Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | |
Mar. 31, 2015 | 5-May-15 | |
Document and Entity Information: | ||
Entity Registrant Name | BioSolar Inc | |
Document Type | 10-Q | |
Document Period End Date | 31-Mar-15 | |
Amendment Flag | FALSE | |
Entity Central Index Key | 1371128 | |
Current Fiscal Year End Date | -19 | |
Entity Common Stock, Shares Outstanding | 14,955,012 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Current Reporting Status | Yes | |
Entity Voluntary Filers | No | |
Entity Well-known Seasoned Issuer | No | |
Document Fiscal Year Focus | 2015 | |
Document Fiscal Period Focus | Q1 |
CONDENSED_BALANCE_SHEETS
CONDENSED BALANCE SHEETS (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
CURRENT ASSETS | ||
Cash | $173,538 | $146,640 |
Prepaid expenses | 65,825 | 45,620 |
TOTAL CURRENT ASSETS | 239,363 | 192,260 |
PROPERTY AND EQUIPMENT | ||
Machinery and equipment | 83,394 | 82,635 |
Less accumulated depreciation | -53,031 | -50,937 |
NET PROPERTY AND EQUIPMENT | 30,363 | 31,698 |
OTHER ASSETS | ||
Patents | 90,562 | 85,830 |
Deposit | 770 | 770 |
TOTAL OTHER ASSETS | 91,332 | 86,600 |
TOTAL ASSETS | 361,058 | 310,558 |
CURRENT LIABILITIES | ||
Accounts payable | 21,402 | 6,982 |
Accrued expenses | 51,535 | 35,272 |
Derivative liability | 2,879,877 | 3,320,943 |
Convertible promissory notes less debt discount of $284,799 and $307,604 respectively | 730,201 | 532,396 |
TOTAL CURRENT LIABILITIES | 3,683,015 | 3,895,593 |
SHAREHOLDERS' DEFICIT | ||
Preferred stock, $0.0001 par value; 10,000,000 authorized preferred shares | ||
Common stock, $0.0001 par value; 500,000,000 authorized common shares 12,171,879 and 11,846,354 shares issued and outstanding, respectively | 1,217 | 1,184 |
Additional paid in capital | 6,841,207 | 6,822,815 |
Accumulated deficit | -10,164,381 | -10,409,034 |
TOTAL SHAREHOLDERS' DECIFIT | -3,321,957 | -3,585,035 |
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT | $361,058 | $310,558 |
CONDENSED_BALANCE_SHEETS_Paren
CONDENSED BALANCE SHEETS (Parenthetical) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Statement of Financial Position | ||
Preferred Stock, par or stated value | $0.00 | $0.00 |
Preferred Stock, shares authorized | 10,000,000 | 10,000,000 |
Common Stock, par or stated value | $0.00 | $0.00 |
Common Stock, shares authorized | 500,000,000 | 500,000,000 |
Common Stock, shares issued | 12,171,879 | 11,846,354 |
Common Stock, shares outstanding | 12,171,879 | 11,846,354 |
Convertible Promissory Notes, Debt discount | $284,799 | $307,604 |
CONDENSED_STATEMENTS_OF_OPERAT
CONDENSED STATEMENTS OF OPERATIONS (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Income Statement | ||
REVENUE | ||
OPERATING EXPENSES | ||
General and administrative expenses | 118,146 | 156,045 |
Research and development | 34,904 | |
Depreciation and amortization | 2,094 | 1,826 |
TOTAL OPERATING EXPENSES | 155,144 | 157,871 |
LOSS FROM OPERATIONS BEFORE OTHER INCOME/(EXPENSES) | -155,144 | -157,871 |
TOTAL OTHER INCOME/(EXPENSES) | ||
Interest income | 7 | 12 |
Gain on change in derivative liability | 485,233 | 45,004 |
Interest expense | -85,443 | -63,131 |
TOTAL OTHER INCOME/(EXPENSES) | 399,797 | -18,115 |
NET INCOME (LOSS) | $244,653 | ($175,986) |
BASIC AND DILUTED LOSS PER SHARE | $0.02 | ($0.02) |
WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING BASIC AND DILUTED | 11,969,330 | 9,580,053 |
CONDENSED_STATEMENT_OF_SHAREHO
CONDENSED STATEMENT OF SHAREHOLDERS' DEFICIT (USD $) | Preferred Stock | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Total |
Shareholders' Equity, beginning of period, Value at Dec. 31, 2014 | $1,184 | $6,822,815 | ($10,409,034) | ($3,585,035) | |
Shareholders' Equity, beginning of period, Shares at Dec. 31, 2014 | 11,846,354 | ||||
Issuance of common shares for converted promissory notes, Value | 33 | 11,906 | 11,939 | ||
Issuance of common shares for converted promissory notes, Shares | 325,525 | ||||
Stock based compensation | 6,486 | 6,486 | |||
Net income for the three months ended March 31, 2015 | 244,653 | 244,653 | |||
Shareholders' Equity, end of period, Value at Mar. 31, 2015 | $1,217 | $6,841,207 | ($10,164,381) | ($3,321,957) | |
Shareholders' Equity, end of period, Shares at Mar. 31, 2015 | 12,171,879 |
CONDENSED_STATEMENTS_OF_CASH_F
CONDENSED STATEMENTS OF CASH FLOWS (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net Income (loss) | $244,653 | ($175,986) |
Adjustment to reconcile net income (loss) to net cash used in operating activities | ||
Depreciation and amortization expense | 2,094 | 1,826 |
Stock based compensation | 6,486 | 22,564 |
Gain on change in derivative liability | -485,233 | -45,004 |
Amortization of debt discount recognized as interest expense | 66,972 | 57,713 |
Changes in Assets and Liabilities | ||
Prepaid expenses | -20,205 | -5,215 |
Accounts payable | 14,420 | 4,300 |
Accrued expenses | 18,202 | 81,560 |
NET CASH USED IN OPERATING ACTIVITIES | -152,611 | -58,242 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchase of equipment | -759 | |
Patent expenditures | -4,732 | -5,474 |
NET CASH USED IN INVESTING ACTIVITIES | -5,491 | -5,474 |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from convertible promissory notes | 185,000 | |
NET CASH PROVIDED BY FINANCING ACTIVITIES | 185,000 | |
NET INCREASE/(DECREASE) IN CASH | 26,898 | -63,716 |
CASH, BEGINNING OF PERIOD | 146,640 | 158,350 |
CASH, END OF PERIOD | 173,538 | 94,634 |
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION | ||
Interest paid | 270 | |
Taxes paid | ||
SUPPLEMENTAL SCHEDULE OF NON-CASH TRANSACTIONS | ||
Common stock issued for debt | $11,939 | $78,243 |
1_Basis_of_Presentation
1. Basis of Presentation | 3 Months Ended |
Mar. 31, 2015 | |
Notes | |
1. Basis of Presentation | 1. Basis of Presentation |
The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all normal recurring adjustments considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 2015 are not necessarily indicative of the results that may be expected for the year ending December 31, 2015. For further information refer to the financial statements and footnotes thereto included in the Company's Form 10-K for the year ended December 31, 2014. | |
Going Concern | |
The accompanying financial statements have been prepared on a going concern basis of accounting, which contemplates continuity of operations, realization of assets and liabilities and commitments in the normal course of business. The accompanying financial statements do not reflect any adjustments that might result if the Company is unable to continue as a going concern. The Company has not generated significant revenue, and has negative cash flows from operations, which raise substantial doubt about the Company’s ability to continue as a going concern. The ability of the Company to continue as a going concern and appropriateness of using the going concern basis is dependent upon, among other things, additional cash infusion. The Company has historically obtained funds through private placements offerings of equity and debt. Management believes that it will be able to continue to raise funds by sale of its securities to its existing shareholders and prospective new investors to provide the additional cash needed to meet the Company’s obligations as they become due, and will allow the development of its core of business. There is no assurance that the Company will be able to continue raising the required capital for its operations. |
