid dividends thereon. The Company classified the Series E Preferred Stock as a liability pursuant to ASC 480 on the closing date due to the structure of the financing agreement, whereby the Company has an unconditional obligation that the Company may settle by issuing a variable number of common shares with a monetary value that is fixed and known at inception. There are 70 shares of Series E Preferred Stock outstanding, representing a value of $70,000 , as of June 30, 2017 . Pursuant to a number of factors outlined in ASC Topic 815, Derivatives and Hedging , the conversion option in the Series E Preferred Stock was deemed to include an embedded derivative that required bifurcation and separate accounting. As such, the Company ascertained the value of the conversion option as if separate from the convertible issuance and appropriately recorded that value as a derivative liability. At December 31, 2016 , the derivative liability associated with the Series E Preferred Stock was $141,000 . The derivative liability associated with the Series E Preferred Stock is subject to revaluation on a quarterly basis to reflect the market value change of the embedded conversion option. At March 31, 2017 and June 30, 2017 , the Company conducted a fair value assessment of the embedded derivative associated with the Series E Preferred Stock. As a result of the fair value assessment, the Company recorded a $40,016 loss as "Change in fair value of derivatives and gain/(loss) on extinguishment of liabilities, net" in the Condensed Consolidated Statements of Operations, for the three months ended June 30, 2017 . The net gain recorded for the six months ended June 30, 2017 was $19,358 , to properly reflect the fair value of the embedded derivative of $121,390 as of June 30, 2017 . The fair value measurements rely primarily on Company-specific inputs and the Company’s own assumptions. With the absence of observable inputs, the Company determined these recurring fair value measurements reside primarily within Level 3 of the fair value hierarchy. The derivative associated with the Series E Preferred Stock approximates management’s estimate of the fair value of the embedded derivative liability at June 30, 2017 based on using a Monte Carlo simulation following a Geometric Brownian Motion with the following assumptions: annual volatility of 70% , present value discount rate of 12% and dividend yield of 0% . The Committed Equity Line On November 10, 2015, the Company and the private investor entered into a committed equity line purchase agreement (the "CEL"). Under the terms and subject to the conditions of the CEL purchase agreement, at its option the Company has the right to sell to the private investor, and the private investor is obligated to purchase from the Company, up to $32.2 million of the Company’s common stock, subject to certain limitations, from time to time, over the 36 -month period commencing on December 18, 2015, the date that the registration statement was declared effective by the SEC. From time to time, the Company may direct the private investor, at its sole discretion and subject to certain conditions, to purchase an amount of shares of common stock up to the lesser of (i) $1,000,000 or (ii) 300% of the average daily trading volume of the Company’s common stock over the preceding ten trading day period. The per share purchase price for shares of common stock to be sold by the Company under the CEL purchase agreement shall be equal to 80% of the average of the two lowest VWAPs of the common stock for the ten consecutive trading day period prior to the purchase date. As of June 30, 2017 , the Company had directed the private investor to purchase 3,056,147 of common stock which resulted in the issuance of 1,368,000 shares of common stock The Company may not direct the private investor to purchase shares of common stock more frequently than once each ten business days. The Company’s sales of shares of common stock to the private investor under the CEL purchase agreement are limited to no more than the number of shares that would result in the beneficial ownership by the private investor and its affiliates, at any single point in time, of more than 9.99% of the Company’s then outstanding shares of common stock. As consideration for entering into the CEL purchase agreement, the Company agreed to issue to the private investor 132,000 shares of common stock (the “Commitment Shares”). The Commitment Shares were issued to the private investor commencing upon the date that the registration statement was declared effective by the SEC. SERIES F PREFERRED STOCK On January 19, 2016, the Company entered into a securities purchase agreement with a private investor for the sale of $7,000,000 of the Company’s newly designated Series F 7% Convertible Preferred Stock (the “Series F Preferred Stock”). On January 20, 2016, the Company sold and issued 7,000 shares of Series F Preferred Stock to the private investor. The aggregate purchase price of the Series F Preferred shares was $7,000,000 . On January 20, 2016, the private investor paid $500,000 to the Company. The remaining $6,500,000 was paid by the private investor to the Company in 14 weekly increments of $500,000 or $250,000 beginning January 25, 2016 and ending April 28, 2016. Shares of the Series F Preferred Stock (including the amount of any accrued and unpaid dividends thereon) are convertible, at the option of the holder, into common stock at a fixed conversion price equal to $5.00 per share. If certain defined default events occur, the conversion price would thereafter be reduced (and only reduced), to equal 70% of the average of the two lowest VWAPs of our common stock for the twenty consecutive trading day period prior to the conversion date. If requested by the private investor, the Company will make weekly redemptions of shares of Series F Preferred Stock (including any accrued and unpaid dividends thereon). If the redemption price is paid by the Company in cash, the number of shares to be redeemed in each weekly increment is 250 shares of Series F Preferred Stock, and the redemption price is a price per share equal to $1,250 plus any accrued but unpaid dividends thereon. The Company has the option to make such redemption payments in shares of common stock provided certain specified equity conditions are satisfied at the time of payment. The number of shares of common stock to be issued would be calculated using a per share price equal to 80% of the one lowest VWAP of our common stock for the ten consecutive trading day period prior to the payment date. For redemption payments made in shares of common stock, the Company will redeem either (i) 250 shares of Series F Preferred Stock or (ii) such greater number of shares of Series F Preferred Stock (and also including any accrued and unpaid dividends) that would result upon redemption in the issuance of a number of shares of common stock equal to 12% of the aggregate composite trading volume for the Company’s common stock during the preceding calendar week. The private investor had available to them a new conversion price beginning on June 9, 2016 as a result of the Series H Preferred Stock transaction further described in Note 14. Shares of the Series F Preferred Stock are now convertible, at the option of the private investor, into common stock at a variable conversion price equal to 70% of (i) the lowest VWAP of our common stock for the ten consecutive trading day period prior to the conversion date or (ii) the lowest closing bid price of our common stock for the ten consecutive trading day period prior to the conversion date. Amendment of Outstanding Series F Preferred Stock Conversion Price On October 5, 2016, the Company filed a Certificate of Amendment to the Certificate of Designations of Preferences, Rights and Limitations of Series F Preferred Stock with the Secretary of State of the State of Delaware. The Certificate of Amendment amends the conversion price at which the Series F Preferred Stock can be converted into shares of common stock. The Company had approximately $336,000 of Series F Preferred Stock remaining outstanding as of October 5, 2016. As amended, the conversion price will now be equal to the lowest of (i) 50% of the lowest weighted average price (“VWAP”) of our common stock for the ten consecutive trading day period prior to the conversion date or (ii) 50% of the lowest closing bid price of our common stock for the ten consecutive trading day period prior to the conversion date. If certain “Triggering Events” specified in the terms of the Series F Preferred Stock occur, then the conversion price of the Series F Preferred Stock shall be thereafter reduced, and only reduced, to equal 50% of the average of the lowest traded price of the common stock for the twenty consecutive trading day period prior to the conversion date. The following table summarizes the conversion activity of the Series F Preferred Stock: Conversion Period Preferred Series F Shares Converted Value of Series F Preferred Shares (inclusive of accrued dividends) Common Shares Issued Q1 2016 2,168 $ 2,188,298 2,183,992 Q2 2016 3,234 3,300,931 6,649,741 Q3 2016 1,262 1,315,743 81,917,364 Q4 2016 176 185,118 27,276,005 6,840 $ 6,990,090 118,027,102 Holders of the Series F Preferred Stock are entitled to dividends in the amount of 7% per annum. During the quarter ended June 30, 2017 , the Company did not pay any dividends or issue any shares in relation to accrued dividends. The Company classified the Series F Preferred Stock as a liability pursuant to ASC 480 on the closing date due to the structure of the financing agreement, whereby the Company has an unconditional obligation that the Company may settle by issuing a variable number of common shares with a monetary value that is fixed and known at inception. There are 160 shares of Series F Preferred Stock, representing a value of $160,000 , outstanding as of June 30, 2017 . Pursuant to a number of factors outlined in ASC Topic 815, Derivatives and Hedging , the conversion option in the Series F Preferred Stock was deemed to include an embedded derivative that required bifurcation and separate accounting. As such, the Company ascertained the value of the conversion option as if separate from the convertible issuance and appropriately recorded that value as a derivative liability. At closing, a derivative liability and a corresponding debt discount in the amount of $1,666,000 were recorded. The debt discount will be charged to interest expense ratably over the life of the Series F Preferred Stock. The derivative liability associated with the Series F Preferred Stock is subject to revaluation on a quarterly basis to reflect the market value change of the embedded conversion option. At June 30, 2017 , the Company conducted a fair value assessment of the embedded derivative associated with the Series F Preferred Stock. As a result of the fair value assessment, the Company recorded a $209,613 loss as "Change in fair value of derivatives and gain/(loss) on extinguishment of liabilities, net" in the Condensed Consolidated Statements of Operations, for the three months ended June 30, 2017 . The net loss recorded for the six months ended June 30, 2017 was $85,557 , to properly reflect the fair value of the embedded derivative of $340,881 as of June 30, 2017 . The fair value measurements rely primarily on Company-specific inputs and the Company’s own assumptions. With the absence of observable inputs, the Company determined these recurring fair value measurements reside primarily within Level 3 of the fair value hierarchy. The derivative associated with the Series F Preferred Stock approximates management’s estimate of the fair value of the embedded derivative liability at June 30, 2017 based on using a Monte Carlo simulation following a Geometric Brownian Motion with the following assumptions: annual volatility of 66% , present value discount rate of 12% and dividend yield of 0% . SERIES G PREFERRED STOCK On April 29, 2016, the Company entered into a securities purchase agreement with private investors to issue 2,000 shares of Series G Preferred Stock for $2,000,000 . At Closing, the Company issued a total of 500 shares of Series G Preferred Stock to the private investors in exchange for $500,000 . The Company issued an additional 1,500 shares of Series G Preferred Stock to the private investors during the months of May and June 2016, which resulted in additional gross proceeds to the Company of $1,500,000 . Holders of the Series G Preferred Stock will be entitled to dividends in the amount of 10% per annum. One year after issuance, the Company is required to redeem for cash all or any portion of the outstanding shares of the Series G Preferred Stock at a price per share equal to $1,000 plus any accrued but unpaid dividends thereon. Assignment of Series G Preferred Stock Beginning September 19, 2016, the two private investors (the “Series G Sellers”) entered into assignment agreements with accredited investors (the “Series G Purchasers”). Under the terms of the assignment agreements, the Series G Sellers may sell all 2,000 outstanding shares of Series G Preferred Stock to the Series G Purchasers for a purchase price of $1,000 per share of Series G Preferred Stock (plus the amount of any accrued and unpaid dividends thereon). As of June 30, 2017 , the Series G Sellers had sold 1,835 shares of Series G Preferred Stock, representing a value of $1,835,000 , to the Series G Purchasers. On September 21, 2016, the Company filed a Certificate of Amendment to the Certificate of Designations of Preferences, Rights and Limitations of Series G Preferred Stock with the Secretary of State of the State of Delaware. The Certificate of Amendment amends the conversion price at which the Series G Preferred Stock can be converted into shares of common stock. Shares of the Series G Preferred Stock (including the amount of any accrued and unpaid dividends thereon) were previously convertible at the option of the private investors into common stock at a fixed conversion price of $1.00 per share. As amended, the conversion price is equal to the lowest of (i) $0.045 , (ii) 70% of the lowest volume weighted average price of the Company’s common stock for the ten consecutive trading day period prior to the conversion date or (iii) 70% of the lowest closing bid price of the Company’s common stock for the ten consecutive trading day period prior to the conversion date. The following table summarizes the conversion activity of the Series G Preferred Stock: Conversion Period Preferred Series G Shares Converted Value of Series G Preferred Shares (inclusive of accrued dividends) Common Shares Issued Q4 2016 892 929,895 245,726,283 Q1 2017 372 397,970 327,718,386 Q2 2017 526 575,096 1,337,776,821 1,790 $ 1,902,961 1,911,221,490 Holders of the Series G Preferred Stock will be entitled to dividends in the amount of 10% per annum. During the six months ended June 30, 2017 , the Company converted dividends in the amount of $49,096 on the Series G Preferred Stock, resulting in the issuance of 114,854,745 shares of common stock. On June 29, and June 30, 2017, the Company redeemed the remaining 210 outstanding shares, and the related accrued dividends for cash payments in the amount of $232,440 . Due to international wire cut off times, $182,715 of that amount was not actually paid until July 3, 2017, and the resulting liability is included in accounts payable on the Condensed Consolidated Balance Sheet for the six months ended June 30, 2017 . As of June 30, 2017 , all Series G Preferred Stock Shares, and the related accrued dividends, had either been converted or redeemed. Pursuant to a number of factors outlined in ASC Topic 815, Derivatives and Hedging , the conversion option in the Series G Preferred Stock were deemed to include an embedded derivative that required bifurcation and separate accounting. As such, the Company ascertained the value of the conversion option as if separate from the convertible issuance and appropriately recorded that value as a derivative liability. At December 31, 2016 the fair value of the derivative liability was $361,831 and was $219,347 prior to the redemption. At June 30, 2017 , the Company recorded the reduction of the remaining embedded derivative associated with the Series G Preferred Stock of $219,347 as a gain in the "Change in fair value of derivatives and gain/(loss) on extinguishment of liabilities, net" in the Condensed Consolidated Statements of Operations for the three months ended June 30, 2017 . The net gain recorded for the six months ended June 30, 2017 was $361,831 , to properly reflect the elimination of the embedded derivative as of June 30, 2017 . Conversion Inducement and Disposal Price Guarantee On January 17, 2017, one of the Series G Preferred Stock holders (“Holder A”) requested a conversion of 100 shares of Series G Preferred Stock, $100,000 face value, including accrued dividends of $6,416.67 for a total conversion value of $106,416.67 into common stock of the Company at a conversion price of $0.00112 which would have resulted in the issuance of 95,014,884 shares of common stock. At the date of the request the Company did not have enough authorized shares to execute the conversion request and therefore entered into an agreement with Holder A to honor the conversion price of $0.00112 and issue the 95,014,884 shares of common stock upon the increase of the authorized common shares of the Company. The actual conversion occurred on March 17, 2017 which would have been a conversion price of $0.00168 . In conjunction with the conversion price agreement the Company agreed to provide a minimum disposal price guarantee to the Holder A of $0.003 on the tranche of 95,014,884 shares. If Holder A fails to dispose of these shares at $0.003 or above the Company will issue additional shares of common stock to make up the difference between the minimum disposal price of $0.003 and the price that Holder A disposed of the shares. During the six months ended June 30, 2017 , in accordance with ASC 470-20-40-16, the Company recorded expense of $79,179 related to the conversion inducement and expense of $134,566 related to the disposal price guarantee. The amount related to the disposal price guarantee was also recorded as a corresponding liability in the Condensed Consolidated Balance Sheet as of June 30, 2017 . JULY 2016 CONVERTIBLE NOTES Series H Preferred Stock On June 9, 2016, the Company entered into a securities purchase agreement with a private investor to issue 2,500 shares of Series H Preferred Stock for $2,500,000 . The Company received gross proceeds of $250,000 at Closing. Additional gross proceeds of $580,000 were received by the Company through July 7, 2016. The Company agreed to exchange outstanding Series H Preferred Stock for Senior Secured Convertible Notes (“July 2016 Notes”) on July 13, 2016. At the date of the exchange, the Company had sold and issued 830 shares of Series H Preferred Stock to the private investor in exchange for $830,000 of gross proceeds. Refer to the section below for details of the exchange. July 2016 Convertible Notes On July 13, 2016, the Company entered into a securities purchase agreement (the “Note SPA”) with the private investor for the private placement of up to $2,082,600 of the Company’s 4% Original Issue Discount Senior Secured Convertible Promissory Notes (the “July 2016 Convertible Notes”). On July 13, 2016, the Company sold and issued $364,000 principal amount of notes to the investor in exchange for $350,000 of gross proceeds. The Company sold and issued the remaining $1,718,600 principal amount of July 2016 Convertible Notes to the investor in exchange for $1,650,000 of gross proceeds in weekly tranches between July and September 2016. The Company and the private investor also entered into an Exchange Agreement dated July 13, 2016 (the “Exchange Agreement”). Under the terms of the Exchange Agreement, the outstanding shares of Series H Preferred Stock (approximately $833,000 of capital and accrued dividends) were canceled. In exchange, the Company issued to the private investor approximately $866,000 of July 2016 Convertible Notes. There were 830 shares of Series H Preferred Stock outstanding as of the date of the Exchange Agreement. Unless earlier converted or prepaid, all of the July 2016 Convertible Notes will mature July 13, 2017 (the “Maturity Date”). The July 2016 Convertible Notes bear interest at a rate of 10% per annum, subject to increase to 24% per annum upon the occurrence and continuance of an event of default. Principal on the July 2016 Convertible Notes is payable on the Maturity Date. Interest on the July 2016 Convertible Notes is payable quarterly. Principal and interest are payable in cash or, if specified equity conditions are met, shares of Common Stock. The July 2016 Convertible Notes are secured by a security interest in substantially all of the Company’s assets. The subsidiaries of the Company have guaranteed the Company’s obligations under the July 2016 Convertible Notes. The July 2016 Convertible Notes contain standard and customary events of default including but not limited to: (i) failure to make payments when due under the July 2016 Convertible Notes; (ii) bankruptcy or insolvency of the Company; and (iii) failure to file a registration statement by October 9, 2016. On October 10, 2016 the Company had not been successful in filing the registration statement triggering an event of default per the July 2016 Note Agreement. Upon default the interest rate increases to 24% per annum