2_Summary_of_Significant_Accou
2. Summary of Significant Accounting Policies | 3 Months Ended | ||||
Mar. 31, 2015 | |||||
Notes | |||||
2. Summary of Significant Accounting Policies | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||||
This summary of significant accounting policies of the Company are presented to assist in understanding the Company’s financial statements. The financial statements and notes are representations of the Company’s management, which is responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America and have been consistently applied in the preparation of the financial statements. | |||||
Revenue Recognition | |||||
The Company will recognize revenue when services are performed, and at the time of shipment of products, provided that evidence of an arrangement exists, title and risk of loss have passed to the customer, fees are fixed or determinable, and collection of the related receivable is reasonably assured. To date, the Company has not had significant revenues and is in the development stage. | |||||
Cash and Cash Equivalent | |||||
The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. | |||||
Use of Estimates | |||||
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the accompanying financial statements. Significant estimates made in preparing these financial statements include the estimate of useful lives of property and equipment, the deferred tax valuation allowance, derivative liabilities and the fair value of stock options. Actual results could differ from those estimates. | |||||
Intangible Assets | |||||
Intangible assets consist of patents that are initially measured at the lower of cost or fair value. The patents are deemed to have an indefinite life and are not amortized. The patents are assessed annually for impairment, or whenever conditions indicate the asset may be impaired, and any such impairment will be recognized in the period identified. | |||||
Stock-Based Compensation | |||||
The Company measures the cost of employee services received in exchange for an equity award based on the grant-date fair value of the award. All grants under our stock-based compensation programs are accounted for at fair value and that cost is recognized over the period during which an employee is required to provide service in exchange for the award (the vesting period). Compensation expense for options granted to non-employees is determined in accordance with the standard as the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measured. Compensation expense for awards granted to non-employees is re-measured each period. | |||||
Determining the appropriate fair value of the stock-based compensation requires the input of subjective assumptions, including the expected life of the stock-based payment and stock price volatility. The Company uses the Black-Scholes option-pricing model to value its stock option awards which incorporate the Company’s stock price, volatility, U.S. risk-free rate, dividend rate, and estimated life. On March 24, 2015, the Company granted 2,450,000 stock options with an exercise price of $0.09 per share. The options will vest 1/25 on a monthly basis starting April 24, 2015, and terminate seven (7) years from the date of grant or upon termination of employment. | |||||
Loss per Share Calculations | |||||
Loss per Share dictates the calculation of basic earnings per share and diluted earnings per share are computed by dividing income available to common shareholders by the weighted-average number of common shares available. Diluted earnings per share is computed similar to basic earnings per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. No shares for employee options or warrants were used in the calculation of the loss per share as they were all anti-dilutive. The Company’s diluted loss per share is the same as the basic loss per share for the three months ended March 31, 2015 and 2014, as the inclusion of any potential shares would have had an anti-dilutive effect due to the Company generating a loss. The Company has excluded 3,286,667 options, 245,000 warrants, and the shares issuable from convertible debt of $1,015,000 for the three months ended March 31, 2015. | |||||
Fair Value of Financial Instruments | |||||
Fair Value of Financial Instruments, requires disclosure of the fair value information, whether or not recognized in the balance sheet, where it is practicable to estimate that value. As of March 31, 2015, the amounts reported for cash, inventory, prepaid expenses, accounts payable, and accrued expenses, approximate the fair value because of their short maturities. | |||||
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC Topic 820 established a three-tier fair value hierarchy which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). These tiers include: | |||||
· Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets; | |||||
· Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and | |||||
· Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. | |||||
We measure certain financial instruments at fair value on a recurring basis. Assets and liabilities measured at fair value on a recurring basis are as follows at March 31, 2015: | |||||
Total | (Level 1) | (Level 2) | (Level 3) | ||
Derivative Liability | $2,879,877 | $- | $- | $2,879,877 | |
Total liabilities measured at fair value | $2,879,877 | $- | $- | $2,879,877 | |
The following is a reconciliation of the derivative liability for which Level 3 inputs were used in determining the approximate fair value: | |||||
Beginning balance as of January 1, 2015 | $3,320,943 | ||||
Fair value of derivative liabilities issued | 44,167 | ||||
Gain on change in derivative liability | -485,233 | ||||
Ending balance as of March 31, 2015 | $2,879,877 | ||||
Recently Issued Accounting Pronouncements | |||||
In April 2015, the FASB issued ASU 2015-03, “Simplifying the Presentation of Debt Issuance Costs” this Update as part of its initiative to reduce complexity in accounting standards (the Simplification Initiative). The Board received feedback that having different balance sheet presentation requirements for debt issuance costs and debt discount and premium creates unnecessary complexity. Recognizing debt issuance costs as a deferred charge (that is, an asset) also is different from the guidance in International Financial Reporting Standards (IFRS), which requires that transaction costs be deducted from the carrying value of the financial liability and not recorded as separate assets. Additionally, the requirement to recognize debt issuance costs as deferred charges conflicts with the guidance in FASB Concepts Statement No. 6, Elements of Financial Statements, which states that debt issuance costs are similar to debt discounts and in effect reduce the proceeds of borrowing, thereby increasing the effective interest rate. Concepts Statement 6 further states that debt issuance costs cannot be an asset because they provide no future economic benefit. To simplify presentation of debt issuance costs, the amendments in this Update require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this Update. For public business entities, the amendments in this Update are effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. For all other entities, the amendments in this Update are effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within fiscal years beginning after December 15, 2016. The Company is currently evaluating the effects of adopting this ASU, if it is deemed to be applicable. | |||||
In August 2014, FASB issued ASU 2014-15, “Presentation of Financial Statements Going Concern (Subtopic 205-40) – Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern ”. Currently, there is no guidance in U.S. GAAP about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern or to provide related footnote disclosures. The amendments in this ASU provide that guidance. In doing so, the amendments are intended to reduce diversity in the timing and content of footnote disclosures. The amendments require management to assess an entity’s ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards. Specifically, the amendments (1) provide a definition of the term substantial doubt, (2) require an evaluation every reporting period including interim periods, (3) provide principles for considering the mitigating effect of management’s plans, (4) require certain disclosures when substantial doubt is alleviated as a result of consideration of management’s plans, (5) require an express statement and other disclosures when substantial doubt is not alleviated, and (6) require an assessment for a period of one year after the date that the financial statements are issued (or available to be issued). The amendments in this ASU are effective for public and nonpublic entities for annual periods ending after December 15, 2016. Early adoption is permitted. The Company is currently evaluating the impact of the adoption of ASU 2014-15 on the Company’s financial statements. | |||||
Management does not believe that any other recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying condensed financial statements. | |||||
3_Capital_Stock
3. Capital Stock | 3 Months Ended |
Mar. 31, 2015 | |
Notes | |
3. Capital Stock | 3. CAPITAL STOCK |
During the three months ended March 31, 2015, the Company issued 325,525 shares of common stock at a price per share of $0.0367, upon conversion of $10,000 in convertible promissory notes, including $1,939 in accrued interest. |
4_Stock_Options_and_Warrants
4. Stock Options and Warrants | 3 Months Ended | |||
Mar. 31, 2015 | ||||
Notes | ||||
4. Stock Options and Warrants | 4. STOCK OPTIONS AND WARRANTS | |||
During the year ended December 31, 2014, the Company did not grant any stock options. | ||||
31-Mar-15 | ||||
Weighted | ||||
Number | average | |||
of | exercise | |||
Options | price | |||
Outstanding, January 1, 2015 | 836,667 | $1.43 | ||
Granted | 2,450,000 | 0.09 | ||
Exercised | - | - | ||
Expired | - | - | ||
Outstanding, March 31, 2015 | 3,286,667 | $0.43 | ||
Exercisable at the end of period | 836,667 | $1.43 | ||
The weighted average remaining contractual life of options outstanding as of March 31, 2015 was as follows: | ||||
Weighted | ||||
Average | ||||
Stock | Stock | Remaining | ||
Exercisable | Options | Options | Contractual | |
Prices | Outstanding | Exercisable | Life (years) | |
$4.05 | 236,667 | 236,667 | 0.98 | |
0.4 | 600,000 | 600,000 | 2.92 | |
0.09 | 2,450,000 | - | 6.99 | |
Total | 3,286,667 | 836,667 | ||
The stock-based compensation expense recognized in the statement of operations during the three months ended March 31, 2015 and 2014, related to the granting of these options was $6,486 and $22,564, respectively. | ||||
As of March 31, 2015, there was no intrinsic value with regards to the outstanding options. | ||||
Warrants | ||||
During the three months ended March 31, 2015, the Company granted no warrants. As of March 31, 2015, 245,000 warrants are outstanding. The warrant terms are 5 years with 95,000 warrants expiring in October 2016 and 150,000 warrants expiring in October 2017. | ||||
31-Mar-15 | ||||
Weighted | ||||
Number | average | |||
of | exercise | |||
Warrants | price | |||
Outstanding, January 1, 2015 | 245,000 | $0.97 | ||
Granted | - | - | ||
Exercised | - | - | ||
Expired | - | - | ||
Outstanding, March 31, 2015 | 245,000 | $0.97 | ||
Exercisable at the end of period | 245,000 | $0.97 |
5_Convertible_Promissory_Notes
5. Convertible Promissory Notes | 3 Months Ended |
Mar. 31, 2015 | |
Notes | |
5. Convertible Promissory Notes | 5. CONVERTIBLE PROMISSORY NOTES |
On January 18, 2013, the Company entered into a securities purchase agreement for the sale of 10% convertible promissory note for the aggregate principal amount of $80,000, to be advanced in amounts at the lender’s discretion. Upon execution of the securities purchase agreement, the Company received an advance of $10,000. On April 16, 2013, the Company received an additional advance of $25,000. The total advances received were $35,000, of which principal in the amount of $25,000, and $2,886 in accrued interest was converted into 183,481 shares of common stock at fair value of $0.43 and $0.367 per share on September 29, 2013 and October 3, 2014, leaving a balance of $10,000. During the month of July 2013, the Company extended the maturity date of the note from six (6) months to eighteen (18) months from the effective date of each advance. The note is convertible into shares of common stock of the Company at a price equal to a variable conversion price of the lesser of a) $0.40 per share b) fifty percent (50%) of the lowest trading price of common stock recorded on any trade day after the effective date, or c) the lowest effective price per share granted after the effective date. The fair value of the notes has been determined by using Black-Scholes pricing model with an expected life of more than a year. | |