and the holder of the July 2016 Notes has the option to accelerate the Note and demand cash payment of the Mandatory Default Amount consisting of a 25% premium of the principal balance plus any accrued and unpaid interest. The Company began accruing interest at the rate of 24% on October 10, 2016. Forbearance and Settlement Agreement on July 2016 Convertible Notes On May 5, 2017, the Company entered into a Forbearance and Settlement Agreement ("Forbearance Agreement") with a holder of certain secured convertible notes that are in default due to various triggering events. The holder and the Company agreed to forbear from taking any action provided for under the secured convertible notes in exchange for the following terms provided in this agreement: • The Company agreed to redeem for cash all secured convertible notes of the Company held by the holder no later than September 1, 2017 . • The Company affirmed that the current balance of owed principal and accrued and unpaid interest to the holder is $1,790,214 as of May 2, 2017. • The redemption price for such secured convertible notes shall be 120% (if redeemed on or prior to August 15, 2017) or 125% (if redeemed after August 15, 2017) of the then outstanding principal, plus any accrued and unpaid interest. • During the month of May 2017, the Holder agreed to limit its conversions of outstanding Company secured convertible notes to $50,000 per calendar week of principal/interest. • During the months of June, July and August 2017, the holder agreed to limit its conversions of outstanding Company secured convertible notes to $75,000 per calendar week of principal/interest. • During the months of May, June, July and August 2017, the holder agreed that all outstanding Company secured convertible notes shall bear interest at the normal stated rate of 10% , rather than default rate of 24% . • All conversions during the months of May, June, July and August 2017 will be at the “triggering event” discount conversion price as stated in the secured convertible notes, and will continue at the “triggering event” discount price until, if and when the notes are redeemed. • Should the Company fail to redeem for cash all secured convertible notes on or before September 1, 2017 , default interest and normal stated interest will accrue from the date of execution of this agreement. All principal and accrued interest on the July 2016 Convertible Notes are convertible at any time, in whole or in part, at the option of the private investor, into shares of Common Stock at a variable conversion price equal to the lowest of (i) $0.045 (the “Fixed Conversion Price”), (ii) 70% of the lowest volume weighted average price (“VWAP”) of the Company's common stock for the ten consecutive trading day period prior to the conversion date or (iii) 70% of the lowest closing bid price of the Company's common stock for the ten consecutive trading day period prior to the conversion date. If certain defined triggering events occur, the conversion price would thereafter be reduced (and only reduced), to equal 60% of the lower of (i) the lowest closing bid price of the Company's common stock for the thirty consecutive trading day period prior to the conversion date or (ii) the lowest VWAP of the the Company's common stock for the thirty consecutive trading day period prior to the conversion date. In addition, on the 90th day and also on the 180th day from the date of the Note SPA, the private investor may reset the Fixed Conversion Price to thereafter be equal to the VWAP of the Common Stock for such day or if such 90th or 180th day is not a trading day, then the |
SERIES K PREFERRED STOCK SERIES
SERIES K PREFERRED STOCK SERIES K PREFERRED STOCK | 6 Months Ended |
Jun. 30, 2017 | |
Equity [Abstract] | |
PREFERRED STOCK | SERIES A PREFERRED STOCK In June 2013, the Company entered into a Securities Purchase Agreement with an investor to sell an aggregate of 750,000 shares of Series A Preferred Stock at a price of $8.00 per share, resulting in gross proceeds of $6,000,000 . This purchase agreement included warrants to purchase up to 13,125 shares of common stock of the Company. The transfer of cash and securities took place incrementally, the first closing occurring on June 17, 2013 with the transfer of 125,000 shares of Series A Preferred Stock and a warrant to purchase 2,187 shares of common stock for $1,000,000 . The final closings took place in August 2013, with the transfer of 625,000 shares of Series A Preferred Stock and a warrant to purchase 10,938 shares of common stock for $5,000,000 . Holders of Series A Preferred Stock are entitled to cumulative dividends at a rate of 8% per annum when and if declared by the Board of Directors in its sole discretion. The dividends may be paid in cash or in the form of common stock (valued at 10% below market price, but not to exceed the lowest closing price during the applicable measurement period), at the discretion of the Board of Directors. The dividend rate on the Series A Preferred Stock is indexed to the Company's stock price and subject to adjustment. In addition, the Series A Preferred Stock contains a make-whole provision whereby, conversion or redemption of the preferred stock within 4 years of issuance will require dividends for the full four year period to be paid by the Company in cash or common stock (valued at 10% below market price, but not to exceed the lowest closing price during the applicable measurement period). The Series A Preferred Stock may be converted into shares of common stock at the option of the Company if the closing price of the common stock exceeds $232 , as adjusted, for 20 consecutive trading days, or by the holder at any time. The Company has the right to redeem the Series A Preferred Stock at a price of $8.00 per share, plus any accrued and unpaid dividends, plus the make-whole amount (if applicable). At June 30, 2017 , the preferred shares were not eligible for conversion to common shares at the option of the Company. The holder of the preferred shares may convert to common shares at any time, at no cost, at a ratio of 1 preferred share into 1 common share (subject to standard ratable anti-dilution adjustments). Upon any conversion (whether at the option of the Company or the holder), the holder is entitled to receive any accrued but unpaid dividends and also any make-whole amount (if applicable). See Note 19. Make-Whole Dividend Liability. On October 6, 2016, the Series A Holder entered into an exchange agreement (the “Exchange Agreement”) with Adar Bays. Pursuant to the exchange agreement, beginning December 5, 2016, Adar Bays has the option to exchange, from time to time, all or any portion of the October 2016 Convertible Notes (see Note 17) for outstanding shares of Series A Preferred Stock from the Series A Holder. As of June 30, 2017 , Adar Bays had elected to exchange all outstanding October 2016 Convertible Notes, in accordance with the exchange agreement, resulting in the exchange of 104,785 shares of Series A Preferred Stock. As of June 30, 2017 , Adar Bays had also converted their 104,785 shares of Series A Preferred Stock, and the related make whole dividend, which resulted in the issuance of 173,946,250 shares of common stock. Except as otherwise required by law (or with respect to approval of certain actions), the Series A Preferred Stock shall have no voting rights. Upon any liquidation, dissolution or winding up of the Company, after payment or provision for payment of debts and other liabilities of the Company, the holders of Series A Preferred Stock shall be entitled to receive, pari passu with any distribution to the holders of common stock of the Company, an amount equal to $8.00 per share of Series A Preferred Stock plus any accrued and unpaid dividends. As of June 30, 2017 , there were 60,756 shares of Series A Preferred Stock outstanding. SERIES E PREFERRED STOCK AND THE COMMITTED EQUITY LINE Series E Preferred Stock On November 4, 2015, the Company entered into a securities purchase agreement with a private investor to issue 2,800 shares of Series E Preferred Stock in exchange for $2,800,000 . Shares of the Series E Preferred Stock (including the amount of any accrued and unpaid dividends thereon) are convertible, at the option of the holder, into common stock at a variable conversion price equal to 80% of the average of the two lowest VWAPs of the Company's common stock for the ten consecutive trading day period prior to the conversion date. If certain defined default events occur, the conversion price would thereafter be reduced (and only reduced), to equal 70% of the average of the two lowest VWAPs of the Company's common stock for the twenty consecutive trading day period prior to the conversion date. The private investor had available to them a new conversion price beginning on June 9, 2016 as a result of the Series H Preferred Stock transaction further described in Note 14. Shares of the Series E Preferred Stock are now convertible, at the option of the private investor, into common stock at a variable conversion price equal to 70% of (i) the lowest VWAP of our common stock for the ten consecutive trading day period prior to the conversion date or (ii) the lowest closing bid price of our common stock for the ten consecutive trading day period prior to the conversion date. The following table summarizes the conversion activity of the Series E Preferred Stock: Conversion Period Preferred Series E Shares Converted Value of Series E Preferred Shares (inclusive of accrued dividends) Common Shares Issued Q4 2015 478 $ 481,500 250,000 Q1 2016 1,220 1,239,436 1,132,000 Q2 2016 365 381,414 7,979,568 Q3 2016 523 548,896 21,973,747 Q4 2016 94 101,018 13,089,675 Q1 2017 15 16,248 8,289,962 Q2 2017 35 38,886 134,927,207 2,730 $ 2,807,398 187,642,159 Holders of the Series E Preferred Stock will be entitled to dividends in the amount of 7% per annum. During the six months ended June 30, 2017 , the holder converted dividends in the amount of $5,134 on the Series E Preferred Stock, resulting in the issuance of 14,135,538 shares of common stock. The Company has issued 18,000 shares of common stock to the private investor as a commitment fee relating to the Series E Preferred Stock. Costs associated with the Series E Preferred Stock, such as legal fees and commitment shares are capitalized and reported as deferred financing costs on the Condensed Consolidated Balance Sheets. The total gross debt issuance cost incurred by the Company related to the Series E Preferred Stock was $104,000 . These debt issuance costs will be recognized as additional interest expense over the life of the Series E Preferred Stock. At any time after March 31, 2016, the private investor has the option to redeem for cash all or any portion of the outstanding shares of the Series E Preferred Stock at a price per share equal to $1,250 plus any accrued but unpaid dividends thereon. At any time after the third anniversary of the date of the initial issuance of Series E Preferred Stock, the Company will have the option to redeem for cash all outstanding shares of the Series E Preferred Stock at a price per share equal to $1,250 plus any accrued but unpaid dividends thereon. The Company classified the Series E Preferred Stock as a liability pursuant to ASC 480 on the closing date due to the structure of the financing agreement, whereby the Company has an unconditional obligation that the Company may settle by issuing a variable number of common shares with a monetary value that is fixed and known at inception. There are 70 shares of Series E Preferred Stock outstanding, representing a value of $70,000 , as of June 30, 2017 . Pursuant to a number of factors outlined in ASC Topic 815, Derivatives and Hedging , the conversion option in the Series E Preferred Stock was deemed to include an embedded derivative that required bifurcation and separate accounting. As such, the Company ascertained the value of the conversion option as if separate from the convertible issuance and appropriately recorded that value as a derivative liability. At December 31, 2016 , the derivative liability associated with the Series E Preferred Stock was $141,000 . The derivative liability associated with the Series E Preferred Stock is subject to revaluation on a quarterly basis to reflect the market value change of the embedded conversion option. At March 31, 2017 and June 30, 2017 , the Company conducted a fair value assessment of the embedded derivative associated with the Series E Preferred Stock. As a result of the fair value assessment, the Company recorded a $40,016 loss as "Change in fair value of derivatives and gain/(loss) on extinguishment of liabilities, net" in the Condensed Consolidated Statements of Operations, for the three months ended June 30, 2017 . The net gain recorded for the six months ended June 30, 2017 was $19,358 , to properly reflect the fair value of the embedded derivative of $121,390 as of June 30, 2017 . The fair value measurements rely primarily on Company-specific inputs and the Company’s own assumptions. With the absence of observable inputs, the Company determined these recurring fair value measurements reside primarily within Level 3 of the fair value hierarchy. The derivative associated with the Series E Preferred Stock approximates management’s estimate of the fair value of the embedded derivative liability at June 30, 2017 based on using a Monte Carlo simulation following a Geometric Brownian Motion with the following assumptions: annual volatility of 70% , present value discount rate of 12% and dividend yield of 0% . The Committed Equity Line On November 10, 2015, the Company and the private investor entered into a committed equity line purchase agreement (the "CEL"). Under the terms and subject to the conditions of the CEL purchase agreement, at its option the Company has the right to sell to the private investor, and the private investor is obligated to purchase from the Company, up to $32.2 million of the Company’s common stock, subject to certain limitations, from time to time, over the 36 -month period commencing on December 18, 2015, the date that the registration statement was declared effective by the SEC. From time to time, the Company may direct the private investor, at its sole discretion and subject to certain conditions, to purchase an amount of shares of common stock up to the lesser of (i) $1,000,000 or (ii) 300% of the average daily trading volume of the Company’s common stock over the preceding ten trading day period. The per share purchase price for shares of common stock to be sold by the Company under the CEL purchase agreement shall be equal to 80% of the average of the two lowest VWAPs of the common stock for the ten consecutive trading day period prior to the purchase date. As of June 30, 2017 , the Company had directed the private investor to purchase 3,056,147 of common stock which resulted in the issuance of 1,368,000 shares of common stock The Company may not direct the private investor to purchase shares of common stock more frequently than once each ten business days. The Company’s sales of shares of common stock to the private investor under the CEL purchase agreement are limited to no more than the number of shares that would result in the beneficial ownership by the private investor and its affiliates, at any single point in time, of more than 9.99% of the Company’s then outstanding shares of common stock. As consideration for entering into the CEL purchase agreement, the Company agreed to issue to the private investor 132,000 shares of common stock (the “Commitment Shares”). The Commitment Shares were issued to the private investor commencing upon the date that the registration statement was declared effective by the SEC. SERIES F PREFERRED STOCK On January 19, 2016, the Company entered into a securities purchase agreement with a private investor for the sale of $7,000,000 of the Company’s newly designated Series F 7% Convertible Preferred Stock (the “Series F Preferred Stock”). On January 20, 2016, the Company sold and issued 7,000 shares of Series F Preferred Stock to the private investor. The aggregate purchase price of the Series F Preferred shares was $7,000,000 . On January 20, 2016, the private investor paid $500,000 to the Company. The remaining $6,500,000 was paid by the private investor to the Company in 14 weekly increments of $500,000 or $250,000 beginning January 25, 2016 and ending April 28, 2016. Shares of the Series F Preferred Stock (including the amount of any accrued and unpaid dividends thereon) are convertible, at the option of the holder, into common stock at a fixed conversion price equal to $5.00 per share. If certain defined default events occur, the conversion price would thereafter be reduced (and only reduced), to equal 70% of the average of the two lowest VWAPs of our common stock for the twenty consecutive trading day period prior to the conversion date. If requested by the private investor, the Company will make weekly redemptions of shares of Series F Preferred Stock (including any accrued and unpaid dividends thereon). If the redemption price is paid by the Company in cash, the number of shares to be redeemed in each weekly increment is 250 shares of Series F Preferred Stock, and the redemption price is a price per share equal to $1,250 plus any accrued but unpaid dividends thereon. The Company has the option to make such redemption payments in shares of common stock provided certain specified equity conditions are satisfied at the time of payment. The number of shares of common stock to be issued would be calculated using a per share price equal to 80% of the one lowest VWAP of our common stock for the ten consecutive trading day period prior to the payment date. For redemption payments made in shares of common stock, the Company will redeem either (i) 250 shares of Series F Preferred Stock or (ii) such greater number of shares of Series F Preferred Stock (and also including any accrued and unpaid dividends) that would result upon redemption in the issuance of a number of shares of common stock equal to 12% of the aggregate composite trading volume for the Company’s common stock during the preceding calendar week. The private investor had available to them a new conversion price beginning on June 9, 2016 as a result of the Series H Preferred Stock transaction further described in Note 14. Shares of the Series F Preferred Stock are now convertible, at the option of the private investor, into common stock at a variable conversion price equal to 70% of (i) the lowest VWAP of our common stock for the ten consecutive trading day period prior to the conversion date or (ii) the lowest closing bid price of our common stock for the ten consecutive trading day period prior to the conversion date. Amendment of Outstanding Series F Preferred Stock Conversion Price On October 5, 2016, the Company filed a Certificate of Amendment to the Certificate of Designations of Preferences, Rights and Limitations of Series F Preferred Stock with the Secretary of State of the State of Delaware. The Certificate of Amendment amends the conversion price at which the Series F Preferred Stock can be converted into shares of common stock. The Company had approximately $336,000 of Series F Preferred Stock remaining outstanding as of October 5, 2016. As amended, the conversion price will now be equal to the lowest of (i) 50% of the lowest weighted average price (“VWAP”) of our common stock for the ten consecutive trading day period prior to the conversion date or (ii) 50% of the lowest closing bid price of our common stock for the ten consecutive trading day period prior to the conversion date. If certain “Triggering Events” specified in the terms of the Series F Preferred Stock occur, then the conversion price of the Series F Preferred Stock shall be thereafter reduced, and only reduced, to equal 50% of the average of the lowest traded price of the common stock for the twenty consecutive trading day period prior to the conversion date. The following table summarizes the conversion activity of the Series F Preferred Stock: Conversion Period Preferred Series F Shares Converted Value of Series F Preferred Shares (inclusive of accrued dividends) Common Shares Issued Q1 2016 2,168 $ 2,188,298 2,183,992 Q2 2016 3,234 3,300,931 6,649,741 Q3 2016 1,262 1,315,743 81,917,364 Q4 2016 176 185,118 27,276,005 6,840 $ 6,990,090 118,027,102 Holders of the Series F Preferred Stock are entitled to dividends in the amount of 7% per annum. During the quarter ended June 30, 2017 , the Company did not pay any dividends or issue any shares in relation to accrued dividends. The Company classified the Series F Preferred Stock as a liability pursuant to ASC 480 on the closing date due to the structure of the financing agreement, whereby the Company has an unconditional obligation that the Company may settle by issuing a variable number of common shares with a monetary value that is fixed and known at inception. There are 160 shares of Series F Preferred Stock, representing a value of $160,000 , outstanding as of June 30, 2017 . Pursuant to a number of factors outlined in ASC Topic 815, Derivatives and Hedging , the conversion option in the Series F Preferred Stock was deemed to include an embedded derivative that required bifurcation and separate accounting. As such, the Company ascertained the value of the conversion option as if separate from the convertible issuance and appropriately recorded that value as a derivative liability. At closing, a derivative liability and a corresponding debt discount in the amount of $1,666,000 were recorded. The debt discount will be charged to interest expense ratably over the life of the Series F Preferred Stock. The derivative liability associated with the Series F Preferred Stock is subject to revaluation on a quarterly basis to reflect the market value change of the embedded conversion option. At June 30, 2017 , the Company conducted a fair value assessment of the embedded derivative associated with the Series F Preferred Stock. As a result of the fair value assessment, the Company recorded a $209,613 loss as "Change in fair value of derivatives and gain/(loss) on extinguishment of liabilities, net" in the Condensed Consolidated Statements of Operations, for the three months ended June 30, 2017 . The net loss recorded for the six months ended June 30, 2017 was $85,557 , to properly reflect the fair value of the embedded derivative of $340,881 as of June 30, 2017 . The fair value measurements rely primarily on Company-specific inputs and the Company’s own assumptions. With the absence of observable inputs, the Company determined these recurring fair value measurements reside primarily within Level 3 of the fair value hierarchy. The derivative associated with the Series F Preferred Stock approximates management’s estimate of the fair value of the embedded derivative liability at June 30, 2017 based on using a Monte Carlo simulation following a Geometric Brownian Motion with the following assumptions: annual volatility of 66% , present value discount rate of 12% and dividend yield of 0% . SERIES G PREFERRED STOCK On April 29, 2016, the Company entered into a securities purchase agreement with private investors to issue 2,000 shares of Series G Preferred Stock for $2,000,000 . At Closing, the Company issued a total of 500 shares of Series G Preferred Stock to the private investors in exchange for $500,000 . The Company issued an additional 1,500 shares of Series G Preferred Stock to the private investors during the months of May and June 2016, which resulted in additional gross proceeds to the Company of $1,500,000 . Holders of the Series G Preferred Stock will be entitled to dividends in the amount of 10% per annum. One year after issuance, the Company is required to redeem for cash all or any portion of the outstanding shares of the Series G Preferred Stock at a price per share equal to $1,000 plus any accrued but unpaid dividends thereon. Assignment of Series G Preferred Stock Beginning September 19, 2016, the two private investors (the “Series G Sellers”) entered into assignment agreements with accredited investors (the “Series G Purchasers”). Under the terms of the assignment agreements, the Series G Sellers may sell all 2,000 outstanding shares of Series G Preferred Stock to the Series G Purchasers for a purchase price of $1,000 per share of Series G Preferred Stock (plus the amount of any accrued and unpaid dividends thereon). As of June 30, 2017 , the Series G Sellers had sold 1,835 shares of Series G Preferred Stock, representing a value of $1,835,000 , to the Series G Purchasers. On September 21, 2016, the Company filed a Certificate of Amendment to the Certificate of Designations of Preferences, Rights and Limitations of Series G Preferred Stock with the Secretary of State of the State of Delaware. The Certificate of Amendment amends the conversion price at which the Series G Preferred Stock can be converted into shares of common stock. Shares of the Series G Preferred Stock (including the amount of any accrued and unpaid dividends thereon) were previously convertible at the option of the private investors into common stock at a fixed conversion price of $1.00 per share. As amended, the conversion price is equal to the lowest of (i) $0.045 , (ii) 70% of the lowest volume weighted average price of the Company’s common stock for the ten consecutive trading day period prior to the conversion date or (iii) 70% of the lowest closing bid price of the Company’s common stock for the ten consecutive trading day period prior to the conversion date. The following table summarizes the conversion activity of the Series G Preferred Stock: Conversion Period Preferred Series G Shares Converted Value of Series G Preferred Shares (inclusive of accrued dividends) Common Shares Issued Q4 2016 892 929,895 245,726,283 Q1 2017 372 397,970 327,718,386 Q2 2017 526 575,096 1,337,776,821 1,790 $ 1,902,961 1,911,221,490 Holders of the Series G Preferred Stock will be entitled to dividends in the amount of 10% per annum. During the six months ended June 30, 2017 , the Company converted dividends in the amount of $49,096 on the Series G Preferred Stock, resulting in the issuance of 114,854,745 shares of common stock. On June 29, and June 30, 2017, the Company redeemed the remaining 210 outstanding shares, and the related accrued dividends for cash payments in the amount of $232,440 . Due to international wire cut off times, $182,715 of that amount was not actually paid until July 3, 2017, and the resulting liability is included in accounts payable on the Condensed Consolidated Balance Sheet for the six months ended June 30, 2017 . As of June 30, 2017 , all Series G Preferred Stock Shares, and the related accrued dividends, had either been converted or redeemed. Pursuant to a number of factors outlined in ASC Topic 815, Derivatives and Hedging , the conversion option in the Series G Preferred Stock were deemed to include an embedded derivative that required bifurcation and separate accounting. As such, the Company ascertained the value of the conversion option as if separate from the convertible issuance and appropriately recorded that value as a derivative liability. At December 31, 2016 the fair value of the derivative liability was $361,831 and was $219,347 prior to the redemption. At June 30, 2017 , the Company recorded the reduction of the remaining embedded derivative associated with the Series G Preferred Stock of $219,347 as a gain in the "Change in fair value of derivatives and gain/(loss) on extinguishment of liabilities, net" in the Condensed Consolidated Statements of Operations for the three months ended June 30, 2017 . The net gain recorded for the six months ended June 30, 2017 was $361,831 , to properly reflect the elimination of the embedded derivative as of June 30, 2017 . Conversion Inducement and Disposal Price Guarantee On January 17, 2017, one of the Series G Preferred Stock holders (“Holder A”) requested a conversion of 100 shares of Series G Preferred Stock, $100,000 face value, including accrued dividends of $6,416.67 for a total conversion value of $106,416.67 into common stock of the Company at a conversion price of $0.00112 which would have resulted in the issuance of 95,014,884 shares of common stock. At the date of the request the Company did not have enough authorized shares to execute the conversion request and therefore entered into an agreement with Holder A to honor the conversion price of $0.00112 and issue the 95,014,884 shares of common stock upon the increase of the authorized common shares of the Company. The actual conversion occurred on March 17, 2017 which would have been a conversion price of $0.00168 . In conjunction with the conversion price agreement the Company agreed to provide a minimum disposal price guarantee to the Holder A of $0.003 on the tranche of 95,014,884 shares. If Holder A fails to dispose of these shares at $0.003 or above the Company will issue additional shares of common stock to make up the difference between the minimum disposal price of $0.003 and the price that Holder A disposed of the shares. During the six months ended June 30, 2017 , in accordance with ASC 470-20-40-16, the Company recorded expense of $79,179 related to the conversion inducement and expense of $134,566 related to the disposal price guarantee. The amount related to the disposal price guarantee was also recorded as a corresponding liability in the Condensed Consolidated Balance Sheet as of June 30, 2017 . JULY 2016 CONVERTIBLE NOTES Series H Preferred Stock On June 9, 2016, the Company entered into a securities purchase agreement with a private investor to issue 2,500 shares of Series H Preferred Stock for $2,500,000 . The Company received gross proceeds of $250,000 at Closing. Additional gross proceeds of $580,000 were received by the Company through July 7, 2016. The Company agreed to exchange outstanding Series H Preferred Stock for Senior Secured Convertible Notes (“July 2016 Notes”) on July 13, 2016. At the date of the exchange, the Company had sold and issued 830 shares of Series H Preferred Stock to the private investor in exchange for $830,000 of gross proceeds. Refer to the section below for details of the exchange. July 2016 Convertible Notes On July 13, 2016, the Company entered into a securities purchase agreement (the “Note SPA”) with the private investor for the private placement of up to $2,082,600 of the Company’s 4% Original Issue Discount Senior Secured Convertible Promissory Notes (the “July 2016 Convertible Notes”). On July 13, 2016, the Company sold and issued $364,000 principal amount of notes to the investor in exchange for $350,000 of gross proceeds. The Company sold and issued the remaining $1,718,600 principal amount of July 2016 Convertible Notes to the investor in exchange for $1,650,000 of gross proceeds in weekly tranches between July and September 2016. The Company and the private investor also entered into an Exchange Agreement dated July 13, 2016 (the “Exchange Agreement”). Under the terms of the Exchange Agreement, the outstanding shares of Series H Preferred Stock (approximately $833,000 of capital and accrued dividends) were canceled. In exchange, the Company issued to the private investor approximately $866,000 of July 2016 Convertible Notes. There were 830 shares of Series H Preferred Stock outstanding as of the date of the Exchange Agreement. Unless earlier converted or prepaid, all of the July 2016 Convertible Notes will mature July 13, 2017 (the “Maturity Date”). The July 2016 Convertible Notes bear interest at a rate of 10% per annum, subject to increase to 24% per annum upon the occurrence and continuance of an event of default. Principal on the July 2016 Convertible Notes is payable on the Maturity Date. Interest on the July 2016 Convertible Notes is payable quarterly. Principal and interest are payable in cash or, if specified equity conditions are met, shares of Common Stock. The July 2016 Convertible Notes are secured by a security interest in substantially all of the Company’s assets. The subsidiaries of the Company have guaranteed the Company’s obligations under the July 2016 Convertible Notes. The July 2016 Convertible Notes contain standard and customary events of default including but not limited to: (i) failure to make payments when due under the July 2016 Convertible Notes; (ii) bankruptcy or insolvency of the Company; and (iii) failure to file a registration statement by October 9, 2016. On October 10, 2016 the Company had not been successful in filing the registration statement triggering an event of default per the July 2016 Note Agreement. Upon default the interest rate increases to 24% per annum and the holder of the July 2016 Notes has the option to accelerate the Note and demand cash payment of the Mandatory Default Amount consisting of a 25% premium of the principal balance plus any accrued and unpaid interest. The Company began accruing interest at the rate of 24% on October 10, 2016. Forbearance and Settlement Agreement on July 2016 Convertible Notes On May 5, 2017, the Company entered into a Forbearance and Settlement Agreement ("Forbearance Agreement") with a holder of certain secured convertible notes that are in default due to various triggering events. The holder and the Company agreed to forbear from taking any action provided for under the secured convertible notes in exchange for the following terms provided in this agreement: • The Company agreed to redeem for cash all secured convertible notes of the Company held by the holder no later than September 1, 2017 . • The Company affirmed that the current balance of owed principal and accrued and unpaid interest to the holder is $1,790,214 as of May 2, 2017. • The redemption price for such secured convertible notes shall be 120% (if redeemed on or prior to August 15, 2017) or 125% (if redeemed after August 15, 2017) of the then outstanding principal, plus any accrued and unpaid interest. • During the month of May 2017, the Holder agreed to limit its conversions of outstanding Company secured convertible notes to $50,000 per calendar week of principal/interest. • During the months of June, July and August 2017, the holder agreed to limit its conversions of outstanding Company secured convertible notes to $75,000 per calendar week of principal/interest. • During the months of May, June, July and August 2017, the holder agreed that all outstanding Company secured convertible notes shall bear interest at the normal stated rate of 10% , rather than default rate of 24% . • All conversions during the months of May, June, July and August 2017 will be at the “triggering event” discount conversion price as stated in the secured convertible notes, and will continue at the “triggering event” discount price until, if and when the notes are redeemed. • Should the Company fail to redeem for cash all secured convertible notes on or before September 1, 2017 , default interest and normal stated interest will accrue from the date of execution of this agreement. All principal and accrued interest on the July 2016 Convertible Notes are convertible at any time, in whole or in part, at the option of the private investor, into shares of Common Stock at a variable conversion price equal to the lowest of (i) $0.045 (the “Fixed Conversion Price”), (ii) 70% of the lowest volume weighted average price (“VWAP”) of the Company's common stock for the ten consecutive trading day period prior to the conversion date or (iii) 70% of the lowest closing bid price of the Company's common stock for the ten consecutive trading day period prior to the conversion date. If certain defined triggering events occur, the conversion price would thereafter be reduced (and only reduced), to equal 60% of the lower of (i) the lowest closing bid price of the Company's common stock for the thirty consecutive trading day period prior to the conversion date or (ii) the lowest VWAP of the the Company's common stock for the thirty consecutive trading day period prior to the conversion date. In addition, on the 90th day and also on the 180th day from the date of the Note SPA, the private investor may reset the Fixed Conversion Price to thereafter be equal to the VWAP of the Common Stock for such day or if such 90th or 180th day is not a trading day, then the |
MAKE-WHOLE DIVIDEND LIABILITY
MAKE-WHOLE DIVIDEND LIABILITY | 6 Months Ended |
Jun. 30, 2017 | |
Make-whole dividend liability [Abstract] | |
MAKE-WHOLE DIVIDEND LIABILITY | MAKE-WHOLE DIVIDEND LIABILITY In June 2013, the Company entered into a Series A Preferred Stock Purchase Agreement. Holders of Series A Preferred Stock are entitled to cumulative dividends at a rate of 8.0% per annum, with the dividend rate being indexed to the Company's stock price and subject to adjustment. Conversion or redemption of the Series A Preferred Stock within 4 years of issuance requires the Company pay a make-whole dividend to the holders, whereby dividends for the full four year period are to be paid in cash or common stock (valued at 10% below market price). The Company concluded the make-whole dividends should be characterized as embedded derivatives under ASC 815. The make-whole dividends were expensed at the time of issuance and recorded as "Make-whole dividend liability" in the Condensed Consolidated Balance Sheets. The fair value of these dividend liabilities, which are indexed to the Company's common stock, must be evaluated at each period end. The fair value measurements rely primarily on Company-specific inputs and the Company’s own assumptions. With the absence of observable inputs, the Company determined these recurring fair value measurements reside primarily within Level 3 of the fair value hierarchy. The fair value determination required forecasting stock price volatility, expected average annual return and conversion date. During the six months ended June 30, 2017 , the fair value of the make-whole liability decreased $0.25 million from the fair value at December 31, 2016 as a result of the conversion described below. As of March 31, 2017, a Preferred Series A holder had converted 104,785 shares of Series A Preferred Stock, and the related make whole dividend of $419,140 , which resulted in the issuance of 173,946,250 shares of common stock. At June 30, 2017 , there were 60,756 shares of Series A outstanding and the Company was entitled to redeem the outstanding Series A preferred shares for $0.5 million , plus a make-whole amount of $0.2 million , payable in cash or common shares. The fair value of the make-whole dividend liabilities for the Series A preferred shares, which approximates cash value, was $0.2 million as of June 30, 2017 . |
STOCKHOLDERS' DEFICIT
STOCKHOLDERS' DEFICIT | 6 Months Ended |
Jun. 30, 2017 | |
Equity [Abstract] | |
STOCKHOLDERS' DEFICIT | SERIES A PREFERRED STOCK In June 2013, the Company entered into a Securities Purchase Agreement with an investor to sell an aggregate of 750,000 shares of Series A Preferred Stock at a price of $8.00 per share, resulting in gross proceeds of $6,000,000 . This purchase agreement included warrants to purchase up to 13,125 shares of common stock of the Company. The transfer of cash and securities took place incrementally, the first closing occurring on June 17, 2013 with the transfer of 125,000 shares of Series A Preferred Stock and a warrant to purchase 2,187 shares of common stock for $1,000,000 . The final closings took place in August 2013, with the transfer of 625,000 shares of Series A Preferred Stock and a warrant to purchase 10,938 shares of common stock for $5,000,000 . Holders of Series A Preferred Stock are entitled to cumulative dividends at a rate of 8% per annum when and if declared by the Board of Directors in its sole discretion. The dividends may be paid in cash or in the form of common stock (valued at 10% below market price, but not to exceed the lowest closing price during the applicable measurement period), at the discretion of the Board of Directors. The dividend rate on the Series A Preferred Stock is indexed to the Company's stock price and subject to adjustment. In addition, the Series A Preferred Stock contains a make-whole provision whereby, conversion or redemption of the preferred stock within 4 years of issuance will require dividends for the full four year period to be paid by the Company in cash or common stock (valued at 10% below market price, but not to exceed the lowest closing price during the applicable measurement period). The Series A Preferred Stock may be converted into shares of common stock at the option of the Company if the closing price of the common stock exceeds $232 , as adjusted, for 20 consecutive trading days, or by the holder at any time. The Company has the right to redeem the Series A Preferred Stock at a price of $8.00 per share, plus any accrued and unpaid dividends, plus the make-whole amount (if applicable). At June 30, 2017 , the preferred shares were not eligible for conversion to common shares at the option of the Company. The holder of the preferred shares may convert to common shares at any time, at no cost, at a ratio of 1 preferred share into 1 common share (subject to standard ratable anti-dilution adjustments). Upon any conversion (whether at the option of the Company or the holder), the holder is entitled to receive any accrued but unpaid dividends and also any make-whole amount (if applicable). See Note 19. Make-Whole Dividend Liability. On October 6, 2016, the Series A Holder entered into an exchange agreement (the “Exchange Agreement”) with Adar Bays. Pursuant to the exchange agreement, beginning December 5, 2016, Adar Bays has the option to exchange, from time to time, all or any portion of the October 2016 Convertible Notes (see Note 17) for outstanding shares of Series A Preferred Stock from the Series A Holder. As of June 30, 2017 , Adar Bays had elected to exchange all outstanding October 2016 Convertible Notes, in accordance with the exchange agreement, resulting in the exchange of 104,785 shares of Series A Preferred Stock. As of June 30, 2017 , Adar Bays had also converted their 104,785 shares of Series A Preferred Stock, and the related make whole dividend, which resulted in the issuance of 173,946,250 shares of common stock. Except as otherwise required by law (or with respect to approval of certain actions), the Series A Preferred Stock shall have no voting rights. Upon any liquidation, dissolution or winding up of the Company, after payment or provision for payment of debts and other liabilities of the Company, the holders of Series A Preferred Stock shall be entitled to receive, pari passu with any distribution to the holders of common stock of the Company, an amount equal to $8.00 per share of Series A Preferred Stock plus any accrued and unpaid dividends. As of June 30, 2017 , there were 60,756 shares of Series A Preferred Stock outstanding. SERIES E PREFERRED STOCK AND THE COMMITTED EQUITY LINE Series E Preferred Stock On November 4, 2015, the Company entered into a securities purchase agreement with a private investor to issue 2,800 shares of