On March 1, 2013, the Company entered into a securities purchase agreement, providing for the sale by the Company of a 10% unsecured Convertible Note in the aggregate principal amount of $100,000, to be advanced in amounts at the lender’s discretion. The Company received advances of $35,000 during the year ended December 31, 2013. The note was amended on February 24, 2014, and was extended for six (6) months to mature on August 28, 2014. The note matured and was extended to August 28, 2015. The note is convertible into shares of common stock of the Company at a price equal to a variable conversion price of the lesser of $0.20 per share or fifty percent (50%) of the lowest trading price recorded on any trade day after the effective date. On October 2, 2014 and December 30, 2014, the lender converted $20,000 in principal, plus $11,001 of accrued interest. As of December 31, 2014, the remaining balance was $15,000. On February 25, 2015, the Company issued 325,525 shares of common stock at fair value of $0.0367 for principal in the amount of $10,000, plus accrued interest of $1,939, leaving a remaining balance of $5,000 as of March 31, 2015. On April 21, 2015, the remaining principal of $5,000, plus accrued interest of $1,071 was converted into 182,319 shares of common stock. The fair value of the note has been determined by using the Black-Scholes pricing model with an expected life of less than a year. | |
On June 5, 2013, the Company issued two 5% convertible promissory notes in exchange for services rendered by the Company’s Chief Executive Officer ($114,000) and Chief Technology Officer ($128,000) in the aggregate amount of $242,000. On March 5, 2014, the Company issued 694,191 upon partial conversion of principal in the amount of $55,000, plus accrued interest of $2,063, leaving a remaining balance of $187,000. On April 17, 2015, the Company issued 2,187,692 shares of common stock upon conversion of $130,000 in principal, plus $12,200 in accrued interest, leaving a balance of $57,000. The notes are convertible into shares of common stock of the Company at a conversion price equal to the lesser of $0.24 per share or the closing price per share of common stock recorded on the trading day immediately preceding the date of conversion. The notes mature two (2) years from their effective dates. The fair value of the notes has been determined by using the Black-Scholes pricing model with an expected life of two (2) years. The Company recorded amortization of debt discount, which was recognized as interest expense in the amount of $14,054 during the three months ended March 31, 2015. | |
On May 2, 2014, the Company entered into a securities purchase agreement, providing for the sale by the Company of a 10% unsecured Convertible Note in the aggregate principal amount of $500,000, to be advanced in amounts at the lender’s discretion. Upon execution of the securities purchase agreement, the Company received an advance in the amount of $50,000. On various dates, the Company received additional advances in the aggregate sum of $450,000. | |
The principal balance at December 31, 2014 was $500,000. The note matures eighteen months from the effective date of each advance. The note is convertible into shares of common stock of the Company at a price equal to a variable conversion price of a) the lesser of $0.25 per share of common stock, b) fifty percent (50%) of the average three (3) lowest trading prices of three (3) separate trading days recorded after the effective date, or c) the lowest effective price granted to any person or entity after the effective date to acquire common stock. The fair value of the note has been determined by using the Black-Scholes pricing model with an expected life of eighteen (18) months. The Company recorded amortization of debt discount, which was recognized as interest expense in the amount of $35,886 during the three months ended March 31, 2015. | |
On December 18, 2014, the Company issued two 5% convertible promissory notes in exchange for services rendered by the Company’s Chief Executive Officer ($68,000) and Chief Technology Officer ($61,000) in the aggregate amount of $128,000. The notes are convertible into shares of common stock of the Company at a conversion price equal to the lesser of $0.101 per share of common stock or the closing price per share of common stock recorded on the trading day immediately preceding the date of conversion. The notes mature two (2) years from their effective dates. The fair value of the notes has been determined by using the Black-Scholes pricing model with an expected life of two (2) years. The Company recorded amortization of debt discount, which was recognized as interest expense in the amount of $11,818 during the three months ended March 31, 2015. | |
On January 30, 2015, the Company entered into a securities purchase agreement, providing for the sale by the Company of a 10% unsecured Convertible Note in the aggregate principal amount of $500,000, to be advanced in amounts at the lender’s discretion. Upon execution of the securities purchase agreement, the Company received an advance in the amount of $50,000. On various dates, the Company received additional advances in the aggregate sum of $135,000. The principal balance at March 31, 2015 was $185,000. The note matures nine months from the effective date of each advance. The note is convertible into shares of common stock of the Company at a price equal to a variable conversion price of a) the lesser of $0.15 per share of common stock, b) fifty percent (50%) of the lowest trade price recorded since the original effective date of the note, or c) the lowest effective price per share granted to any person or entity after the effective date to acquire common stock. The fair value of the note has been determined by using the Black-Scholes pricing model with an expected life of nine (9) months. The Company recorded amortization of debt discount, which was recognized as interest expense in the amount of $5,214 during the three months ended March 31, 2015. | |
We evaluated the financing transactions in accordance with ASC Topic 815, Derivatives and Hedging, and determined that the conversion feature of the convertible promissory note was not afforded the exemption for conventional convertible instruments due to its variable conversion rate. The note has no explicit limit on the number of shares issuable so they did not meet the conditions set forth in current accounting standards for equity classification. The Company elected to recognize the note under paragraph 815-15-25-4, whereby, there would be a separation into a host contract and derivative instrument. The Company elected to initially and subsequently measure the note in its entirety at fair value, with changes in fair value recognized in earnings. The Company recorded a derivative liability representing the imputed interest associated with the embedded derivative. The derivative liability is adjusted periodically according to the stock price fluctuations. |
6_Derivative_Liabilities
6. Derivative Liabilities | 3 Months Ended | ||
Mar. 31, 2015 | |||
Notes | |||
6. Derivative Liabilities | 6. DERIVATIVE LIABILITIES | ||
The convertible notes issued and described in Note 5 do not have fixed settlement provisions because their conversion prices are not fixed. The conversion feature has been characterized as derivative liabilities to be re-measured at the end of every reporting period with the change in value reported in the statement of operations. | |||
During the three months ended March 31, 2015, as a result of the convertible notes (“Notes”) issued that were accounted for as derivative liabilities, we determined that the fair value of the conversion feature of the convertible notes at issuance was $44,167, based upon a Black-Sholes-Model calculation. We recorded the full value of the derivative as a liability at issuance with an offset to valuation discount, which will be amortized over the life of the Notes. | |||
During the three months ended March 31, 2015, approximately $10,000 convertible notes were converted. As a result of the conversion of these notes and the change in fair value of the remaining notes, the Company recorded a gain in change in derivative of $495,774 in the statement of operations for the three months ended March 31, 2015. At March 31, 2015, the fair value of the derivative liability was $2,879,877. | |||
For purpose of determining the fair market value of the derivative liability for the embedded conversion, the Company used Black Scholes option valuation model. The significant assumptions used in the Black Scholes valuation of the derivative are as follows: | |||
3/31/15 | |||
Risk free interest rate | 0.03% - 0.58% | ||
Stock volatility factor | 130.11% - 158.46% | ||
Weighted average expected option life | 6 mos - 2 years | ||
Expected dividend yield | None |
7_Subsequent_Event
7. Subsequent Event | 3 Months Ended |
Mar. 31, 2015 | |
Notes | |
7. Subsequent Event | 7. SUBSEQUENT EVENT |
Management has evaluated subsequent events according to the requirements of ASC TOPIC 855 and has determined that there are the following subsequent events: | |
On April 20, 2015, the Company issued 2,187,692 shares of common stock upon partial conversion of two (2) notes payable in the principal amounts of $65,000 each, plus accrued interest of $12,200. | |
On April 21, 2015, the Company issued 182,319 shares of common stock upon complete conversion of a note payable in the principal amount of $5,000, plus accrued interest of $1,071. | |
On April 23, 2015, the option holders of 808,333 stock options entered into a cancellation agreement with the Corporation pursuant to which the holders, for no consideration, agreed to cancel the outstanding options. All of the options were vested at the time of cancellation. | |
On April 28, 2015, the Company issued 413,122 shares of common stock upon partial conversion of a note payable in the principal amount of $5,000, plus accrued interest of $495. |
2_Summary_of_Significant_Accou1
2. Summary of Significant Accounting Policies (Policies) | 3 Months Ended | ||||
Mar. 31, 2015 | |||||
Policies | |||||
Revenue Recognition | Revenue Recognition | ||||
The Company will recognize revenue when services are performed, and at the time of shipment of products, provided that evidence of an arrangement exists, title and risk of loss have passed to the customer, fees are fixed or determinable, and collection of the related receivable is reasonably assured. To date, the Company has not had significant revenues and is in the development stage. | |||||
Cash and Cash Equivalent | Cash and Cash Equivalent | ||||
The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. | |||||
Use of Estimates | Use of Estimates | ||||
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the accompanying financial statements. Significant estimates made in preparing these financial statements include the estimate of useful lives of property and equipment, the deferred tax valuation allowance, derivative liabilities and the fair value of stock options. Actual results could differ from those estimates. | |||||
Intangible Assets | Intangible Assets | ||||
Intangible assets consist of patents that are initially measured at the lower of cost or fair value. The patents are deemed to have an indefinite life and are not amortized. The patents are assessed annually for impairment, or whenever conditions indicate the asset may be impaired, and any such impairment will be recognized in the period identified. | |||||
Stock-based Compensation | Stock-Based Compensation | ||||
The Company measures the cost of employee services received in exchange for an equity award based on the grant-date fair value of the award. All grants under our stock-based compensation programs are accounted for at fair value and that cost is recognized over the period during which an employee is required to provide service in exchange for the award (the vesting period). Compensation expense for options granted to non-employees is determined in accordance with the standard as the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measured. Compensation expense for awards granted to non-employees is re-measured each period. | |||||
Determining the appropriate fair value of the stock-based compensation requires the input of subjective assumptions, including the expected life of the stock-based payment and stock price volatility. The Company uses the Black-Scholes option-pricing model to value its stock option awards which incorporate the Company’s stock price, volatility, U.S. risk-free rate, dividend rate, and estimated life. On March 24, 2015, the Company granted 2,450,000 stock options with an exercise price of $0.09 per share. The options will vest 1/25 on a monthly basis starting April 24, 2015, and terminate seven (7) years from the date of grant or upon termination of employment. | |||||
Loss Per Share Calculations | Loss per Share Calculations | ||||
Loss per Share dictates the calculation of basic earnings per share and diluted earnings per share are computed by dividing income available to common shareholders by the weighted-average number of common shares available. Diluted earnings per share is computed similar to basic earnings per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. No shares for employee options or warrants were used in the calculation of the loss per share as they were all anti-dilutive. The Company’s diluted loss per share is the same as the basic loss per share for the three months ended March 31, 2015 and 2014, as the inclusion of any potential shares would have had an anti-dilutive effect due to the Company generating a loss. The Company has excluded 3,286,667 options, 245,000 warrants, and the shares issuable from convertible debt of $1,015,000 for the three months ended March 31, 2015. | |||||
Fair Value of Financial Instruments | Fair Value of Financial Instruments | ||||
Fair Value of Financial Instruments, requires disclosure of the fair value information, whether or not recognized in the balance sheet, where it is practicable to estimate that value. As of March 31, 2015, the amounts reported for cash, inventory, prepaid expenses, accounts payable, and accrued expenses, approximate the fair value because of their short maturities. | |||||
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC Topic 820 established a three-tier fair value hierarchy which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). These tiers include: | |||||
· Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets; | |||||
· Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and | |||||
· Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. | |||||