Series E Preferred Stock in exchange for $2,800,000 . Shares of the Series E Preferred Stock (including the amount of any accrued and unpaid dividends thereon) are convertible, at the option of the holder, into common stock at a variable conversion price equal to 80% of the average of the two lowest VWAPs of the Company's common stock for the ten consecutive trading day period prior to the conversion date. If certain defined default events occur, the conversion price would thereafter be reduced (and only reduced), to equal 70% of the average of the two lowest VWAPs of the Company's common stock for the twenty consecutive trading day period prior to the conversion date. The private investor had available to them a new conversion price beginning on June 9, 2016 as a result of the Series H Preferred Stock transaction further described in Note 14. Shares of the Series E Preferred Stock are now convertible, at the option of the private investor, into common stock at a variable conversion price equal to 70% of (i) the lowest VWAP of our common stock for the ten consecutive trading day period prior to the conversion date or (ii) the lowest closing bid price of our common stock for the ten consecutive trading day period prior to the conversion date. The following table summarizes the conversion activity of the Series E Preferred Stock: Conversion Period Preferred Series E Shares Converted Value of Series E Preferred Shares (inclusive of accrued dividends) Common Shares Issued Q4 2015 478 $ 481,500 250,000 Q1 2016 1,220 1,239,436 1,132,000 Q2 2016 365 381,414 7,979,568 Q3 2016 523 548,896 21,973,747 Q4 2016 94 101,018 13,089,675 Q1 2017 15 16,248 8,289,962 Q2 2017 35 38,886 134,927,207 2,730 $ 2,807,398 187,642,159 Holders of the Series E Preferred Stock will be entitled to dividends in the amount of 7% per annum. During the six months ended June 30, 2017 , the holder converted dividends in the amount of $5,134 on the Series E Preferred Stock, resulting in the issuance of 14,135,538 shares of common stock. The Company has issued 18,000 shares of common stock to the private investor as a commitment fee relating to the Series E Preferred Stock. Costs associated with the Series E Preferred Stock, such as legal fees and commitment shares are capitalized and reported as deferred financing costs on the Condensed Consolidated Balance Sheets. The total gross debt issuance cost incurred by the Company related to the Series E Preferred Stock was $104,000 . These debt issuance costs will be recognized as additional interest expense over the life of the Series E Preferred Stock. At any time after March 31, 2016, the private investor has the option to redeem for cash all or any portion of the outstanding shares of the Series E Preferred Stock at a price per share equal to $1,250 plus any accrued but unpaid dividends thereon. At any time after the third anniversary of the date of the initial issuance of Series E Preferred Stock, the Company will have the option to redeem for cash all outstanding shares of the Series E Preferred Stock at a price per share equal to $1,250 plus any accrued but unpaid dividends thereon. The Company classified the Series E Preferred Stock as a liability pursuant to ASC 480 on the closing date due to the structure of the financing agreement, whereby the Company has an unconditional obligation that the Company may settle by issuing a variable number of common shares with a monetary value that is fixed and known at inception. There are 70 shares of Series E Preferred Stock outstanding, representing a value of $70,000 , as of June 30, 2017 . Pursuant to a number of factors outlined in ASC Topic 815, Derivatives and Hedging , the conversion option in the Series E Preferred Stock was deemed to include an embedded derivative that required bifurcation and separate accounting. As such, the Company ascertained the value of the conversion option as if separate from the convertible issuance and appropriately recorded that value as a derivative liability. At December 31, 2016 , the derivative liability associated with the Series E Preferred Stock was $141,000 . The derivative liability associated with the Series E Preferred Stock is subject to revaluation on a quarterly basis to reflect the market value change of the embedded conversion option. At March 31, 2017 and June 30, 2017 , the Company conducted a fair value assessment of the embedded derivative associated with the Series E Preferred Stock. As a result of the fair value assessment, the Company recorded a $40,016 loss as "Change in fair value of derivatives and gain/(loss) on extinguishment of liabilities, net" in the Condensed Consolidated Statements of Operations, for the three months ended June 30, 2017 . The net gain recorded for the six months ended June 30, 2017 was $19,358 , to properly reflect the fair value of the embedded derivative of $121,390 as of June 30, 2017 . The fair value measurements rely primarily on Company-specific inputs and the Company’s own assumptions. With the absence of observable inputs, the Company determined these recurring fair value measurements reside primarily within Level 3 of the fair value hierarchy. The derivative associated with the Series E Preferred Stock approximates management’s estimate of the fair value of the embedded derivative liability at June 30, 2017 based on using a Monte Carlo simulation following a Geometric Brownian Motion with the following assumptions: annual volatility of 70% , present value discount rate of 12% and dividend yield of 0% . The Committed Equity Line On November 10, 2015, the Company and the private investor entered into a committed equity line purchase agreement (the "CEL"). Under the terms and subject to the conditions of the CEL purchase agreement, at its option the Company has the right to sell to the private investor, and the private investor is obligated to purchase from the Company, up to $32.2 million of the Company’s common stock, subject to certain limitations, from time to time, over the 36 -month period commencing on December 18, 2015, the date that the registration statement was declared effective by the SEC. From time to time, the Company may direct the private investor, at its sole discretion and subject to certain conditions, to purchase an amount of shares of common stock up to the lesser of (i) $1,000,000 or (ii) 300% of the average daily trading volume of the Company’s common stock over the preceding ten trading day period. The per share purchase price for shares of common stock to be sold by the Company under the CEL purchase agreement shall be equal to 80% of the average of the two lowest VWAPs of the common stock for the ten consecutive trading day period prior to the purchase date. As of June 30, 2017 , the Company had directed the private investor to purchase 3,056,147 of common stock which resulted in the issuance of 1,368,000 shares of common stock The Company may not direct the private investor to purchase shares of common stock more frequently than once each ten business days. The Company’s sales of shares of common stock to the private investor under the CEL purchase agreement are limited to no more than the number of shares that would result in the beneficial ownership by the private investor and its affiliates, at any single point in time, of more than 9.99% of the Company’s then outstanding shares of common stock. As consideration for entering into the CEL purchase agreement, the Company agreed to issue to the private investor 132,000 shares of common stock (the “Commitment Shares”). The Commitment Shares were issued to the private investor commencing upon the date that the registration statement was declared effective by the SEC. SERIES F PREFERRED STOCK On January 19, 2016, the Company entered into a securities purchase agreement with a private investor for the sale of $7,000,000 of the Company’s newly designated Series F 7% Convertible Preferred Stock (the “Series F Preferred Stock”). On January 20, 2016, the Company sold and issued 7,000 shares of Series F Preferred Stock to the private investor. The aggregate purchase price of the Series F Preferred shares was $7,000,000 . On January 20, 2016, the private investor paid $500,000 to the Company. The remaining $6,500,000 was paid by the private investor to the Company in 14 weekly increments of $500,000 or $250,000 beginning January 25, 2016 and ending April 28, 2016. Shares of the Series F Preferred Stock (including the amount of any accrued and unpaid dividends thereon) are convertible, at the option of the holder, into common stock at a fixed conversion price equal to $5.00 per share. If certain defined default events occur, the conversion price would thereafter be reduced (and only reduced), to equal 70% of the average of the two lowest VWAPs of our common stock for the twenty consecutive trading day period prior to the conversion date. If requested by the private investor, the Company will make weekly redemptions of shares of Series F Preferred Stock (including any accrued and unpaid dividends thereon). If the redemption price is paid by the Company in cash, the number of shares to be redeemed in each weekly increment is 250 shares of Series F Preferred Stock, and the redemption price is a price per share equal to $1,250 plus any accrued but unpaid dividends thereon. The Company has the option to make such redemption payments in shares of common stock provided certain specified equity conditions are satisfied at the time of payment. The number of shares of common stock to be issued would be calculated using a per share price equal to 80% of the one lowest VWAP of our common stock for the ten consecutive trading day period prior to the payment date. For redemption payments made in shares of common stock, the Company will redeem either (i) 250 shares of Series F Preferred Stock or (ii) such greater number of shares of Series F Preferred Stock (and also including any accrued and unpaid dividends) that would result upon redemption in the issuance of a number of shares of common stock equal to 12% of the aggregate composite trading volume for the Company’s common stock during the preceding calendar week. The private investor had available to them a new conversion price beginning on June 9, 2016 as a result of the Series H Preferred Stock transaction further described in Note 14. Shares of the Series F Preferred Stock are now convertible, at the option of the private investor, into common stock at a variable conversion price equal to 70% of (i) the lowest VWAP of our common stock for the ten consecutive trading day period prior to the conversion date or (ii) the lowest closing bid price of our common stock for the ten consecutive trading day period prior to the conversion date. Amendment of Outstanding Series F Preferred Stock Conversion Price On October 5, 2016, the Company filed a Certificate of Amendment to the Certificate of Designations of Preferences, Rights and Limitations of Series F Preferred Stock with the Secretary of State of the State of Delaware. The Certificate of Amendment amends the conversion price at which the Series F Preferred Stock can be converted into shares of common stock. The Company had approximately $336,000 of Series F Preferred Stock remaining outstanding as of October 5, 2016. As amended, the conversion price will now be equal to the lowest of (i) 50% of the lowest weighted average price (“VWAP”) of our common stock for the ten consecutive trading day period prior to the conversion date or (ii) 50% of the lowest closing bid price of our common stock for the ten consecutive trading day period prior to the conversion date. If certain “Triggering Events” specified in the terms of the Series F Preferred Stock occur, then the conversion price of the Series F Preferred Stock shall be thereafter reduced, and only reduced, to equal 50% of the average of the lowest traded price of the common stock for the twenty consecutive trading day period prior to the conversion date. The following table summarizes the conversion activity of the Series F Preferred Stock: Conversion Period Preferred Series F Shares Converted Value of Series F Preferred Shares (inclusive of accrued dividends) Common Shares Issued Q1 2016 2,168 $ 2,188,298 2,183,992 Q2 2016 3,234 3,300,931 6,649,741 Q3 2016 1,262 1,315,743 81,917,364 Q4 2016 176 185,118 27,276,005 6,840 $ 6,990,090 118,027,102 Holders of the Series F Preferred Stock are entitled to dividends in the amount of 7% per annum. During the quarter ended June 30, 2017 , the Company did not pay any dividends or issue any shares in relation to accrued dividends. The Company classified the Series F Preferred Stock as a liability pursuant to ASC 480 on the closing date due to the structure of the financing agreement, whereby the Company has an unconditional obligation that the Company may settle by issuing a variable number of common shares with a monetary value that is fixed and known at inception. There are 160 shares of Series F Preferred Stock, representing a value of $160,000 , outstanding as of June 30, 2017 . Pursuant to a number of factors outlined in ASC Topic 815, Derivatives and Hedging , the conversion option in the Series F Preferred Stock was deemed to include an embedded derivative that required bifurcation and separate accounting. As such, the Company ascertained the value of the conversion option as if separate from the convertible issuance and appropriately recorded that value as a derivative liability. At closing, a derivative liability and a corresponding debt discount in the amount of $1,666,000 were recorded. The debt discount will be charged to interest expense ratably over the life of the Series F Preferred Stock. The derivative liability associated with the Series F Preferred Stock is subject to revaluation on a quarterly basis to reflect the market value change of the embedded conversion option. At June 30, 2017 , the Company conducted a fair value assessment of the embedded derivative associated with the Series F Preferred Stock. As a result of the fair value assessment, the Company recorded a $209,613 loss as "Change in fair value of derivatives and gain/(loss) on extinguishment of liabilities, net" in the Condensed Consolidated Statements of Operations, for the three months ended June 30, 2017 . The net loss recorded for the six months ended June 30, 2017 was $85,557 , to properly reflect the fair value of the embedded derivative of $340,881 as of June 30, 2017 . The fair value measurements rely primarily on Company-specific inputs and the Company’s own assumptions. With the absence of observable inputs, the Company determined these recurring fair value measurements reside primarily within Level 3 of the fair value hierarchy. The derivative associated with the Series F Preferred Stock approximates management’s estimate of the fair value of the embedded derivative liability at June 30, 2017 based on using a Monte Carlo simulation following a Geometric Brownian Motion with the following assumptions: annual volatility of 66% , present value discount rate of 12% and dividend yield of 0% . SERIES G PREFERRED STOCK On April 29, 2016, the Company entered into a securities purchase agreement with private investors to issue 2,000 shares of Series G Preferred Stock for $2,000,000 . At Closing, the Company issued a total of 500 shares of Series G Preferred Stock to the private investors in exchange for $500,000 . The Company issued an additional 1,500 shares of Series G Preferred Stock to the private investors during the months of May and June 2016, which resulted in additional gross proceeds to the Company of $1,500,000 . Holders of the Series G Preferred Stock will be entitled to dividends in the amount of 10% per annum. One year after issuance, the Company is required to redeem for cash all or any portion of the outstanding shares of the Series G Preferred Stock at a price per share equal to $1,000 plus any accrued but unpaid dividends thereon. Assignment of Series G Preferred Stock Beginning September 19, 2016, the two private investors (the “Series G Sellers”) entered into assignment agreements with accredited investors (the “Series G Purchasers”). Under the terms of the assignment agreements, the Series G Sellers may sell all 2,000 outstanding shares of Series G Preferred Stock to the Series G Purchasers for a purchase price of $1,000 per share of Series G Preferred Stock (plus the amount of any accrued and unpaid dividends thereon). As of June 30, 2017 , the Series G Sellers had sold 1,835 shares of Series G Preferred Stock, representing a value of $1,835,000 , to the Series G Purchasers. On September 21, 2016, the Company filed a Certificate of Amendment to the Certificate of Designations of Preferences, Rights and Limitations of Series G Preferred Stock with the Secretary of State of the State of Delaware. The Certificate of Amendment amends the conversion price at which the Series G Preferred Stock can be converted into shares of common stock. Shares of the Series G Preferred Stock (including the amount of any accrued and unpaid dividends thereon) were previously convertible at the option of the private investors into common stock at a fixed conversion price of $1.00 per share. As amended, the conversion price is equal to the lowest of (i) $0.045 , (ii) 70% of the lowest volume weighted average price of the Company’s common stock for the ten consecutive trading day period prior to the conversion date or (iii) 70% of the lowest closing bid price of the Company’s common stock for the ten consecutive trading day period prior to the conversion date. The following table summarizes the conversion activity of the Series G Preferred Stock: Conversion Period Preferred Series G Shares Converted Value of Series G Preferred Shares (inclusive of accrued dividends) Common Shares Issued Q4 2016 892 929,895 245,726,283 Q1 2017 372 397,970 327,718,386 Q2 2017 526 575,096 1,337,776,821 1,790 $ 1,902,961 1,911,221,490 Holders of the Series G Preferred Stock will be entitled to dividends in the amount of 10% per annum. During the six months ended June 30, 2017 , the Company converted dividends in the amount of $49,096 on the Series G Preferred Stock, resulting in the issuance of 114,854,745 shares of common stock. On June 29, and June 30, 2017, the Company redeemed the remaining 210 outstanding shares, and the related accrued dividends for cash payments in the amount of $232,440 . Due to international wire cut off times, $182,715 of that amount was not actually paid until July 3, 2017, and the resulting liability is included in accounts payable on the Condensed Consolidated Balance Sheet for the six months ended June 30, 2017 . As of June 30, 2017 , all Series G Preferred Stock Shares, and the related accrued dividends, had either been converted or redeemed. Pursuant to a number of factors outlined in ASC Topic 815, Derivatives and Hedging , the conversion option in the Series G Preferred Stock were deemed to include an embedded derivative that required bifurcation and separate accounting. As such, the Company ascertained the value of the conversion option as if separate from the convertible issuance and appropriately recorded that value as a derivative liability. At December 31, 2016 the fair value of the derivative liability was $361,831 and was $219,347 prior to the redemption. At June 30, 2017 , the Company recorded the reduction of the remaining embedded derivative associated with the Series G Preferred Stock of $219,347 as a gain in the "Change in fair value of derivatives and gain/(loss) on extinguishment of liabilities, net" in the Condensed Consolidated Statements of Operations for the three months ended June 30, 2017 . The net gain recorded for the six months ended June 30, 2017 was $361,831 , to properly reflect the elimination of the embedded derivative as of June 30, 2017 . Conversion Inducement and Disposal Price Guarantee On January 17, 2017, one of the Series G Preferred Stock holders (“Holder A”) requested a conversion of 100 shares of Series G Preferred Stock, $100,000 face value, including accrued dividends of $6,416.67 for a total conversion value of $106,416.67 into common stock of the Company at a conversion price of $0.00112 which would have resulted in the issuance of 95,014,884 shares of common stock. At the date of the request the Company did not have enough authorized shares to execute the conversion request and therefore entered into an agreement with Holder A to honor the conversion price of $0.00112 and issue the 95,014,884 shares of common stock upon the increase of the authorized common shares of the Company. The actual conversion occurred on March 17, 2017 which would have been a conversion price of $0.00168 . In conjunction with the conversion price agreement the Company agreed to provide a minimum disposal price guarantee to the Holder A of $0.003 on the tranche of 95,014,884 shares. If Holder A fails to dispose of these shares at $0.003 or above the Company will issue additional shares of common stock to make up the difference between the minimum disposal price of $0.003 and the price that Holder A disposed of the shares. During the six months ended June 30, 2017 , in accordance with ASC 470-20-40-16, the Company recorded expense of $79,179 related to the conversion inducement and expense of $134,566 related to the disposal price guarantee. The amount related to the disposal price guarantee was also recorded as a corresponding liability in the Condensed Consolidated Balance Sheet as of June 30, 2017 . JULY 2016 CONVERTIBLE NOTES Series H Preferred Stock On June 9, 2016, the Company