We measure certain financial instruments at fair value on a recurring basis. Assets and liabilities measured at fair value on a recurring basis are as follows at March 31, 2015: | |||||
Total | (Level 1) | (Level 2) | (Level 3) | ||
Derivative Liability | $2,879,877 | $- | $- | $2,879,877 | |
Total liabilities measured at fair value | $2,879,877 | $- | $- | $2,879,877 | |
The following is a reconciliation of the derivative liability for which Level 3 inputs were used in determining the approximate fair value: | |||||
Beginning balance as of January 1, 2015 | $3,320,943 | ||||
Fair value of derivative liabilities issued | 44,167 | ||||
Gain on change in derivative liability | -485,233 | ||||
Ending balance as of March 31, 2015 | $2,879,877 | ||||
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements | ||||
In April 2015, the FASB issued ASU 2015-03, “Simplifying the Presentation of Debt Issuance Costs” this Update as part of its initiative to reduce complexity in accounting standards (the Simplification Initiative). The Board received feedback that having different balance sheet presentation requirements for debt issuance costs and debt discount and premium creates unnecessary complexity. Recognizing debt issuance costs as a deferred charge (that is, an asset) also is different from the guidance in International Financial Reporting Standards (IFRS), which requires that transaction costs be deducted from the carrying value of the financial liability and not recorded as separate assets. Additionally, the requirement to recognize debt issuance costs as deferred charges conflicts with the guidance in FASB Concepts Statement No. 6, Elements of Financial Statements, which states that debt issuance costs are similar to debt discounts and in effect reduce the proceeds of borrowing, thereby increasing the effective interest rate. Concepts Statement 6 further states that debt issuance costs cannot be an asset because they provide no future economic benefit. To simplify presentation of debt issuance costs, the amendments in this Update require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this Update. For public business entities, the amendments in this Update are effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. For all other entities, the amendments in this Update are effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within fiscal years beginning after December 15, 2016. The Company is currently evaluating the effects of adopting this ASU, if it is deemed to be applicable. | |||||
In August 2014, FASB issued ASU 2014-15, “Presentation of Financial Statements Going Concern (Subtopic 205-40) – Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern ”. Currently, there is no guidance in U.S. GAAP about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern or to provide related footnote disclosures. The amendments in this ASU provide that guidance. In doing so, the amendments are intended to reduce diversity in the timing and content of footnote disclosures. The amendments require management to assess an entity’s ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards. Specifically, the amendments (1) provide a definition of the term substantial doubt, (2) require an evaluation every reporting period including interim periods, (3) provide principles for considering the mitigating effect of management’s plans, (4) require certain disclosures when substantial doubt is alleviated as a result of consideration of management’s plans, (5) require an express statement and other disclosures when substantial doubt is not alleviated, and (6) require an assessment for a period of one year after the date that the financial statements are issued (or available to be issued). The amendments in this ASU are effective for public and nonpublic entities for annual periods ending after December 15, 2016. Early adoption is permitted. The Company is currently evaluating the impact of the adoption of ASU 2014-15 on the Company’s financial statements. | |||||
Management does not believe that any other recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying condensed financial statements. | |||||
2_Summary_of_Significant_Accou2
2. Summary of Significant Accounting Policies: Fair Value of Financial Instruments: Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis (Tables) | 3 Months Ended | ||||
Mar. 31, 2015 | |||||
Tables/Schedules | |||||
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis | We measure certain financial instruments at fair value on a recurring basis. Assets and liabilities measured at fair value on a recurring basis are as follows at March 31, 2015: | ||||
Total | (Level 1) | (Level 2) | (Level 3) | ||
Derivative Liability | $2,879,877 | $- | $- | $2,879,877 | |
Total liabilities measured at fair value | $2,879,877 | $- | $- | $2,879,877 |
2_Summary_of_Significant_Accou3
2. Summary of Significant Accounting Policies: Fair Value of Financial Instruments: Schedule of Derivative Liability Reconciliation of Fair Value (Tables) | 3 Months Ended | |
Mar. 31, 2015 | ||
Tables/Schedules | ||
Schedule of Derivative Liability Reconciliation of Fair Value | The following is a reconciliation of the derivative liability for which Level 3 inputs were used in determining the approximate fair value: | |
Beginning balance as of January 1, 2015 | $3,320,943 | |
Fair value of derivative liabilities issued | 44,167 | |
Gain on change in derivative liability | -485,233 | |
Ending balance as of March 31, 2015 | $2,879,877 |
4_Stock_Options_and_Warrants_S
4. Stock Options and Warrants: Schedule of Stock Options, Activity (Tables) | 3 Months Ended | ||
Mar. 31, 2015 | |||
Tables/Schedules | |||
Schedule of Stock Options, Activity | |||
31-Mar-15 | |||
Weighted | |||
Number | average | ||
of | exercise | ||
Options | price | ||
Outstanding, January 1, 2015 | 836,667 | $1.43 | |
Granted | 2,450,000 | 0.09 | |
Exercised | - | - | |
Expired | - | - | |
Outstanding, March 31, 2015 | 3,286,667 | $0.43 | |
Exercisable at the end of period | 836,667 | $1.43 |
4_Stock_Options_and_Warrants_S1
4. Stock Options and Warrants: Schedule of Options, Weighted Average Remaining Contractual Life (Tables) | 3 Months Ended | |||
Mar. 31, 2015 | ||||
Tables/Schedules | ||||
Schedule of Options, Weighted Average Remaining Contractual Life | The weighted average remaining contractual life of options outstanding as of March 31, 2015 was as follows: | |||
Weighted | ||||
Average | ||||
Stock | Stock | Remaining | ||
Exercisable | Options | Options | Contractual | |
Prices | Outstanding | Exercisable | Life (years) | |
$4.05 | 236,667 | 236,667 | 0.98 | |
0.4 | 600,000 | 600,000 | 2.92 | |
0.09 | 2,450,000 | - | 6.99 | |
Total | 3,286,667 | 836,667 |
4_Stock_Options_and_Warrants_S2
4. Stock Options and Warrants: Schedule of Warrants (Tables) | 3 Months Ended | ||
Mar. 31, 2015 | |||
Tables/Schedules | |||
Schedule of Warrants | |||
31-Mar-15 | |||
Weighted | |||
Number | average | ||
of | exercise | ||
Warrants | price | ||
Outstanding, January 1, 2015 | 245,000 | $0.97 | |
Granted | - | - | |
Exercised | - | - | |
Expired | - | - | |
Outstanding, March 31, 2015 | 245,000 | $0.97 | |
Exercisable at the end of period | 245,000 | $0.97 |
6_Derivative_Liabilities_Sched
6. Derivative Liabilities: Schedule of Derivative Liabilities Valuation Assumptions (Tables) | 3 Months Ended | ||
Mar. 31, 2015 | |||
Tables/Schedules | |||
Schedule of Derivative Liabilities Valuation Assumptions | For purpose of determining the fair market value of the derivative liability for the embedded conversion, the Company used Black Scholes option valuation model. The significant assumptions used in the Black Scholes valuation of the derivative are as follows: | ||
3/31/15 | |||
Risk free interest rate | 0.03% - 0.58% | ||
Stock volatility factor | 130.11% - 158.46% | ||
Weighted average expected option life | 6 mos - 2 years | ||
Expected dividend yield | None |
2_Summary_of_Significant_Accou4
2. Summary of Significant Accounting Policies: Stock-based Compensation (Details) (USD $) | 3 Months Ended |
Mar. 31, 2015 | |
Options Granted | 2,450,000 |
Options Granted, Weighted average exercise price | $0.09 |
Employee Stock Option | |
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights | The options will vest 1/25 on a monthly basis starting April 24, 2015 |
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period | 7 years |
2_Summary_of_Significant_Accou5
2. Summary of Significant Accounting Policies: Loss Per Share Calculations (Details) (USD $) | 3 Months Ended |
Mar. 31, 2015 | |
Warrant | |
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 245,000 |
Convertible Debt Securities | |
Dilutive Securities, Effect on Basic Earnings Per Share, Dilutive Convertible Securities | 1,015,000 |
Employee Stock Option | |
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 3,286,667 |
2_Summary_of_Significant_Accou6
2. Summary of Significant Accounting Policies: Fair Value of Financial Instruments: Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis (Details) (USD $) | Mar. 31, 2015 |
Derivative Liability | $2,879,877 |
Total liabilities measures at fair value | 2,879,877 |
Fair Value, Inputs, Level 1 | |
Derivative Liability | 0 |
Total liabilities measures at fair value | 0 |
Fair Value, Inputs, Level 2 | |
Derivative Liability | 0 |
Total liabilities measures at fair value | 0 |
Fair Value, Inputs, Level 3 | |
Derivative Liability | 2,879,877 |
Total liabilities measures at fair value | $2,879,877 |
2_Summary_of_Significant_Accou7
2. Summary of Significant Accounting Policies: Fair Value of Financial Instruments: Schedule of Derivative Liability Reconciliation of Fair Value (Details) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Details | ||
Derivative Liabilities, beginning balance | $3,320,943 | |
Fair value of derivative liabilities issued | 44,167 | |
Gain on change in derivative liability | -485,233 | -45,004 |
Derivative Liabilities, ending balance | $2,879,877 |
3_Capital_Stock_Details
3. Capital Stock (Details) (USD $) | 3 Months Ended |
Mar. 31, 2015 | |
Debt Instrument, Convertible, Conversion Price | $0.04 |
Debt Conversion, Original Debt, Amount | $10,000 |
Interest | |
Debt Conversion, Original Debt, Amount | $1,939 |
Common Stock | |
Debt Conversion, Converted Instrument, Shares Issued | 325,525 |
4_Stock_Options_and_Warrants_S3
4. Stock Options and Warrants: Schedule of Stock Options, Activity (Details) (USD $) | 3 Months Ended |
Mar. 31, 2015 | |
Details | |
Options Outstanding, beginning of period | 836,667 |
Options Outstanding, Weighted average exercise price, beginning of period | $1.43 |
Options Granted | 2,450,000 |
Options Granted, Weighted average exercise price | $0.09 |
Options Exercised | 0 |
Options Exercised, Weighted average exercise price | $0 |
Options Expired | 0 |
Options Expired, Weighted average exercise price | $0 |
Options Outstanding, end of period | 3,286,667 |
Options Outstanding, Weighted average exercise price, end of period | $0.43 |
Options Exercisable at the end of period | 836,667 |
Options Exercisable, Weighted average exercise price | $1.43 |
4_Stock_Options_and_Warrants_S4
4. Stock Options and Warrants: Schedule of Options, Weighted Average Remaining Contractual Life (Details) | 3 Months Ended |
Mar. 31, 2015 | |
Stock Options Outstanding | 3,286,667 |
Stock Options Exercisable | 836,667 |
4.05 | |
Stock Options Outstanding | 236,667 |
Stock Options Exercisable | 236,667 |
Weighted Average Remaining Contractual Life (years) | 11 months 23 days |
0.4 | |
Stock Options Outstanding | 600,000 |
Stock Options Exercisable | 600,000 |
Weighted Average Remaining Contractual Life (years) | 2 years 11 months 1 day |
0.09 | |
Stock Options Outstanding | 2,450,000 |
Stock Options Exercisable | 0 |
Weighted Average Remaining Contractual Life (years) | 6 years 11 months 26 days |
4_Stock_Options_and_Warrants_D
4. Stock Options and Warrants (Details) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Options, Outstanding, Intrinsic Value | $0 | |
Warrants, Outstanding | 245,000 | |
Warrant Term, in years | 5 years | |
October 2016 Expiration Date | ||
Warrants, Outstanding | 95,000 | |
October 2017 Expiration Date | ||
Warrants, Outstanding | 150,000 | |
Employee Stock Option | ||
Allocated Share-based Compensation Expense | $6,486 | $22,564 |
4_Stock_Options_and_Warrants_S5
4. Stock Options and Warrants: Schedule of Warrants (Details) (USD $) | 3 Months Ended |
Mar. 31, 2015 | |
Details | |
Warrants Outstanding, beginning of period | 245,000 |
Warrants Outstanding, Weighted average exercise price, beginning of period | $0.97 |
Warrants, Granted | 0 |
Warrants Granted, Weighted average exercise price | $0 |
Warrants, Exercised | 0 |
Warrants Exercised, Weighted average exercise price | $0 |
Warrants, Expired | 0 |
Warrants Expired, Weighted average exercise price | $0 |
Warrants Outstanding, end of period | 245,000 |
Warrants Outstanding, Weighted average exercise price, end of period | $0.97 |
Warrants, Exercisable | 245,000 |
Warrants Exercisable, Weighted average exercise price | $0.97 |
5_Convertible_Promissory_Notes1
5. Convertible Promissory Notes (Details) (USD $) | 3 Months Ended | 18 Months Ended | 3 Months Ended | 12 Months Ended | 0 Months Ended | 3 Months Ended | 0 Months Ended | 12 Months Ended | 0 Months Ended | ||||||||||
Mar. 31, 2015 | Mar. 31, 2014 | Jun. 30, 2013 | Oct. 03, 2014 | Mar. 31, 2013 | Dec. 31, 2013 | Apr. 21, 2015 | Dec. 31, 2014 | Apr. 17, 2015 | Dec. 31, 2014 | Jan. 30, 2015 | Sep. 29, 2013 | Jan. 18, 2013 | Mar. 01, 2013 | Feb. 25, 2015 | Mar. 05, 2014 | Jun. 05, 2013 | 2-May-14 | Dec. 18, 2014 | |
Proceeds from convertible promissory notes | $185,000 | ||||||||||||||||||
Debt Conversion, Original Debt, Amount | 10,000 | ||||||||||||||||||
Debt Instrument, Convertible, Conversion Price | $0.04 | ||||||||||||||||||
Fair Value Measurements, Valuation Techniques | Black Scholes valuation | ||||||||||||||||||
Amortization of debt discount recognized as interest expense | 66,972 | 57,713 | |||||||||||||||||
Common Stock | |||||||||||||||||||
Debt Conversion, Converted Instrument, Shares Issued | 325,525 | ||||||||||||||||||