entered into a securities purchase agreement with a private investor to issue 2,500 shares of Series H Preferred Stock for $2,500,000 . The Company received gross proceeds of $250,000 at Closing. Additional gross proceeds of $580,000 were received by the Company through July 7, 2016. The Company agreed to exchange outstanding Series H Preferred Stock for Senior Secured Convertible Notes (“July 2016 Notes”) on July 13, 2016. At the date of the exchange, the Company had sold and issued 830 shares of Series H Preferred Stock to the private investor in exchange for $830,000 of gross proceeds. Refer to the section below for details of the exchange. July 2016 Convertible Notes On July 13, 2016, the Company entered into a securities purchase agreement (the “Note SPA”) with the private investor for the private placement of up to $2,082,600 of the Company’s 4% Original Issue Discount Senior Secured Convertible Promissory Notes (the “July 2016 Convertible Notes”). On July 13, 2016, the Company sold and issued $364,000 principal amount of notes to the investor in exchange for $350,000 of gross proceeds. The Company sold and issued the remaining $1,718,600 principal amount of July 2016 Convertible Notes to the investor in exchange for $1,650,000 of gross proceeds in weekly tranches between July and September 2016. The Company and the private investor also entered into an Exchange Agreement dated July 13, 2016 (the “Exchange Agreement”). Under the terms of the Exchange Agreement, the outstanding shares of Series H Preferred Stock (approximately $833,000 of capital and accrued dividends) were canceled. In exchange, the Company issued to the private investor approximately $866,000 of July 2016 Convertible Notes. There were 830 shares of Series H Preferred Stock outstanding as of the date of the Exchange Agreement. Unless earlier converted or prepaid, all of the July 2016 Convertible Notes will mature July 13, 2017 (the “Maturity Date”). The July 2016 Convertible Notes bear interest at a rate of 10% per annum, subject to increase to 24% per annum upon the occurrence and continuance of an event of default. Principal on the July 2016 Convertible Notes is payable on the Maturity Date. Interest on the July 2016 Convertible Notes is payable quarterly. Principal and interest are payable in cash or, if specified equity conditions are met, shares of Common Stock. The July 2016 Convertible Notes are secured by a security interest in substantially all of the Company’s assets. The subsidiaries of the Company have guaranteed the Company’s obligations under the July 2016 Convertible Notes. The July 2016 Convertible Notes contain standard and customary events of default including but not limited to: (i) failure to make payments when due under the July 2016 Convertible Notes; (ii) bankruptcy or insolvency of the Company; and (iii) failure to file a registration statement by October 9, 2016. On October 10, 2016 the Company had not been successful in filing the registration statement triggering an event of default per the July 2016 Note Agreement. Upon default the interest rate increases to 24% per annum and the holder of the July 2016 Notes has the option to accelerate the Note and demand cash payment of the Mandatory Default Amount consisting of a 25% premium of the principal balance plus any accrued and unpaid interest. The Company began accruing interest at the rate of 24% on October 10, 2016. Forbearance and Settlement Agreement on July 2016 Convertible Notes On May 5, 2017, the Company entered into a Forbearance and Settlement Agreement ("Forbearance Agreement") with a holder of certain secured convertible notes that are in default due to various triggering events. The holder and the Company agreed to forbear from taking any action provided for under the secured convertible notes in exchange for the following terms provided in this agreement: • The Company agreed to redeem for cash all secured convertible notes of the Company held by the holder no later than September 1, 2017 . • The Company affirmed that the current balance of owed principal and accrued and unpaid interest to the holder is $1,790,214 as of May 2, 2017. • The redemption price for such secured convertible notes shall be 120% (if redeemed on or prior to August 15, 2017) or 125% (if redeemed after August 15, 2017) of the then outstanding principal, plus any accrued and unpaid interest. • During the month of May 2017, the Holder agreed to limit its conversions of outstanding Company secured convertible notes to $50,000 per calendar week of principal/interest. • During the months of June, July and August 2017, the holder agreed to limit its conversions of outstanding Company secured convertible notes to $75,000 per calendar week of principal/interest. • During the months of May, June, July and August 2017, the holder agreed that all outstanding Company secured convertible notes shall bear interest at the normal stated rate of 10% , rather than default rate of 24% . • All conversions during the months of May, June, July and August 2017 will be at the “triggering event” discount conversion price as stated in the secured convertible notes, and will continue at the “triggering event” discount price until, if and when the notes are redeemed. • Should the Company fail to redeem for cash all secured convertible notes on or before September 1, 2017 , default interest and normal stated interest will accrue from the date of execution of this agreement. All principal and accrued interest on the July 2016 Convertible Notes are convertible at any time, in whole or in part, at the option of the private investor, into shares of Common Stock at a variable conversion price equal to the lowest of (i) $0.045 (the “Fixed Conversion Price”), (ii) 70% of the lowest volume weighted average price (“VWAP”) of the Company's common stock for the ten consecutive trading day period prior to the conversion date or (iii) 70% of the lowest closing bid price of the Company's common stock for the ten consecutive trading day period prior to the conversion date. If certain defined triggering events occur, the conversion price would thereafter be reduced (and only reduced), to equal 60% of the lower of (i) the lowest closing bid price of the Company's common stock for the thirty consecutive trading day period prior to the conversion date or (ii) the lowest VWAP of the the Company's common stock for the thirty consecutive trading day period prior to the conversion date. In addition, on the 90th day and also on the 180th day from the date of the Note SPA, the private investor may reset the Fixed Conversion Price to thereafter be equal to the VWAP of the Common Stock for such day or if such 90th or 180th day is not a trading day, then the |
EQUITY PLANS AND SHARE-BASED CO
EQUITY PLANS AND SHARE-BASED COMPENSATION | 6 Months Ended |
Jun. 30, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
EQUITY PLANS AND SHARE-BASED COMPENSATION | EQUITY PLANS AND SHARE-BASED COMPENSATION Share-Based Compensation: The Company measures share-based compensation cost at the grant date based on the fair value of the award and recognizes this cost as an expense over the grant recipients’ requisite service periods for all awards made to employees, officers, directors and consultants. The share-based compensation expense recognized in the Condensed Consolidated Statements of Operations was as follows: For the three months ended June 30, For the six months ended June 30, 2017 2016 2017 2016 Share-based compensation cost included in: Research and development $ 287 $ 79,595 $ 16,898 $ 125,284 Selling, general and administrative 15,887 260,547 79,013 432,696 Total share-based compensation cost $ 16,174 $ 340,142 $ 95,911 $ 557,980 The following table presents share-based compensation expense by type: For the three months ended June 30, For the six months ended June 30, 2017 2016 2017 2016 Type of Award: Stock Options $ 16,174 $ 141,574 $ 69,582 $ 236,958 Restricted Stock Units and Awards — 198,568 26,329 321,022 Total share-based compensation cost $ 16,174 $ 340,142 $ 95,911 $ 557,980 Stock Options: The Company recognized share-based compensation expense for stock options of $70,000 to officers, directors and employees for the six months ended June 30, 2017 related to stock option awards ultimately expected to vest. The weighted average estimated fair value of employee stock options granted for the six months ended June 30, 2017 and 2016 was $0.00 and $1.20 per share, respectively. Fair value was calculated using the Black-Scholes Model with the following assumptions: For the six months ended June 30, 2017 2016 Expected volatility 114% 115% Risk free interest rate 1% 1% Expected dividends — — Expected life (in years) 6.0 5.8 Expected volatility is based on the historical volatility of the Company’s stock. The risk-free rate of return is based on the yield of U.S. Treasury bonds with a maturity equal to the expected term of the award. Historical data is used to estimate forfeitures within the Company’s valuation model. The Company’s expected life of stock option awards is derived from historical experience and represents the period of time that awards are expected to be outstanding. As of June 30, 2017 , total compensation cost related to non-vested stock options not yet recognized was $52,000 which is expected to be recognized over a weighted average period of approximately 1.5 years, 67,007 shares were vested or expected to vest in the future at a weighted average exercise price of $39.97 , and 193,824 shares remained available for future grants under the Option Plan. Restricted Stock: In addition to the stock options discussed above, the Company recognized share-based compensation expense related to restricted stock grants of $26,000 for the six months ended June 30, 2017 . The weighted average estimated fair value of restricted stock grants for the six months ended June 30, 2017 and 2016 was $0.00 and $2.00 per share, respectively. As of June 30, 2017 , there was no unrecognized share-based compensation expense from unvested restricted stock, 0 shares were expected to vest in the future, and, 518,388 shares remained available for future grants under the Restricted Stock Plan. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 6 Months Ended |
Jun. 30, 2017 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | RELATED PARTY TRANSACTIONS On August 29, 2016, the Company entered into a note purchase agreement with Tertius Financial Group Pte. Ltd. ("TFG”) for the private placement of $330,000 of the Company’s original issue discount notes with an original maturity date of November 26, 2016. The notes bear interest of 6% per annum and principal and interest on the notes are payable upon maturity. The notes are unsecured and not convertible into equity shares of the Company. On December 6, 2016, the Company issued a new $600,000 original issue discount note to TFG in exchange for (i) $200,000 of additional gross proceeds and (ii) cancellation of the existing outstanding $330,000 note. The new TFG note bears interest at a rate of 6% per annum and matures on December 31, 2017. Principal and interest on the new TFG note is payable at maturity. Following the transaction, the outstanding balance of the new note was $602,000 (including accrued and unpaid interest) with a discount of $60,000 as of December 31, 2016 . On January 19, 2017, the Company issued 333,333,333 shares of unregistered common stock in a private placement to TFG pursuant to a Securities Purchase Agreement (the “SPA”). Pursuant to the SPA, the Company issued the 333,333,333 shares to TFG in exchange for cancellation of its $600,000 promissory note (including accrued interest of approximately $4,340 ) that was issued by the Company on December 6, 2016. The SPA does not provide any registration rights for the shares issued to TFG. TFG is a Singapore based entity controlled and 50% owned by Ascent’s President & CEO, Victor Lee, and owns less than 5% of the Company's outstanding shares at June 30, 2017 . All related party transactions were approved by our independent board of directors. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Jun. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES The Company is subject to various legal proceedings, both asserted and unasserted, that arise in the ordinary course of business. The Company cannot predict the ultimate outcome of such legal proceedings or in certain instances provide reasonable ranges of potential losses. However, as of the date of this report, the Company believes that none of these claims will have a material adverse effect on its consolidated financial position or results of operations. In the event of unexpected subsequent developments and given the inherent unpredictability of these legal proceedings, there can be no assurance that the Company’s assessment of any claim will reflect the ultimate outcome, and an adverse outcome in certain matters could, from time to time, have a material adverse effect on the Company’s consolidated financial position or results of operations in particular quarterly or annual periods. On October 21, 2011, the Company was notified that a complaint claiming $3.0 million for an investment banking fee (the “Lawsuit”) was filed by Jefferies & Company, Inc. (“Jefferies”) against the Company in New York State Supreme Court in the County of New York. In December 2010, Ascent and Jefferies entered into an engagement agreement (the “Fee Agreement”) pursuant to which Jefferies was hired to act as the Company's financial advisor in relation to certain potential transactions. In addition, Jefferies claimed an award for attorney's fees and prejudgment interest in the approximate amount of $1.2 million . On April 16, 2014, the parties settled the lawsuit where the Company agreed to pay Jefferies a total of $2.0 million in equal installments over 40 months. The Company paid $150,000 during the six months ended June 30, 2017 . The Company records a liability in its financial statements for costs related to claims, including settlements and judgments, where the Company has assessed that a loss is probable and an amount can be reasonably estimated. The Company accrued $ 1.7 million , the net present value of the $2.0 million settlement, as of December 31, 2013. As of June 30, 2017 , $49,620 was the remaining accrued litigation settlement, recorded as a current liability in the Condensed Consolidated Balance Sheets. As of June 30, 2017 , the Company has recorded an accrual of $143,000 , on the statement of operations, for an estimated settlement with a former EnerPlex customer regarding a requested return of product after the warranty period. While negotiations are ongoing, the Company does not anticipate any further expense to be incurred. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 6 Months Ended |
Jun. 30, 2017 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | SUBSEQUENT EVENTS Update on Series K Preferred Stock Transactions As of August 14, 2017 , an additional 3,750 shares of Series K Preferred Stock had been issued in exchange for $3,750,000 in proceeds. There are 1,800 outstanding shares of Series K Preferred Stock, as of the date of this report, representing a value of $1,800,000 . On July 28, 2017, 3,000 shares of Series K Preferred Stock was converted into 750,000,000 shares of the Company's common stock. Following this transaction, and as of the date of this report, the Series K investor owns 17.99% of the Company's outstanding common stock. Update on July 2016 Convertible Notes Redemption As of August 14, 2017 , additional cash payments of $496,600 and $403,400 had been made on the outstanding principal and interest of the July 2016 Convertible Notes, respectively. As of the date of this report, the principal of the July 2016 Convertible Notes has either been converted or redeemed in full. Update on Series I Exchange Convertible Notes As of August 14, 2017 , the Series I Exchange Convertible Notes had been either converted or redeemed in full. On July 26, 2017 , the investor converted $20,000 in principal and on July 31, 2017 , the investor converted $98,536 in principal and $10,268 in interest. These conversions resulted in the aggregate issuance of 306,675,548 shares of the Company's common stock. Also on July 31, 2017 , the Company paid the remaining accrued interest of $5,255 in cash. Update on Series J-1 Preferred Stock On August 10, 2017 , the Company entered into a redemption agreement with the holder of the Series J-1 Preferred Stock. In accordance with this agreement, the holder surrendered $700,000 face value of Series J-1 Preferred Stock and $55,305.55 in accrued dividends in exchange for 500,000,000 shares of the Company's common stock and a warrant to purchase 250,000,000 shares of the Company's common stock. The warrant has a fixed exercise price of $0.003 and a term of one year. The warrant may not be exercised if, after giving effect to the exercise, the holder would beneficially own in excess of 9.99% of the Company's outstanding shares of Common Stock. Update on payments on Promissory Notes As of August 14, 2017 , additional interest payments of $50,581 had been made on promissory notes issued between December 2016 and April 2017. As of August 14, 2017 , principal payments of $20,150 and interest payments of $41,655 , had been made on the Promissory Note dated January 17, 2017. Settlement Agreement with Consultant On July 24, 2017 , the Company entered into a settlement agreement with a consultant that had been retained by the Company in July 2016. The Company settled all of its obligations with the consultant and canceled the consulting agreement. Under the settlement, the Company will pay the consultant $20,000 in cash and will issue a warrant to the consultant for 250,000,000 shares of common stock. The warrant has a fixed exercise price of $0.004 and a term of one year. The warrant may not be exercised if, after giving effect to the exercise, the holder would beneficially own in excess of 9.99% of the Company's outstanding shares of Common Stock. |
SUMMARY OF SIGNIFICANT ACCOUN30
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Jun. 30, 2017 | |
Accounting Policies [Abstract] | |
Basis of presentation | The accompanying condensed consolidated financial statements have been derived from the accounting records of Ascent Solar Technologies, Inc., Ascent Solar (Asia) Pte. Ltd., and Ascent Solar (Shenzhen) Co., Ltd. (collectively, "the Company") as of June 30, 2017 and December 31, 2016 , and the results of operations for the three and six months ended June 30, 2017 and 2016 . Ascent Solar (Shenzhen) Co., Ltd. is wholly owned by Ascent Solar (Asia) Pte. Ltd., which is wholly owned by Ascent Solar Technologies, Inc. All significant inter-company balances and transactions have been eliminated in the accompanying condensed consolidated financial statements. The accompanying, unaudited, condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") for interim financial information and in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, these interim financial statements do not include all of the information and footnotes typically found in U.S. GAAP audited annual financial statements. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair statement have been included. The Condensed Consolidated Balance Sheet at December 31, 2016 has been derived from the audited financial statements as of that date but does not include all of the information and footnotes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 . These condensed consolidated financial statements and notes should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 . The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Operating results for the six months ended June 30, 2017 are not necessarily indicative of the results that may be expected for the year ending December 31, 2017 . |
Recent accounting pronouncements | In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) . The update will establish a comprehensive revenue recognition standard for virtually all industries in GAAP. ASU 2014-09 will change the amount and timing of revenue and cost recognition, implementation, disclosures and documentation. In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of Effective Date. The amendments in ASU 2015-14 defer the effective date of ASU 2014-09 for all entities by one year. ASU 2014-09 is now effective for the Company in fiscal year 2018. The Company is researching whether the adoption of ASU 2014-09 will have a material effect on the Company’s consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) . ASU 2016-02 requires lessees to recognize all leases, including operating leases, on the balance sheet as a lease asset or lease liability, unless the lease is a short-term lease. ASU 2016-02 also requires additional disclosures regarding leasing arrangements. ASU 2016-02 is effective for interim periods and fiscal years beginning after December 15, 2018, and early application is permitted. The Company is currently evaluating the impact, if any, that the adoption of this guidance will have on its consolidated financial statements. In May 2017, the FASB issued ASU No. 2017-09, Compensation - Stock Compensation (Topic 718) . ASU 2017-09 provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. ASU 2017-09 is effective for interim periods and fiscal years beginning after December 15, 2017, and early application is permitted. The Company is currently evaluating the impact, if any, that the adoption of this guidance will have on its consolidated financial statements. In July 2017, the FASB issued ASU No. 2017-11 Part I, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480), Derivatives and Hedging (Topic 815) . ASU 2017-11 Part I changes the classification analysis of certain equity-linked financial instruments with down round features. ASU 2017-11 Part I is effective, for public business entities, for interim periods and fiscal years beginning after December 15, 2018, and early application is permitted. The Company is currently evaluating the impact, if any, that the adoption of this guidance will have on its consolidated financial statements. |
PROPERTY, PLANT AND EQUIPMENT (
PROPERTY, PLANT AND EQUIPMENT (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Property, Plant and Equipment [Abstract] | |
Property, plant and equipment | The following table summarizes property, plant and equipment as of June 30, 2017 and December 31, 2016 : As of June 30, As of December 31, 2017 2016 Building $ 5,828,960 $ 5,828,960 Furniture, fixtures, computer hardware and computer software 489,421 489,421 Manufacturing machinery and equipment 30,300,391 30,300,391 Net depreciable property, plant and equipment 36,618,772 36,618,772 Manufacturing machinery and equipment in progress 20,688 20,688 Property, plant and equipment 36,639,460 36,639,460 Less: Accumulated depreciation and amortization (31,606,565 ) (30,983,448 ) Net property, plant and equipment $ 5,032,895 $ 5,656,012 |
INVENTORIES (Tables)
INVENTORIES (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Inventory Disclosure [Abstract] | |
Schedule of inventory, current | Inventories consisted of the following at June 30, 2017 and December 31, 2016 : As of June 30, As of December 31, 2017 2016 Raw materials $ 770,448 $ 832,806 Work in process 45,413 635,130 Finished goods 380,001 1,101,880 Total $ 1,195,862 $ 2,569,816 |
DEBT (Tables)
DEBT (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Debt Disclosure [Abstract] | |
Schedule of maturities of long-term debt | As of June 30, 2017 , remaining future principal payments on long-term debt are due as follows: 2017 $ 190,121 2018 343,395 2019 366,757 2020 391,709 2021 418,358 Thereafter 3,941,599 $ 5,651,939 |
SERIES E PREFERRED STOCK AND 34
SERIES E PREFERRED STOCK AND THE COMMITTED EQUITY LINE (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Equity [Abstract] | |
Preferred stock conversion activity | The following table summarizes the conversion activity of the Series E Preferred Stock: Conversion Period Preferred Series E Shares Converted Value of Series E Preferred Shares (inclusive of accrued dividends) Common Shares Issued Q4 2015 478 $ 481,500 250,000 Q1 2016 1,220 1,239,436 1,132,000 Q2 2016 365 381,414 7,979,568 Q3 2016 523 548,896 21,973,747 Q4 2016 94 101,018 13,089,675 Q1 2017 15 16,248 8,289,962 Q2 2017 35 38,886 134,927,207 2,730 $ 2,807,398 187,642,159 The following table summarizes the conversion activity of the Series F Preferred Stock: Conversion Period Preferred Series F Shares Converted Value of Series F Preferred Shares (inclusive of accrued dividends) Common Shares Issued Q1 2016 2,168 $ 2,188,298 2,183,992 Q2 2016 3,234 3,300,931 6,649,741 Q3 2016 1,262 1,315,743 81,917,364 Q4 2016 176 185,118 27,276,005 6,840 $ 6,990,090 118,027,102 The following table summarizes the conversion activity of the Series G Preferred Stock: Conversion Period Preferred Series G Shares Converted Value of Series G Preferred Shares (inclusive of accrued dividends) Common Shares Issued Q4 2016 892 929,895 245,726,283 Q1 2017 372 397,970 327,718,386 Q2 2017 526 575,096 1,337,776,821 1,790 $ 1,902,961 1,911,221,490 The following table summarizes the conversion activity of Series K Preferred Stock: Conversion Period Preferred Series K Shares Converted Value of Series K Preferred Shares Common Shares Issued Q2 2017 3,200 $ 3,200,000 800,000,000 3,200 $ 3,200,000 800,000,000 |
SERIES F PREFERRED STOCK (Table
SERIES F PREFERRED STOCK (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Equity [Abstract] | |
Preferred stock conversion activity | The following table summarizes the conversion activity of the Series E Preferred Stock: Conversion Period Preferred Series E Shares Converted Value of Series E Preferred Shares (inclusive of accrued dividends) Common Shares Issued Q4 2015 478 $ 481,500 250,000 Q1 2016 1,220 1,239,436 1,132,000 Q2 2016 365 381,414 7,979,568 Q3 2016 523 548,896 21,973,747 Q4 2016 94 101,018 13,089,675 Q1 2017 15 16,248 8,289,962 Q2 2017 35 38,886 134,927,207 2,730 $ 2,807,398 187,642,159 The following table summarizes the conversion activity of the Series F Preferred Stock: Conversion Period Preferred Series F Shares Converted Value of Series F Preferred Shares (inclusive of accrued dividends) Common Shares Issued Q1 2016 2,168 $ 2,188,298 2,183,992 Q2 2016 3,234 3,300,931 6,649,741 Q3 2016 1,262 1,315,743 81,917,364 Q4 2016 176 185,118 27,276,005 6,840 $ 6,990,090 118,027,102 The following table summarizes the conversion activity of the Series G Preferred Stock: Conversion Period Preferred Series G Shares Converted Value of Series G Preferred Shares (inclusive of accrued dividends) Common Shares Issued Q4 2016 892 929,895 245,726,283 Q1 2017 372 397,970 327,718,386 Q2 2017 526 575,096 1,337,776,821 1,790 $ 1,902,961 1,911,221,490 The following table summarizes the conversion activity of Series K Preferred Stock: Conversion Period Preferred Series K Shares Converted Value of Series K Preferred Shares Common Shares Issued Q2 2017 3,200 $ 3,200,000 800,000,000 3,200 $ 3,200,000 800,000,000 |
SERIES G PREFERRED STOCK SERIES
SERIES G PREFERRED STOCK SERIES G PREFERRED STOCK (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Equity [Abstract] | |
Preferred stock conversion activity | The following table summarizes the conversion activity of the Series E Preferred Stock: Conversion Period Preferred Series E Shares Converted Value of Series E Preferred Shares (inclusive of accrued dividends) Common Shares Issued Q4 2015 478 $ 481,500 250,000 Q1 2016 1,220 1,239,436 1,132,000 Q2 2016 365 381,414 7,979,568 Q3 2016 523 548,896 21,973,747 Q4 2016 94 101,018 13,089,675 Q1 2017 15 16,248 8,289,962 Q2 2017 35 38,886 134,927,207 2,730 $ 2,807,398 187,642,159 The following table summarizes the conversion activity of the Series F Preferred Stock: Conversion Period Preferred Series F Shares Converted Value of Series F Preferred Shares (inclusive of accrued dividends) Common Shares Issued Q1 2016 2,168 $ 2,188,298 2,183,992 Q2 2016 3,234 3,300,931 6,649,741 Q3 2016 1,262 1,315,743 81,917,364 Q4 2016 176 185,118 27,276,005 6,840 $ 6,990,090 118,027,102 The following table summarizes the conversion activity of the Series G Preferred Stock: Conversion Period Preferred Series G Shares Converted Value of Series G Preferred Shares (inclusive of accrued dividends) Common Shares Issued Q4 2016 892 929,895 245,726,283 Q1 2017 372 397,970 327,718,386 Q2 2017 526 575,096 1,337,776,821 1,790 $ 1,902,961 1,911,221,490 The following table summarizes the conversion activity of Series K Preferred Stock: Conversion Period Preferred Series K Shares Converted Value of Series K Preferred Shares Common Shares Issued Q2 2017 3,200 $ 3,200,000 800,000,000 3,200 $ 3,200,000 800,000,000 |
SERIES H PREFERRED STOCK AND 37
SERIES H PREFERRED STOCK AND CONVERTIBLE NOTES (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Equity [Abstract] | |
Convertible notes conversion activity | The following table summarizes the conversion activity on the principal of the July 2106 Convertible Notes: Conversion Period July 2016 Convertible Notes Converted (exclusive of interest) Common Shares Issued Q4 2016 $ 152,460 64,000,000 Q1 2017 1,017,732 959,704,543 Q2 2017 682,235 1,865,043,998 $ 1,852,427 2,888,748,541 The following table summarizes the conversion activity of the Exchange Convertible Notes: Conversion Period Exchange Convertible Notes Converted Common Shares Issued Q3 2016 $ 15,000 1,470,588 Q4 2016 91,563 13,346,274 Q1 2017 70,000 50,503,662 Q2 2017 37,535 86,987,428 $ 214,098 152,307,952 |
SERIES I PREFERRED STOCK AND 38
SERIES I PREFERRED STOCK AND EXCHANGE CONVERTIBLE NOTES (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Equity [Abstract] | |
Convertible notes conversion activity | The following table summarizes the conversion activity on the principal of the July 2106 Convertible Notes: Conversion Period July 2016 Convertible Notes Converted (exclusive of interest) Common Shares Issued Q4 2016 $ 152,460 64,000,000 Q1 2017 1,017,732 959,704,543 Q2 2017 682,235 1,865,043,998 $ 1,852,427 2,888,748,541 The following table summarizes the conversion activity of the Exchange Convertible Notes: Conversion Period Exchange Convertible Notes Converted Common Shares Issued Q3 2016 $ 15,000 1,470,588 Q4 2016 91,563 13,346,274 Q1 2017 70,000 50,503,662 Q2 2017 37,535 86,987,428 $ 214,098 152,307,952 |
SERIES K PREFERRED STOCK (Table
SERIES K PREFERRED STOCK (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Equity [Abstract] | |
Preferred stock schedule of closings and proceeds received | The following summarizes the closings and proceeds received as of June 30, 2017 : Closing Period Preferred Series K Shares Purchased Closing Amount Q1 2017 150 $ 150,000 Q2 2017 4,100 4,100,000 4,250 $ 4,250,000 |
Preferred stock conversion activity | The following table summarizes the conversion activity of the Series E Preferred Stock: Conversion Period Preferred Series E Shares Converted Value of Series E Preferred Shares (inclusive of accrued dividends) Common Shares Issued Q4 2015 478 $ 481,500 250,000 Q1 2016 1,220 1,239,436 1,132,000 Q2 2016 365 381,414 7,979,568 Q3 2016 523 548,896 21,973,747 Q4 2016 94 101,018 13,089,675 Q1 2017 15 16,248 8,289,962 Q2 2017 35 38,886 134,927,207 2,730 $ 2,807,398 187,642,159 The following table summarizes the conversion activity of the Series F Preferred Stock: Conversion Period Preferred Series F Shares Converted Value of Series F Preferred Shares (inclusive of accrued dividends) Common Shares Issued Q1 2016 2,168 $ 2,188,298 2,183,992 Q2 2016 3,234 3,300,931 6,649,741 Q3 2016 1,262 1,315,743 81,917,364 Q4 2016 176 185,118 27,276,005 6,840 $ 6,990,090 118,027,102 The following table summarizes the conversion activity of the Series G Preferred Stock: Conversion Period Preferred Series G Shares Converted Value of Series G Preferred Shares (inclusive of accrued dividends) Common Shares Issued Q4 2016 892 929,895 245,726,283 Q1 2017 372 397,970 327,718,386 Q2 2017 526 575,096 1,337,776,821 1,790 $ 1,902,961 1,911,221,490 The following table summarizes the conversion activity of Series K Preferred Stock: Conversion Period Preferred Series K Shares Converted Value of Series K Preferred Shares Common Shares Issued Q2 2017 3,200 $ 3,200,000 800,000,000 3,200 $ 3,200,000 800,000,000 |
STOCKHOLDERS' DEFICIT (Tables)
STOCKHOLDERS' DEFICIT (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Equity [Abstract] | |
Preferred Stock | The following table summarizes the designations, shares authorized, and shares outstanding for the Company's Preferred Stock: Preferred Stock Series Designation Shares Outstanding Series A 60,756 Series E 70 Series F 160 Series J 1,075 Series J-1 700 Series K 1,050 |
EQUITY PLANS AND SHARE-BASED 41
EQUITY PLANS AND SHARE-BASED COMPENSATION (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Share-based compensation cost by line item | The share-based compensation expense recognized in the Condensed Consolidated Statements of Operations was as follows: For the three months ended June 30, For the six months ended June 30, 2017 2016 2017 2016 Share-based compensation cost included in: Research and development $ 287 $ 79,595 $ 16,898 $ 125,284 Selling, general and administrative 15,887 260,547 79,013 432,696 Total share-based compensation cost $ 16,174 $ 340,142 $ 95,911 $ 557,980 |
Share-based compensation cost by award type | The following table presents share-based compensation expense by type: For the three months ended June 30, For the six months ended June 30, 2017 2016 2017 2016 Type of Award: Stock Options $ 16,174 $ 141,574 $ 69,582 $ 236,958 Restricted Stock Units and Awards — 198,568 26,329 321,022 Total share-based compensation cost $ 16,174 $ 340,142 $ 95,911 $ 557,980 |
Share-based compensation fair value assumptions | air value was calculated using the Black-Scholes Model with the following assumptions: For the six months ended June 30, 2017 2016 Expected volatility 114% 115% Risk free interest rate 1% 1% Expected dividends — — Expected life (in years) 6.0 5.8 |
ORGANIZATION (Details)
ORGANIZATION (Details) - $ / shares | 1 Months Ended | ||||
Jan. 31, 2006 | Jun. 30, 2017 | Mar. 16, 2017 | Mar. 15, 2017 | Dec. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||
Common stock issued (in shares) | 5,140 | ||||
Common stock, shares authorized (in shares) | 20,000,000,000 | 20,000,000,000 | 2,000,000,000 | 2,000,000,000 | |
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 | $ 0.0001 |
LIQUIDITY AND CONTINUED OPERA43
LIQUIDITY AND CONTINUED OPERATIONS (Details) - USD ($) | Apr. 16, 2014 | Apr. 30, 2014 | Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2013 |
LIQUIDITY AND CONTINUED OPERATIONS [Abstract] | |||||
Net cash (used in) operating activities | $ (6,274,717) | $ (10,560,568) | |||
Notes payable | 5,700,000 | ||||
Notes payable, repayments of principal and interest in remainder of fiscal year | 400,000 | ||||
Estimated litigation liability | $ 50,000 | $ 1,700,000 | |||
Litigation settlement, payment period | 40 months | 40 months |
PROPERTY, PLANT AND EQUIPMENT44
PROPERTY, PLANT AND EQUIPMENT (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 | |
Property, Plant and Equipment [Line Items] | |||||
Property, plant and equipment | $ 36,639,460 | $ 36,639,460 | $ 36,639,460 | ||
Net depreciable property, plant and equipment | 36,618,772 | 36,618,772 | 36,618,772 | ||
Less: Accumulated depreciation and amortization | (31,606,565) | (31,606,565) | (30,983,448) | ||
Net property, plant and equipment | 5,032,895 | 5,032,895 | 5,656,012 | ||
Depreciation expense | 288,493 | $ 1,362,718 | 623,117 | $ 2,722,210 | |
Building [Member] | |||||
Property, Plant and Equipment [Line Items] | |||||
Property, plant and equipment | 5,828,960 | 5,828,960 | 5,828,960 | ||
Furniture, fixtures, computer hardware and computer software [Member] | |||||
Property, Plant and Equipment [Line Items] | |||||
Property, plant and equipment | 489,421 | 489,421 | 489,421 | ||
Manufacturing machinery and equipment [Member] | |||||
Property, Plant and Equipment [Line Items] | |||||
Property, plant and equipment | 30,300,391 | 30,300,391 | 30,300,391 | ||
Manufacturing machinery and equipment in progress [Member] | |||||
Property, Plant and Equipment [Line Items] | |||||
Property, plant and equipment | $ 20,688 | $ 20,688 | $ 20,688 |
INVENTORIES (Details)
INVENTORIES (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 | |
Inventory Disclosure [Abstract] | |||||
Raw materials | $ 770,448 | $ 770,448 | $ 832,806 | ||
Work in process | 45,413 | 45,413 | 635,130 | ||
Finished goods | 380,001 | 380,001 | 1,101,880 | ||
Total | 1,195,862 | 1,195,862 | 2,569,816 | ||
Inventory impairment costs | 0 | $ 0 | 363,758 | $ 0 | |
Inventory allowance | $ 623,014 | $ 623,014 | $ 736,663 |
DEBT Narrative (Details)
DEBT Narrative (Details) - USD ($) | Feb. 08, 2008 | Mar. 31, 2017 | Feb. 01, 2018 | Jun. 30, 2017 | May 01, 2017 | Dec. 31, 2016 | Dec. 31, 2009 |
Debt Instrument [Line Items] | |||||||
Long-term debt | $ 5,651,939 | $ 5,704,932 | |||||
Construction Loan [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Available borrowing capacity | $ 7,500,000 | ||||||
Permanent Loan [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Stated interest rate | 6.60% | ||||||
Long-term debt | $ 5,704,932 | ||||||
Accrued interest | $ 180,043 | ||||||
Manufacturing and Office Facility [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Cost of acquisition | $ 5,500,000 | ||||||
Scenario, forecast [Member] | Permanent Loan [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Debt instrument, periodic payment | $ 57,801 |
DEBT Schedule of Maturities of
DEBT Schedule of Maturities of Long-term Debt (Details) - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 |
Debt Disclosure [Abstract] | ||
Future principal payments on long-term debt, 2017 | $ 190,121 | |
Future principal payments on long-term debt, 2018 | 343,395 | |
Future principal payments on long-term debt, 2019 | 366,757 | |
Future principal payments on long-term debt, 2020 | 391,709 | |
Future principal payments on long-term debt, 2021 | 418,358 | |
Future principal payments on long-term debt, thereafter | 3,941,599 | |
Total maturities | $ 5,651,939 | $ 5,704,932 |
NOTES PAYABLE (Details)
NOTES PAYABLE (Details) - USD ($) | 6 Months Ended | ||||
Jun. 30, 2017 | Mar. 23, 2017 | Feb. 27, 2017 | Feb. 24, 2017 | Dec. 31, 2016 | |
Short-term Debt [Line Items] | |||||
Notes Payable | $ 1,422,026 | $ 0 | |||
Note payable conversion one [Member] | Unsecured debt [Member] | |||||
Short-term Debt [Line Items] | |||||
Notes Payable | $ 765,784 | ||||
Stated interest rate | 6.00% | ||||
Accrued interest | 16,081 | ||||
Note payable conversion two [Member] | Unsecured debt [Member] | |||||
Short-term Debt [Line Items] | |||||
Notes Payable | $ 49,500 | ||||
Stated interest rate | 6.00% | ||||
Accrued interest | 1,001 | ||||
Note payable conversion three [Member] | Unsecured debt [Member] | |||||
Short-term Debt [Line Items] | |||||
Notes Payable | $ 356,742 | ||||
Accrued interest | 4,838 | ||||
Note payable conversion four [Member] | Unsecured debt [Member] | |||||
Short-term Debt [Line Items] | |||||
Notes Payable | $ 250,000 | ||||
Stated interest rate | 5.00% | 5.00% |
PROMISSORY NOTES (Details)
PROMISSORY NOTES (Details) - USD ($) | Jan. 19, 2017 | Jan. 17, 2017 | Dec. 06, 2016 | Jun. 30, 2017 | Apr. 30, 2017 | Oct. 31, 2016 | Apr. 30, 2017 | Jun. 30, 2017 | Jun. 30, 2016 | May 31, 2017 | Dec. 31, 2016 | Aug. 29, 2016 |
Short-term Debt [Line Items] | ||||||||||||
Cash paid for interest | $ 206,080 | $ 192,532 | ||||||||||
Proceeds from promissory note | 2,865,000 | 0 | ||||||||||
Amortization of debt discount | $ 3,190,184 | $ 3,006,096 | ||||||||||
Promissory note [Member] | Promissory note [Member] | ||||||||||||
Short-term Debt [Line Items] | ||||||||||||
Stated interest rate | 12.00% | 12.00% | 12.00% | |||||||||
Cash paid for interest | $ 41,655 | $ 60,434 | $ 50,581 | |||||||||
Debt, principal | 3,400,000 | $ 3,400,000 | $ 1,010,000 | |||||||||
Accrued interest | 105,349 | 105,349 | ||||||||||
Debt instrument, periodic payment | 62,000 | |||||||||||
Discount notes [Member] | Tertius Financial Group Pte. Ltd. [Member] | ||||||||||||
Short-term Debt [Line Items] | ||||||||||||
Proceeds from promissory note | $ 200,000 | |||||||||||
Debt, principal | 602,000 | |||||||||||
Debt instrument, unamortized discount (premium), net | $ 60,000 | |||||||||||
Unsecured debt [Member] | Promissory note one [Member] | ||||||||||||
Short-term Debt [Line Items] | ||||||||||||
Stated interest rate | 10.00% | 10.00% | ||||||||||
Debt, principal | 103,000 | $ 103,000 | $ 103,000 | 103,000 | ||||||||
Amortization of debt discount | 3,000 | |||||||||||
Proceeds from issuance of unsecured debt | $ 100,000 | |||||||||||
Short-term debt, accrued interest | 2,432 | 2,432 | ||||||||||
Unsecured debt [Member] | Promissory note two [Member] | ||||||||||||
Short-term Debt [Line Items] | ||||||||||||
Stated interest rate | 12.00% | |||||||||||
Debt, principal | 125,000 | 125,000 | $ 125,000 | |||||||||
Short-term debt, accrued interest | 2,208 | 2,208 | ||||||||||
Private placement [Member] | Discount notes [Member] | Tertius Financial Group Pte. Ltd. [Member] | ||||||||||||
Short-term Debt [Line Items] | ||||||||||||
Proceeds from issuance of stock | $ 330,000 | |||||||||||
Debt, principal | 700,000 | $ 700,000 | 700,000 | |||||||||
Accrued interest | $ 52,022 | $ 52,022 | ||||||||||
Proceeds from issuance of debt | 420,000 | |||||||||||
Amortization of debt discount | $ 30,000 | |||||||||||
Common stock [Member] | Discount notes [Member] | Tertius Financial Group Pte. Ltd. [Member] | ||||||||||||
Short-term Debt [Line Items] | ||||||||||||
Stated interest rate | 6.00% | 6.00% | ||||||||||
Common stock [Member] | Private placement [Member] | ||||||||||||
Short-term Debt [Line Items] | ||||||||||||
Proceeds from issuance of stock | $ 333,333,333 | |||||||||||
Accrued interest, current, retired for shares | $ 4,340 | |||||||||||
Common stock [Member] | Private placement [Member] | Discount notes [Member] | Tertius Financial Group Pte. Ltd. [Member] | ||||||||||||
Short-term Debt [Line Items] | ||||||||||||
Promissory note, current, retired for shares | $ 600,000 | |||||||||||
Private investor [Member] | ||||||||||||
Short-term Debt [Line Items] | ||||||||||||
Ownership percentage | 5.00% | 5.00% | ||||||||||
Private investor [Member] | Chief Executive Officer [Member] | ||||||||||||
Short-term Debt [Line Items] | ||||||||||||
Ownership percentage | 50.00% | 50.00% |
SERIES A PREFERRED STOCK (Detai
SERIES A PREFERRED STOCK (Details) - USD ($) | Jun. 17, 2016 | Aug. 31, 2016 | Jun. 30, 2013 | Mar. 31, 2017 | Jun. 30, 2017 | Dec. 31, 2016 | Oct. 06, 2016 | Aug. 31, 2013 | Jun. 17, 2013 |
Series A Preferred Stock [Member] | |||||||||
Class of Stock [Line Items] | |||||||||
Preferred stock, shares issued (in shares) | 750,000 | 750,000 | 750,000 | 625,000 | 125,000 | ||||
Share price (in dollars per share) | $ 8 | ||||||||
Preferred stock | $ 6,000,000 | $ 6 | $ 13 | ||||||
Preferred stock, dividend rate | 8.00% | ||||||||
Preferred stock, dividend issuance term | 4 years | ||||||||
Preferred stock, dividend, make-whole dividend rate to market value | 10.00% | ||||||||
Preferred stock, conversion, required common share price | $ 232 | ||||||||
Preferred stock, redemption, term, required make-whole dividend | 4 years | ||||||||
Preferred stock, conversion, required common share price, term | 20 days | ||||||||
Convertible preferred stock, shares issued upon conversion (in shares) | 1 | ||||||||
Preferred stock, shares outstanding (in shares) | 60,756 | 125,044 | 165,541 | ||||||
Shares converted (in shares) | 104,785 | 104,785 | |||||||
Common stock [Member] | |||||||||
Class of Stock [Line Items] | |||||||||
Class of warrant, number of securities called by warrants | 13,125 | 10,938 | 2,187 | ||||||
Proceeds from issuance of preferred stock | $ 1,000,000 | $ 5,000,000 | |||||||
Series A, buyer [Member] | Series A Preferred Stock [Member] | |||||||||
Class of Stock [Line Items] | |||||||||
Preferred stock, shares outstanding (in shares) | 104,785 | ||||||||
Conversion of shares (in shares) | 173,946,250 |
SERIES E PREFERRED STOCK AND 51
SERIES E PREFERRED STOCK AND THE COMMITTED EQUITY LINE (Details) | Nov. 04, 2015USD ($)priceshares | Jun. 30, 2017USD ($)$ / sharesshares | Jun. 30, 2017USD ($)$ / sharesshares | Dec. 31, 2016USD ($) |
Class of Stock [Line Items] | ||||
Make-whole dividend liability | $ 200,000 | $ 200,000 | ||
Series E Preferred Stock [Member] | ||||
Class of Stock [Line Items] | ||||
Percent of two lowest volume weighted average prices | 80.00% | |||
Component of purchase price calculation | price | 2 | |||
Measurement period after conversion date | 10 days | |||
Percent of two lowest volume weighted average prices - in default | 70.00% | |||
Measurement period before conversion date - in default | 20 days | |||
Preferred stock, dividend rate | 7.00% | |||
Converted stock dividends, amount | $ 5,134 | |||
Stock dividends (in shares) | shares | 14,135,538 | |||
Preferred stock, shares outstanding (in shares) | shares | 70 | 70 | ||
Preferred stock, value, outstanding | $ 70,000 | $ 70,000 | ||
Series E Preferred Stock [Member] | Embedded derivative financial instruments [Member] | ||||
Class of Stock [Line Items] | ||||
Derivative - expected annual volatility | 70.00% | |||
Derivative - present value of discount rate | 12.00% | |||
Derivative - expected dividend rate | 0.00% | |||
Series E Preferred Stock [Member] | Parent company [Member] | ||||
Class of Stock [Line Items] | ||||
Preferred stock, redemption price per share (in dollars per share) | $ / shares | $ 1,250 | $ 1,250 | ||
Series E Preferred Stock [Member] | Investor [Member] | ||||
Class of Stock [Line Items] | ||||
Preferred stock, redemption price per share (in dollars per share) | $ / shares | $ 1,250 | $ 1,250 | ||
Series E Preferred Stock [Member] | Private placement [Member] | ||||
Class of Stock [Line Items] | ||||
Proceeds from issuance of stock | $ 2,800,000 | |||
Debt instrument, convertible, conversion price, milestone percentage one | 70.00% | |||
Shares issued as commitment fee (in shares) | shares | 18,000 | |||
Gross debt issuance cost | $ 104,000 | |||
Series E Preferred Stock [Member] | Private placement [Member] | Embedded derivative financial instruments [Member] | ||||
Class of Stock [Line Items] | ||||
Make-whole dividend liability | $ 121,390 | $ 121,390 | $ 141,000 | |
Gain (loss) on change in fair value of derivative | $ (40,016) | $ 19,358 | ||
Series E Preferred Stock [Member] | Convertible debt [Member] | ||||
Class of Stock [Line Items] | ||||
Issuance of common stock (in shares) | shares | 2,800 |
SERIES E PREFERRED STOCK AND 52
SERIES E PREFERRED STOCK AND THE COMMITTED EQUITY LINE - Preferred Stock Conversion Activity (Details) - Series E Preferred Stock [Member] - USD ($) | 3 Months Ended | 21 Months Ended | ||||||
Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Jun. 30, 2017 | |
Class of Stock [Line Items] | ||||||||
Shares converted (in shares) | 35 | 15 | 94 | 523 | 365 | 1,220 | 478 | 2,730 |
Stock issued in lieu of cash, value | $ 38,886 | $ 16,248 | $ 101,018 | $ 548,896 | $ 381,414 | $ 1,239,436 | $ 481,500 | $ 2,807,398 |
Conversion of shares (in shares) | 134,927,207 | 8,289,962 | 13,089,675 | 21,973,747 | 7,979,568 | 1,132,000 | 250,000 | 187,642,159 |
SERIES E PREFERRED STOCK AND 53
SERIES E PREFERRED STOCK AND THE COMMITTED EQUITY LINE - The Committed Equity Line (Details) - Committed Equity Line [Member] | Nov. 10, 2015USD ($)priceshares | Jun. 30, 2017USD ($)shares |
Class of Stock [Line Items] | ||
Proceeds from issuance of stock | $ 3,056,147 | |
Issuance of common stock (in shares) | shares | 1,368,000 | |
Common stock [Member] | ||
Class of Stock [Line Items] | ||
Common stock, subscriptions, period following registration date | 36 months | |
Percent of average trading volume of common stock | 300.00% | |
Threshold consecutive trading days | 10 days | |
Percent of average of 2 lowest volume weighted average prices | 80.00% | |
Component of purchase price calculation | price | 2 | |
Percent of outstanding shares of stock | 9.99% | |
Shares issued as commitment fee (in shares) | shares | 132,000 | |
Maximum [Member] | Common stock [Member] | ||
Class of Stock [Line Items] | ||
Common stock, value, subscriptions | $ 32,200,000 | |
Obligatory purchased of common stock | $ 1,000,000 |
SERIES F PREFERRED STOCK (Detai
SERIES F PREFERRED STOCK (Details) | Oct. 05, 2016USD ($) | Jun. 09, 2016 | Jan. 20, 2016USD ($)paymentshares | Jan. 19, 2016USD ($)d$ / shares | Nov. 10, 2015price | Nov. 04, 2015 | Jun. 30, 2017USD ($)shares | Jun. 30, 2017USD ($)shares |
Class of Stock [Line Items] | ||||||||
Make-whole dividend liability | $ 200,000 | $ 200,000 | ||||||
Series F Preferred Stock [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Measurement period before conversion date - in default | 20 days | |||||||
Convertible debt, period after conversion date | 10 days | |||||||
Preferred stock, value, outstanding | $ 336,000 | $ 160,000 | $ 160,000 | |||||
Debt instrument, convertible, conversion price, milestone percentage one | 50.00% | |||||||
Preferred stock, shares outstanding (in shares) | shares | 160 | 160 | ||||||
Series F Preferred Stock [Member] | Embedded derivative financial instruments [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Derivative - expected annual volatility | 66.00% | |||||||
Derivative - present value of discount rate | 12.00% | |||||||
Derivative - expected dividend rate | 0.00% | |||||||
Series F Preferred Stock [Member] | Parent company [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Preferred stock, redemption price per share (in dollars per share) | $ / shares | $ 1,250 | |||||||
Series F Preferred Stock [Member] | Private placement [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Proceeds from issuance of stock | $ 7,000,000 | |||||||
Preferred stock, dividend rate | 7.00% | |||||||
Issuance of common stock (in shares) | shares | 7,000 | |||||||
Proceeds from issuance of preferred stock | $ 500,000 | |||||||
Preferred stock, value, subscriptions | $ 6,500,000 | |||||||
Preferred stock, subscriptions, number of payments | payment | 14 | |||||||
Preferred stock, value, subscription payments, tranche two | $ 500,000 | |||||||
Preferred stock, value, subscription payments, tranche one | $ 250,000 | |||||||
Convertible preferred stock, conversion price (in dollars per share) | $ / shares | $ 5 | |||||||
Percent of two lowest volume weighted average prices - in default | 70.00% | |||||||
Component of purchase price calculation | 1 | 2 | ||||||
Measurement period before conversion date - in default | 20 days | |||||||
Subscription, weekly redemption amount (in shares) | shares | 250 | |||||||
Percent of average of 2 lowest volume weighted average prices | 80.00% | |||||||
Threshold consecutive trading days | 10 days | |||||||
Subscription terms, weekly redemption as a percent of common stock | 12.00% | |||||||
Percent of two lowest volume weighted average prices - in default | 70.00% | |||||||
Convertible debt, period prior to conversion date | 10 days | |||||||
Series F Preferred Stock [Member] | Private placement [Member] | Embedded derivative financial instruments [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Make-whole dividend liability | $ 1,666,000 | $ 340,881 | $ 340,881 | |||||
Gain (loss) on change in fair value of derivative | $ (209,613) | $ (85,557) |
SERIES F PREFERRED STOCK - Pref
SERIES F PREFERRED STOCK - Preferred Stock Conversion Activity (Details) - Series F Preferred Stock [Member] - USD ($) | 3 Months Ended | 12 Months Ended | |||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2016 | |
Class of Stock [Line Items] | |||||
Shares converted (in shares) | 176 | 1,262 | 3,234 | 2,168 | 6,840 |
Stock issued in lieu of cash, value | $ 185,118 | $ 1,315,743 | $ 3,300,931 | $ 2,188,298 | $ 6,990,090 |
Conversion of shares (in shares) | 27,276,005 | 81,917,364 | 6,649,741 | 2,183,992 | 118,027,102 |
SERIES G PREFERRED STOCK (Detai
SERIES G PREFERRED STOCK (Details) | Jul. 03, 2017USD ($) | Jun. 30, 2017USD ($)shares | Jan. 19, 2017USD ($) | Sep. 21, 2016$ / shares | Jun. 17, 2016USD ($) | Apr. 29, 2016USD ($)$ / sharesshares | Aug. 31, 2016USD ($) | May 31, 2016USD ($)shares | May 31, 2016USD ($) | Jun. 30, 2017USD ($)shares | Mar. 31, 2017shares | Dec. 31, 2016USD ($)shares | Jun. 30, 2017USD ($)shares | Jun. 30, 2017USD ($)shares | Sep. 19, 2016investor$ / shares |
Class of Stock [Line Items] | |||||||||||||||
Make-whole dividend liability | $ 200,000 | $ 200,000 | $ 200,000 | $ 200,000 | |||||||||||
Series G Preferred Stock [Member] | |||||||||||||||
Class of Stock [Line Items] | |||||||||||||||
Proceeds from sale of common stock (in dollars per share) | $ / shares | $ 1,000 | ||||||||||||||
Shares converted (in shares) | shares | 210 | 526 | 372 | 892 | 1,790 | ||||||||||
Preferred stock, redemption amount | $ 232,440 | $ 232,440 | 232,440 | $ 232,440 | |||||||||||
Common stock [Member] | |||||||||||||||
Class of Stock [Line Items] | |||||||||||||||
Proceeds from issuance of preferred stock | $ 1,000,000 | $ 5,000,000 | |||||||||||||
Private placement [Member] | Series G Preferred Stock [Member] | |||||||||||||||
Class of Stock [Line Items] | |||||||||||||||
Proceeds from issuance of stock | $ 2,000,000 | ||||||||||||||
Issuance of common stock (in shares) | shares | 500 | 1,500 | |||||||||||||
Proceeds from issuance of preferred stock | $ 500,000 | $ 1,500,000 | |||||||||||||
Preferred stock, dividend rate | 10.00% | ||||||||||||||
Number of investors | investor | 2 | ||||||||||||||
Preferred stock, value, outstanding | 1,835,000 | 1,835,000 | 1,835,000 | 1,835,000 | |||||||||||
Convertible preferred stock, conversion price (in dollars per share) | $ / shares | $ 0.045 | $ 1 | |||||||||||||
Convertible preferred stock, conversion price, milestone percentage one | 70.00% | ||||||||||||||
Threshold consecutive trading days | 10 days | ||||||||||||||
Dividends, preferred stock | $ 49,096 | ||||||||||||||
Stock dividends (in shares) | shares | 114,854,745 | ||||||||||||||
Private placement [Member] | Common stock [Member] | |||||||||||||||
Class of Stock [Line Items] | |||||||||||||||
Proceeds from issuance of stock | $ 333,333,333 | ||||||||||||||
Embedded derivative financial instruments [Member] | Private placement [Member] | Series G Preferred Stock [Member] | |||||||||||||||
Class of Stock [Line Items] | |||||||||||||||
Make-whole dividend liability | $ 219,347 | 219,347 | $ 361,831 | $ 219,347 | $ 219,347 | ||||||||||
Gain (loss) on change in fair value of derivative | $ 219,347 | $ 361,831 | |||||||||||||
Series G Private Investor [Member] | Private placement [Member] | Series G Preferred Stock [Member] | |||||||||||||||
Class of Stock [Line Items] | |||||||||||||||
Preferred stock, shares outstanding (in shares) | shares | 1,835 | 2,000 | 1,835 | 1,835 | 1,835 | ||||||||||
Series G Purchasers [Member] | Series G Preferred Stock [Member] | |||||||||||||||
Class of Stock [Line Items] | |||||||||||||||
Proceeds from sale of common stock (in dollars per share) | $ / shares | $ 1,000 | ||||||||||||||
Subsequent event [Member] | Series G Preferred Stock [Member] | |||||||||||||||
Class of Stock [Line Items] | |||||||||||||||
Payments for redemption of preferred stock | $ 182,715 |
SERIES G PREFERRED STOCK - Pref
SERIES G PREFERRED STOCK - Preferred Stock Conversion Activity (Details) - Series G Preferred Stock [Member] - USD ($) | Jun. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Jun. 30, 2017 |
Class of Stock [Line Items] | |||||
Shares converted (in shares) | 210 | 526 | 372 | 892 | 1,790 |
Stock issued in lieu of cash, value | $ 575,096 | $ 397,970 | $ 929,895 | $ 1,902,961 | |
Conversion of shares (in shares) | 1,337,776,821 | 327,718,386 | 245,726,283 | 1,911,221,490 |
SERIES G PREFERRED STOCK - Conv
SERIES G PREFERRED STOCK - Conversion Inducement and Disposal Price Guarantee (Details) - USD ($) | Jun. 30, 2017 | Mar. 17, 2017 | Jan. 17, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Jun. 30, 2017 | Jun. 30, 2017 | Sep. 21, 2016 | Apr. 29, 2016 |
Class of Stock [Line Items] | ||||||||||
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 | $ 0.0001 | $ 0.0001 | ||||||
Series G Preferred Stock [Member] | ||||||||||
Class of Stock [Line Items] | ||||||||||
Shares converted (in shares) | 210 | 526 | 372 | 892 | 1,790 | |||||
Conversion of shares (in shares) | 1,337,776,821 | 327,718,386 | 245,726,283 | 1,911,221,490 | ||||||
Preferred stock and notes | $ 0 | $ 0 | $ 408,326 | $ 0 | $ 0 | |||||
Private placement [Member] | Series G Preferred Stock [Member] | ||||||||||
Class of Stock [Line Items] | ||||||||||
Convertible preferred stock, conversion price (in dollars per share) | $ 0.045 | $ 1 | ||||||||
Holder A [Member] | Private placement [Member] | Series G Preferred Stock [Member] | ||||||||||
Class of Stock [Line Items] | ||||||||||
Shares converted (in shares) | 100 | |||||||||
Preferred stock, par value (in dollars per share) | $ 100,000 | |||||||||
Accrued interest | $ 6,416.67 | |||||||||
Conversion value | $ 106,416.67 | |||||||||
Convertible preferred stock, conversion price (in dollars per share) | $ 0.00168 | $ 0.00112 | ||||||||
Convertible preferred stock, conversion price, minimum disposal (in dollars per share) | $ 0.003 | |||||||||
Conversion of shares (in shares) | 95,014,884 | 95,014,884 | ||||||||
Inducement conversion costs | 79,179 | |||||||||
Convertible preferred stock, conversion expense, minimum disposal | 134,566 | |||||||||
Repayments of liability | 44,855 | |||||||||
Preferred stock and notes | $ 89,711 | $ 89,711 | $ 89,711 | $ 89,711 |
SERIES H PREFERRED STOCK AND 59
SERIES H PREFERRED STOCK AND CONVERTIBLE NOTES (Details) | Aug. 16, 2017 | Jul. 13, 2016USD ($)$ / sharesshares | Jun. 09, 2016USD ($)shares | May 31, 2017$ / wk | Jul. 07, 2016USD ($) | Aug. 31, 2016USD ($) | Aug. 30, 2017$ / wk | Aug. 15, 2017 | Jun. 30, 2017USD ($) | Mar. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Jun. 30, 2017USD ($) | Jun. 30, 2016USD ($) | Jun. 30, 2017USD ($) | May 02, 2017USD ($) | Oct. 10, 2016 |
Class of Stock [Line Items] | ||||||||||||||||
Proceeds from issuance of private placement | $ 0 | $ 1,056,147 | ||||||||||||||
Make-whole dividend liability | $ 200,000 | $ 200,000 | $ 200,000 | |||||||||||||
Series H Preferred Stock [Member] | ||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||
Preferred stock, shares outstanding (in shares) | shares | 830 | |||||||||||||||
Series H Preferred Stock [Member] | Embedded derivative financial instruments [Member] | ||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||
Derivative - expected annual volatility | 53.00% | |||||||||||||||
Derivative - present value of discount rate | 12.00% | |||||||||||||||
Derivative - expected dividend rate | 0.00% | |||||||||||||||
Series H Preferred Stock [Member] | Private placement [Member] | ||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||
Issuance of common stock (in shares) | shares | 2,500 | |||||||||||||||
Proceeds from issuance of stock | $ 2,500,000 | |||||||||||||||
Proceeds from issuance of preferred stock | $ 830,000 | $ 250,000 | $ 580,000 | |||||||||||||
Series H Preferred Stock [Member] | Private placement [Member] | Embedded derivative financial instruments [Member] | ||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||
Make-whole dividend liability | 5,078,889 | 31,444 | $ 31,444 | 31,444 | ||||||||||||
Gain (loss) on change in fair value of derivative | 2,625,608 | 5,047,445 | ||||||||||||||
Four Percent Original Issue Discount Senior Secured Convertible Promissory Notes [Member] | Private placement [Member] | ||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||
Aggregate principal amount of Notes outstanding | $ 2,082,600 | |||||||||||||||
Stated interest rate | 4.00% | |||||||||||||||
Proceeds from issuance of stock | $ 364,000 | |||||||||||||||
Proceeds from convertible debt | 350,000 | |||||||||||||||
Debt instrument face amount, to be issued | 1,718,600 | |||||||||||||||
Proceeds from issuance of private placement | $ 1,650,000 | |||||||||||||||
April 2016 Rights Shares [Member] | Convertible debt [Member] | ||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||
Capital and accrued dividends | 833,000 | |||||||||||||||
Convertible Notes, July 2016 [Member] | Convertible debt [Member] | ||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||
Aggregate principal amount of Notes outstanding | $ 866,000 | |||||||||||||||
Stated interest rate | 10.00% | 24.00% | ||||||||||||||
Proceeds from convertible debt | 600,000 | |||||||||||||||
Debt instrument, debt default, due upon default, percent | 25.00% | |||||||||||||||
Conversion price (in dollars per share) | $ / shares | $ 0.045 | |||||||||||||||
Debt instrument, convertible, conversion price, milestone percentage one | 70.00% | |||||||||||||||
Debt instrument, convertible, conversion price, milestone percentage two | 60.00% | |||||||||||||||
Convertible debt, period prior to conversion date | 10 days | |||||||||||||||
Threshold consecutive trading days | 30 days | |||||||||||||||
Debt conversion, amount | 682,235 | $ 1,017,732 | $ 152,460 | 3,960 | 1,852,427 | |||||||||||
Interest expense | $ 100,000 | |||||||||||||||
Redemption price penalty, percentage | 20.00% | |||||||||||||||
Debt, principal | 496,600 | $ 496,600 | 496,600 | |||||||||||||
Accrued interest | $ 421,345 | $ 421,345 | $ 421,345 | |||||||||||||
Convertible Notes, July 2016 [Member] | Convertible debt [Member] | Maximum [Member] | ||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||
Stated interest rate | 24.00% | |||||||||||||||
Secured convertible notes [Member] | Convertible Notes, July 2016 [Member] | ||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||
Stated interest rate | 10.00% | 24.00% | ||||||||||||||
Debt, principal and accrued interest | $ 1,790,214 | |||||||||||||||
Debt instrument, conversion limit | $ / wk | 50,000 | |||||||||||||||
Scenario, forecast [Member] | Secured convertible notes [Member] | Convertible Notes, July 2016 [Member] | ||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||
Redemption price ratio | 125.00% | 120.00% | ||||||||||||||
Debt instrument, conversion limit | $ / wk | 75,000 |
SERIES H PREFERRED STOCK AND 60
SERIES H PREFERRED STOCK AND CONVERTIBLE NOTES - Convertible Notes Conversion Activity (Details) - Convertible debt [Member] - Convertible Notes, July 2016 [Member] - USD ($) | 3 Months Ended | 6 Months Ended | 9 Months Ended | ||
Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Jun. 30, 2017 | Jun. 30, 2017 | |
Class of Stock [Line Items] | |||||
Debt conversion, original debt, amount | $ 682,235 | $ 1,017,732 | $ 152,460 | $ 3,960 | $ 1,852,427 |
Debt conversion, converted instrument, shares issued | 1,865,043,998 | 959,704,543 | 64,000,000 | 2,888,748,541 |
SERIES I PREFERRED STOCK AND 61
SERIES I PREFERRED STOCK AND EXCHANGE CONVERTIBLE NOTES (Details) - USD ($) | Sep. 13, 2016 | Jul. 26, 2016 | Jun. 30, 2017 | Dec. 31, 2016 | Jun. 30, 2017 | Oct. 31, 2016 | Sep. 14, 2016 |
Class of Stock [Line Items] | |||||||
Make-whole dividend liability | $ 200,000 | $ 200,000 | |||||
Exchange Convertible Notes [Member] | Embedded derivative financial instruments [Member] | |||||||
Class of Stock [Line Items] | |||||||
Make-whole dividend liability | $ 275,000 | ||||||
Exchange Convertible Notes [Member] | Convertible debt [Member] | |||||||
Class of Stock [Line Items] | |||||||
Stated interest rate | 10.00% | ||||||
Convertible debt, period prior to conversion date | 10 days | ||||||
Debt instrument, convertible, conversion price, milestone percentage one | 70.00% | ||||||
Debt, principal | 118,536 | 118,536 | |||||
Accrued interest | 14,538 | $ 14,538 | |||||
Exchange Convertible Notes [Member] | Convertible debt [Member] | Maximum [Member] | |||||||
Class of Stock [Line Items] | |||||||
Stated interest rate | 24.00% | ||||||
Series I Preferred Stock [Member] | Embedded derivative financial instruments [Member] | |||||||
Class of Stock [Line Items] | |||||||
Derivative - expected annual volatility | 46.00% | ||||||
Derivative - present value of discount rate | 12.00% | ||||||
Derivative - expected dividend rate | 0.00% | ||||||
Series I Preferred Stock [Member] | Private placement [Member] | |||||||
Class of Stock [Line Items] | |||||||
Proceeds from issuance of stock | 536 | ||||||
Proceeds from issuance of stock | $ 536,000 | ||||||
Shares converted (in shares) | 326 | ||||||
Series I Preferred Stock [Member] | Private placement [Member] | Embedded derivative financial instruments [Member] | |||||||
Class of Stock [Line Items] | |||||||
Make-whole dividend liability | 130,656 | $ 130,656 | |||||
Convertible preferred stock subject to mandatory redemption [Member] | Series I Preferred Stock [Member] | Private placement [Member] | Embedded derivative financial instruments [Member] | |||||||
Class of Stock [Line Items] | |||||||
Gain (loss) on change in fair value of derivative | $ (45,489) | $ 65,961 | |||||
Series I Seller [Member] | Series I Preferred Stock [Member] | Private placement [Member] | |||||||
Class of Stock [Line Items] | |||||||
Preferred stock, shares outstanding (in shares) | 325.77 | 325.77 | |||||
Series I Purchaser [Member] | Exchange Convertible Notes [Member] | Convertible debt [Member] | |||||||
Class of Stock [Line Items] | |||||||
Purchase price (in dollars per share) | $ 1,000 | ||||||
Series I Purchaser [Member] | Series I Preferred Stock [Member] | Private placement [Member] | |||||||
Class of Stock [Line Items] | |||||||
Preferred stock, value, outstanding | $ 332,633 |
SERIES I PREFERRED STOCK AND 62
SERIES I PREFERRED STOCK AND EXCHANGE CONVERTIBLE NOTES - Convertible Notes Conversion Activity (Details) - Convertible debt [Member] - Exchange Convertible Notes [Member] - USD ($) | 3 Months Ended | 12 Months Ended | |||
Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2017 | |
Class of Stock [Line Items] | |||||
Debt conversion, original debt, amount | $ 37,535 | $ 70,000 | $ 91,563 | $ 15,000 | $ 214,098 |
Debt conversion, converted instrument, shares issued | 86,987,428 | 50,503,662 | 13,346,274 | 1,470,588 | 152,307,952 |
SERIES J PREFERRED STOCK AND 63
SERIES J PREFERRED STOCK AND SERIES J-1 PREFERRED STOCK (Details) - USD ($) | May 08, 2017 | Mar. 29, 2017 | Mar. 24, 2017 | Oct. 14, 2016 | Sep. 19, 2016 | Jun. 30, 2017 | Jun. 30, 2017 | Dec. 31, 2016 |
Class of Stock [Line Items] | ||||||||
Make-whole dividend liability | $ 200,000 | $ 200,000 | ||||||
Series J Preferred Stock [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Preferred stock, shares outstanding (in shares) | 1,075 | 1,075 | ||||||
Preferred stock, dividend rate | 10.00% | |||||||
Shares converted (in shares) | 0 | |||||||
Conversion of shares (in shares) | 189,484,143 | 125,429,895 | 71,636,432 | |||||
Series J Preferred Stock [Member] | Private placement [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Proceeds from issuance of stock | $ 1,350,000 | |||||||
Issuance of common stock (in shares) | 1,350 | |||||||
Preferred stock, value, outstanding | $ 1,075,000 | $ 1,075,000 | ||||||
Convertible preferred stock, conversion price (in dollars per share) | $ 0.00028 | $ 0.00105 | $ 0.00147 | $ 0.015 | ||||
Shares converted (in shares) | 50 | 120 | 100 | 275 | ||||
Accrued interest | $ 78,826 | $ 78,826 | ||||||
Share price, discount, percent | 30.00% | 30.00% | ||||||
Convertible debt, period prior to conversion date | 10 days | |||||||
Inducement conversion costs | $ 92,974 | $ 186,640 | $ 142,155 | |||||
Series J-1 Preferred Stock [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Preferred stock, shares outstanding (in shares) | 700 | 700 | 700 | |||||
Preferred stock, dividend rate | 10.00% | |||||||
Preferred stock, redemption price per share (in dollars per share) | $ 1,000 | |||||||
Series J-1 Preferred Stock [Member] | Private placement [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Proceeds from issuance of stock | $ 1,000,000 | |||||||
Issuance of common stock (in shares) | 1,000 | 700 | ||||||
Convertible preferred stock, conversion price (in dollars per share) | $ 0.0125 | |||||||
Proceeds from issuance of preferred stock | $ 700,000 | $ 700,000 | ||||||
Accrued interest | $ 47,333 | $ 47,333 | ||||||
Embedded derivative financial instruments [Member] | Series J Preferred Stock [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Derivative - expected annual volatility | 47.00% | |||||||
Derivative - present value of discount rate | 12.00% | |||||||
Derivative - expected dividend rate | 0.00% | |||||||
Embedded derivative financial instruments [Member] | Series J Preferred Stock [Member] | Private placement [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Make-whole dividend liability | $ 705,024 | 507,389 | $ 507,389 | |||||
Gain (loss) on change in fair value of derivative | (64,912) | 197,635 | ||||||
Series J Seller [Member] | Series J Preferred Stock [Member] | Private placement [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Preferred stock, shares outstanding (in shares) | 250 | |||||||
Purchase price (in dollars per share) | $ 1,000 | |||||||
Series J Purchaser [Member] | Series J Preferred Stock [Member] | Private placement [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Preferred stock, value, outstanding | $ 250,000 | $ 250,000 |
OCTOBER 2016 CONVERTIBLE NOTE64
OCTOBER 2016 CONVERTIBLE NOTES AND EXCHANGE OF SERIES A PREFERRED STOCK (Details) - USD ($) | Oct. 05, 2016 | Jun. 30, 2017 | Jun. 30, 2017 | Dec. 31, 2016 | Oct. 06, 2016 |
Class of Stock [Line Items] | |||||
Make-whole dividend liability | $ 200,000 | $ 200,000 | |||
Series A Preferred Stock [Member] | |||||
Class of Stock [Line Items] | |||||
Preferred stock, shares outstanding (in shares) | 60,756 | 60,756 | 125,044 | 165,541 | |
October 2016 Convertible Notes [Member] | Convertible debt [Member] | |||||
Class of Stock [Line Items] | |||||
Proceeds from issuance of stock | $ 330,000 | $ 330,000 | $ 330,000 | ||
Proceeds from issuance of debt | $ 330,000 | ||||
Stated interest rate | 6.00% | ||||
Percent of average of two lowest volume weighted average prices | 80.00% | ||||
Convertible debt, trading days | 15 days | ||||
Accrued interest | $ 14,740 | ||||
Debt instrument, convertible, conversion price, milestone percentage one | 50.00% | ||||
Make-whole dividend liability | $ 330,000 | ||||
Interest expense | $ 341,000 | ||||
Derivative - expected annual volatility | 64.00% | ||||
Derivative - present value of discount rate | 12.00% | ||||
Derivative - expected dividend rate | 0.00% | ||||
October 2016 Convertible Notes [Member] | Maximum [Member] | Convertible debt [Member] | |||||
Class of Stock [Line Items] | |||||
Stated interest rate | 24.00% | ||||
Embedded derivative financial instruments [Member] | October 2016 Convertible Notes [Member] | Convertible debt [Member] | |||||
Class of Stock [Line Items] | |||||
Make-whole dividend liability | 744,681 | $ 744,681 | |||
Embedded derivative financial instruments [Member] | Convertible preferred stock subject to mandatory redemption [Member] | October 2016 Convertible Notes [Member] | Convertible debt [Member] | |||||
Class of Stock [Line Items] | |||||
Gain (loss) on change in fair value of derivative | $ (333,706) | $ (199,935) |
SERIES K PREFERRED STOCK (Detai
SERIES K PREFERRED STOCK (Details) - Series K Preferred Stock [Member] - USD ($) | Jun. 27, 2017 | Feb. 24, 2017 | Feb. 08, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Jun. 30, 2017 |
Class of Stock [Line Items] | ||||||
Proceeds from issuance of preferred stock | $ 4,100,000 | $ 150,000 | ||||
Preferred stock, shares issued (in shares) | 4,100 | 150 | 4,100 | |||
Ownership percentage | 19.99% | 11.00% | 11.00% | |||
Preferred stock, shares outstanding (in shares) | 1,050 | 1,050 | ||||
Preferred stock | $ 1,050,000 | $ 1,050,000 | ||||
Private placement [Member] | ||||||
Class of Stock [Line Items] | ||||||
Proceeds from issuance of stock | $ 20,000,000 | |||||
Issuance of common stock (in shares) | 15,000 | 1,000 | ||||
Proceeds from issuance of preferred stock | $ 15,000,000 | $ 1,000,000 | $ 4,250,000 | |||
Preferred stock, shares issued (in shares) | 4,250 | 4,250 | ||||
Convertible preferred stock, conversion price (in dollars per share) | $ 0.004 | |||||
Parent company [Member] | ||||||
Class of Stock [Line Items] | ||||||
Preferred stock, redemption price per share (in dollars per share) | $ 1,000 |
SERIES K PREFERRED STOCK - Conv
SERIES K PREFERRED STOCK - Conversion activity (Details) - Series K Preferred Stock [Member] $ in Millions | 3 Months Ended |
Jun. 30, 2017USD ($)shares | |
Class of Stock [Line Items] | |
Shares converted (in shares) | 3,200 |
Stock issued in lieu of cash, value | $ | $ 3.2 |
Conversion of shares (in shares) | 800,000,000 |
SERIES K PREFERRED STOCK - Clos
SERIES K PREFERRED STOCK - Closings and proceeds received (Details) - Series K Preferred Stock [Member] - USD ($) | Jun. 27, 2017 | Feb. 24, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Jun. 30, 2017 |
Class of Stock [Line Items] | |||||
Preferred stock, shares issued (in shares) | 4,100 | 150 | 4,100 | ||
Proceeds from issuance of preferred stock | $ 4,100,000 | $ 150,000 | |||
Private placement [Member] | |||||
Class of Stock [Line Items] | |||||
Preferred stock, shares issued (in shares) | 4,250 | 4,250 | |||
Proceeds from issuance of preferred stock | $ 15,000,000 | $ 1,000,000 | $ 4,250,000 |
MAKE-WHOLE DIVIDEND LIABILITY (
MAKE-WHOLE DIVIDEND LIABILITY (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2013 | Mar. 31, 2017 | Jun. 30, 2017 | Dec. 31, 2016 | Oct. 06, 2016 | |
Class of Stock [Line Items] | |||||
Change in fair value of make-whole dividend liability | $ (250,000) | ||||
Make-whole dividend liability | $ 200,000 | ||||
Series A Preferred Stock [Member] | |||||
Class of Stock [Line Items] | |||||
Preferred stock, dividend rate | 8.00% | ||||
Preferred stock, redemption, term, required make-whole dividend | 4 years | ||||
Preferred stock, dividend, make-whole dividend rate to market value | 10.00% | ||||
Shares converted (in shares) | 104,785 | 104,785 | |||
Dividends, make-whole dividends | $ 419,140 | ||||
Stock dividends (in shares) | 173,946,250 | ||||
Preferred stock, shares outstanding (in shares) | 60,756 | 125,044 | 165,541 | ||
Preferred stock, redemption amount | $ 500,000 | ||||
Preferred stock, redemption amount, additional make-whole amount | $ 200,000 |
STOCKHOLDERS' DEFICIT - Common
STOCKHOLDERS' DEFICIT - Common Stock (Details) | 6 Months Ended | |||
Jun. 30, 2017vote$ / sharesshares | Mar. 16, 2017$ / sharesshares | Mar. 15, 2017shares | Dec. 31, 2016$ / sharesshares | |
Equity [Abstract] | ||||
Common stock, shares authorized (in shares) | 20,000,000,000 | 20,000,000,000 | 2,000,000,000 | 2,000,000,000 |
Common stock, par value (in dollars per share) | $ / shares | $ 0.0001 | $ 0.0001 | $ 0.0001 | |
Number of votes per share | vote | 1 | |||
Common stock, shares outstanding (in shares) | 6,976,187,874 | 554,223,320 |
STOCKHOLDERS' DEFICIT - Preferr
STOCKHOLDERS' DEFICIT - Preferred Stock (Details) - $ / shares | Jun. 30, 2017 | Dec. 31, 2016 | Oct. 06, 2016 |
Class of Stock [Line Items] | |||
Preferred stock, shares authorized (in shares) | 25,000,000 | ||
Preferred stock, par value (in dollars per share) | $ 0.0001 | ||
Series A Preferred Stock [Member] | |||
Class of Stock [Line Items] | |||
Preferred stock, shares authorized (in shares) | 750,000 | 750,000 | |
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 | |
Preferred stock, shares outstanding (in shares) | 60,756 | 125,044 | 165,541 |
Series E Preferred Stock [Member] | |||
Class of Stock [Line Items] | |||
Preferred stock, shares outstanding (in shares) | 70 | ||
Series F Preferred Stock [Member] | |||
Class of Stock [Line Items] | |||
Preferred stock, shares outstanding (in shares) | 160 | ||
Series J Preferred Stock [Member] | |||
Class of Stock [Line Items] | |||
Preferred stock, shares outstanding (in shares) | 1,075 | ||
Series J-1 Preferred Stock [Member] | |||
Class of Stock [Line Items] | |||
Preferred stock, shares authorized (in shares) | 700 | 700 | |
Preferred stock, shares outstanding (in shares) | 700 | 700 | |
Series K Preferred Stock [Member] | |||
Class of Stock [Line Items] | |||
Preferred stock, shares outstanding (in shares) | 1,050 |
EQUITY PLANS AND SHARE-BASED 71
EQUITY PLANS AND SHARE-BASED COMPENSATION - Share-based compensation cost by line item and award type (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Share-based compensation cost | $ 16,174 | $ 340,142 | $ 95,911 | $ 557,980 |
Stock options [Member] | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Share-based compensation cost | 16,174 | 141,574 | 70,000 | 236,958 |
Restricted stock units and awards [Member] | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Share-based compensation cost | 0 | 198,568 | 26,329 | 321,022 |
Research and development [Member] | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Share-based compensation cost | 287 | 79,595 | 16,898 | 125,284 |
Selling, general, administrative [Member] | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Share-based compensation cost | $ 15,887 | $ 260,547 | $ 79,013 | $ 432,696 |
EQUITY PLANS AND SHARE-BASED 72
EQUITY PLANS AND SHARE-BASED COMPENSATION - Share-based compensation fair value assumptions (Details) - Stock options [Member] | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expected volatility | 114.00% | 115.00% |
Risk free interest rate | 1.00% | 1.00% |
Expected dividends | 0.00% | 0.00% |
Expected life (in years) | 6 years | 5 years 9 months 18 days |
EQUITY PLANS AND SHARE-BASED 73
EQUITY PLANS AND SHARE-BASED COMPENSATION - Narrative (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation expense | $ 16,174 | $ 340,142 | $ 95,911 | $ 557,980 |
Stock options [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation expense | 16,174 | 141,574 | $ 70,000 | $ 236,958 |
Weighted average grant date fair value (in dollars per share) | $ 0 | $ 1.20 | ||
Total compensation cost not yet recognized | $ 52,000 | $ 52,000 | ||
Recognized over a weighted average period | 1 year 6 months | |||
Vested and expected to vest shares (in shares) | 67,007 | 67,007 | ||
Vested and expected to vest weighted average exercise price (in dollars per share) | $ 39.97 | $ 39.97 | ||
Number of shares available for grant (in shares) | 193,824 | 193,824 | ||
Restricted stock units and awards [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation expense | $ 0 | $ 198,568 | $ 26,329 | $ 321,022 |
Number of shares available for grant (in shares) | 518,388 | 518,388 | ||
Restricted stock, weighted average estimated fair value (in dollars per share) | $ 0 | $ 2 | ||
Restricted stock expected to vest (in shares) | 0 | 0 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - USD ($) | Jan. 19, 2017 | Dec. 06, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 | Oct. 31, 2016 | Aug. 29, 2016 |
Related Party Transaction [Line Items] | |||||||
Proceeds from promissory note | $ 2,865,000 | $ 0 | |||||
Private placement [Member] | Common stock [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Proceeds from issuance of stock | $ 333,333,333 | ||||||
Accrued interest, current, retired for shares | $ 4,340 | ||||||
Discount notes [Member] | Tertius Financial Group Pte. Ltd. [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Proceeds from promissory note | $ 200,000 | ||||||
Debt, principal | $ 602,000 | ||||||
Debt instrument, unamortized discount (premium), net | $ 60,000 | ||||||
Discount notes [Member] | Tertius Financial Group Pte. Ltd. [Member] | Common stock [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Stated interest rate | 6.00% | 6.00% | |||||
Discount notes [Member] | Private placement [Member] | Tertius Financial Group Pte. Ltd. [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Proceeds from issuance of stock | $ 330,000 | ||||||
Debt, principal | $ 700,000 | $ 700,000 | |||||
Discount notes [Member] | Private placement [Member] | Tertius Financial Group Pte. Ltd. [Member] | Common stock [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Promissory note, current, retired for shares | $ 600,000 | ||||||
Private investor [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Ownership percentage | 5.00% | ||||||
Private investor [Member] | Chief Executive Officer [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Ownership percentage | 50.00% |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) - USD ($) | Apr. 16, 2014 | Oct. 21, 2011 | Apr. 30, 2014 | Dec. 31, 2010 | Jun. 30, 2017 | Dec. 31, 2013 | Dec. 31, 2016 |
Commitments and Contingencies Disclosure [Abstract] | |||||||
Complaint claim amount | $ 3,000,000 | ||||||
Attorney's fees and prejudgment interest | $ 1,200,000 | ||||||
Litigation settlement, amount awarded | $ 2,000,000 | $ 2,000,000 | |||||
Litigation settlement, payment period | 40 months | 40 months | |||||
Payments for legal settlements | $ 150,000 | ||||||
Estimated litigation liability | 50,000 | $ 1,700,000 | |||||
Current portion of litigation settlement | 49,620 | $ 339,481 | |||||
EnerPlex [Member] | |||||||
Loss Contingencies [Line Items] | |||||||
Loss contingency, accrual | $ 143,000 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - USD ($) | Aug. 14, 2017 | Aug. 10, 2017 | Jul. 31, 2017 | Jul. 28, 2017 | Jul. 26, 2017 | Jul. 24, 2017 | Jun. 27, 2017 | Feb. 24, 2017 | Jan. 17, 2017 | Oct. 14, 2016 | Jun. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Apr. 30, 2017 | Jun. 30, 2017 | Jun. 30, 2016 | Feb. 08, 2017 | Dec. 31, 2016 |
Subsequent Event [Line Items] | ||||||||||||||||||
Cash paid for interest | $ 206,080 | $ 192,532 | ||||||||||||||||
Common stock, shares issued (in shares) | 6,976,187,874 | 6,976,187,874 | 6,976,187,874 | 554,223,320 | ||||||||||||||
Subsequent event [Member] | ||||||||||||||||||
Subsequent Event [Line Items] | ||||||||||||||||||
Payments to consultant | $ 20,000 | |||||||||||||||||
Series K Preferred Stock [Member] | ||||||||||||||||||
Subsequent Event [Line Items] | ||||||||||||||||||
Proceeds from issuance of preferred stock | $ 4,100,000 | $ 150,000 | ||||||||||||||||
Preferred stock, shares outstanding (in shares) | 1,050 | 1,050 | 1,050 | |||||||||||||||
Preferred stock | $ 1,050,000 | $ 1,050,000 | $ 1,050,000 | |||||||||||||||
Shares converted (in shares) | 3,200 | |||||||||||||||||
Conversion of shares (in shares) | 800,000,000 | |||||||||||||||||
Ownership percentage | 11.00% | 11.00% | 11.00% | 19.99% | ||||||||||||||
Series K Preferred Stock [Member] | Subsequent event [Member] | ||||||||||||||||||
Subsequent Event [Line Items] | ||||||||||||||||||
Issuance of common stock (in shares) | 3,750 | |||||||||||||||||
Proceeds from issuance of preferred stock | $ 3,750,000 | |||||||||||||||||
Preferred stock, shares outstanding (in shares) | 1,800 | |||||||||||||||||
Preferred stock | $ 1,800,000 | |||||||||||||||||
Shares converted (in shares) | 3,000 | |||||||||||||||||
Conversion of shares (in shares) | 750,000,000 | |||||||||||||||||
Series J-1 Preferred Stock [Member] | ||||||||||||||||||
Subsequent Event [Line Items] | ||||||||||||||||||
Preferred stock, shares outstanding (in shares) | 700 | 700 | 700 | 700 | ||||||||||||||
Preferred stock | $ 700,000 | $ 700,000 | $ 700,000 | $ 700,000 | ||||||||||||||
Private placement [Member] | Series K Preferred Stock [Member] | ||||||||||||||||||
Subsequent Event [Line Items] | ||||||||||||||||||
Issuance of common stock (in shares) | 15,000 | 1,000 | ||||||||||||||||
Proceeds from issuance of preferred stock | $ 15,000,000 | $ 1,000,000 | $ 4,250,000 | |||||||||||||||
Private placement [Member] | Series K Preferred Stock [Member] | Subsequent event [Member] | ||||||||||||||||||
Subsequent Event [Line Items] | ||||||||||||||||||
Ownership percentage | 17.99% | |||||||||||||||||
Private placement [Member] | Series J-1 Preferred Stock [Member] | ||||||||||||||||||
Subsequent Event [Line Items] | ||||||||||||||||||
Issuance of common stock (in shares) | 1,000 | 700 | ||||||||||||||||
Proceeds from issuance of preferred stock | $ 700,000 | $ 700,000 | ||||||||||||||||
Private placement [Member] | Series J-1 Preferred Stock [Member] | Subsequent event [Member] | ||||||||||||||||||
Subsequent Event [Line Items] | ||||||||||||||||||
Extinguishment of debt | $ 700,000 | |||||||||||||||||
Debt accrued dividends, surrendered | $ 55,305.55 | |||||||||||||||||
Common stock, shares issued (in shares) | 500,000,000 | |||||||||||||||||
Warrant to purchase shares (in shares) | 250,000,000 | |||||||||||||||||
Warrant, exercise price (in dollars per share) | $ 0.003 | |||||||||||||||||
Warrant, percent owned common stock limitation | 9.99% | |||||||||||||||||
Secured convertible notes [Member] | Convertible Notes, July 2016 [Member] | Subsequent event [Member] | ||||||||||||||||||
Subsequent Event [Line Items] | ||||||||||||||||||
Repayments of liability | 496,600 | |||||||||||||||||
Cash paid for interest | $ 403,400 | |||||||||||||||||
Promissory note [Member] | Promissory note [Member] | ||||||||||||||||||
Subsequent Event [Line Items] | ||||||||||||||||||
Cash paid for interest | $ 41,655 | $ 60,434 | $ 50,581 | |||||||||||||||
Repayments of short-term debt | $ 20,150 | |||||||||||||||||
Series I Purchaser [Member] | Convertible debt [Member] | Exchange Convertible Notes [Member] | Subsequent event [Member] | ||||||||||||||||||
Subsequent Event [Line Items] | ||||||||||||||||||
Conversion of shares (in shares) | 306,675,548 | |||||||||||||||||
Cash paid for interest | $ 5,255 | |||||||||||||||||
Conversion of stock, amount converted, principle | 98,536 | $ 20,000 | ||||||||||||||||
Conversion of stock, amount converted, interest | $ 10,268 | |||||||||||||||||
Settlement agreement, consultant [Member] | Subsequent event [Member] | ||||||||||||||||||
Subsequent Event [Line Items] | ||||||||||||||||||
Warrant to purchase shares (in shares) | 250,000,000 | |||||||||||||||||
Warrant, exercise price (in dollars per share) | $ 0.004 | |||||||||||||||||
Warrant, percent owned common stock limitation | 9.99% |