Interest | |||||||||||||||||||
Debt Conversion, Original Debt, Amount | 1,939 | ||||||||||||||||||
Securities Purchase Agreements Unsecured Convertible Notes 1 | |||||||||||||||||||
Debt Instrument, Interest Rate, Stated Percentage | 10.00% | ||||||||||||||||||
Debt Instrument, Face Amount | 80,000 | ||||||||||||||||||
Proceeds from convertible promissory notes | 35,000 | ||||||||||||||||||
Debt Conversion, Converted Instrument, Shares Issued | 183,481 | ||||||||||||||||||
Debt Instrument, Convertible, Conversion Price | $0.37 | $0.43 | |||||||||||||||||
Long-term Debt, Gross | 10,000 | ||||||||||||||||||
Debt Instrument, Description | During the month of July 2013, the Company extended the maturity date of the note from six (6) months to eighteen (18) months from the effective date of each advance. The note is convertible into shares of common stock of the Company at a price equal to a variable conversion price of the lesser of a) $0.40 per share b) fifty percent (50%) of the lowest trading price of common stock recorded on any trade day after the effective date, or c) the lowest effective price per share granted after the effective date. | ||||||||||||||||||
Securities Purchase Agreements Unsecured Convertible Notes 1 | Advance 1 | |||||||||||||||||||
Proceeds from convertible promissory notes | 10,000 | ||||||||||||||||||
Securities Purchase Agreements Unsecured Convertible Notes 1 | Advance 2 | |||||||||||||||||||
Proceeds from convertible promissory notes | 25,000 | ||||||||||||||||||
Securities Purchase Agreements Unsecured Convertible Notes 1 | Principal | |||||||||||||||||||
Debt Conversion, Original Debt, Amount | 25,000 | ||||||||||||||||||
Securities Purchase Agreements Unsecured Convertible Notes 1 | Interest | |||||||||||||||||||
Debt Conversion, Original Debt, Amount | 2,886 | ||||||||||||||||||
Securities Purchase Agreements Unsecured Convertible Notes 2 | |||||||||||||||||||
Debt Instrument, Interest Rate, Stated Percentage | 10.00% | ||||||||||||||||||
Debt Instrument, Face Amount | 100,000 | ||||||||||||||||||
Proceeds from convertible promissory notes | 35,000 | ||||||||||||||||||
Long-term Debt, Gross | 5,000 | 15,000 | 15,000 | ||||||||||||||||
Debt Instrument, Description | The note was amended on February 24, 2014, and was extended for six (6) months to mature on August 28, 2014. The note matured and was extended to August 28, 2015. The note is convertible into shares of common stock of the Company at a price equal to a variable conversion price of the lesser of $0.20 per share or fifty percent (50%) of the lowest trading price recorded on any trade day after the effective date. | ||||||||||||||||||
Securities Purchase Agreements Unsecured Convertible Notes 2 | Common Stock | |||||||||||||||||||
Debt Conversion, Converted Instrument, Shares Issued | 325,525 | ||||||||||||||||||
Debt Instrument, Convertible, Conversion Price | $0.04 | ||||||||||||||||||
Securities Purchase Agreements Unsecured Convertible Notes 2 | Common Stock | Subsequent Event | |||||||||||||||||||
Debt Conversion, Converted Instrument, Shares Issued | 182,319 | ||||||||||||||||||
Securities Purchase Agreements Unsecured Convertible Notes 2 | Principal | |||||||||||||||||||
Debt Conversion, Original Debt, Amount | 10,000 | 20,000 | |||||||||||||||||
Securities Purchase Agreements Unsecured Convertible Notes 2 | Principal | Subsequent Event | |||||||||||||||||||
Debt Conversion, Original Debt, Amount | 5,000 | ||||||||||||||||||
Securities Purchase Agreements Unsecured Convertible Notes 2 | Interest | |||||||||||||||||||
Debt Conversion, Original Debt, Amount | 1,939 | 11,001 | |||||||||||||||||
Securities Purchase Agreements Unsecured Convertible Notes 2 | Interest | Subsequent Event | |||||||||||||||||||
Debt Conversion, Original Debt, Amount | 1,071 | ||||||||||||||||||
Securities Purchase Agreements Unsecured Convertible Notes 3 | |||||||||||||||||||
Debt Instrument, Face Amount | 242,000 | ||||||||||||||||||
Long-term Debt, Gross | 187,000 | ||||||||||||||||||
Debt Instrument, Description | The notes are convertible into shares of common stock of the Company at a conversion price equal to the lesser of $0.24 per share or the closing price per share of common stock recorded on the trading day immediately preceding the date of conversion. The notes mature two (2) years from their effective dates | ||||||||||||||||||
Fair Value Measurements, Valuation Techniques | Black-Scholes pricing model | ||||||||||||||||||
Weighted average expected option life | 2 years | ||||||||||||||||||
Amortization of debt discount recognized as interest expense | 14,054 | ||||||||||||||||||
Securities Purchase Agreements Unsecured Convertible Notes 3 | Chief Executive Officer | |||||||||||||||||||
Debt Instrument, Interest Rate, Stated Percentage | 5.00% | ||||||||||||||||||
Debt Instrument, Face Amount | 114,000 | ||||||||||||||||||
Securities Purchase Agreements Unsecured Convertible Notes 3 | Officer | |||||||||||||||||||
Debt Instrument, Interest Rate, Stated Percentage | 5.00% | ||||||||||||||||||
Debt Instrument, Face Amount | 128,000 | ||||||||||||||||||
Securities Purchase Agreements Unsecured Convertible Notes 3 | Subsequent Event | |||||||||||||||||||
Long-term Debt, Gross | 57,000 | ||||||||||||||||||
Securities Purchase Agreements Unsecured Convertible Notes 3 | Common Stock | |||||||||||||||||||
Debt Conversion, Converted Instrument, Shares Issued | 694,191 | ||||||||||||||||||
Securities Purchase Agreements Unsecured Convertible Notes 3 | Common Stock | Subsequent Event | |||||||||||||||||||
Debt Conversion, Converted Instrument, Shares Issued | 2,187,692 | ||||||||||||||||||
Securities Purchase Agreements Unsecured Convertible Notes 3 | Principal | |||||||||||||||||||
Debt Conversion, Original Debt, Amount | 55,000 | ||||||||||||||||||
Securities Purchase Agreements Unsecured Convertible Notes 3 | Principal | Subsequent Event | |||||||||||||||||||
Debt Conversion, Original Debt, Amount | 130,000 | ||||||||||||||||||
Securities Purchase Agreements Unsecured Convertible Notes 3 | Interest | |||||||||||||||||||
Debt Conversion, Original Debt, Amount | 2,063 | ||||||||||||||||||
Securities Purchase Agreements Unsecured Convertible Notes 3 | Interest | Subsequent Event | |||||||||||||||||||
Debt Conversion, Original Debt, Amount | 12,200 | ||||||||||||||||||
Securities Purchase Agreements Unsecured Convertible Notes 5 | |||||||||||||||||||
Debt Instrument, Interest Rate, Stated Percentage | 10.00% | ||||||||||||||||||
Proceeds from convertible promissory notes | 50,000 | ||||||||||||||||||
Long-term Debt, Gross | 500,000 | 500,000 | |||||||||||||||||
Debt Instrument, Description | The note matures eighteen months from the effective date of each advance. The note is convertible into shares of common stock of the Company at a price equal to a variable conversion price of a) the lesser of $0.25 per share of common stock, b) fifty percent (50%) of the average three (3) lowest trading prices of three (3) separate trading days recorded after the effective date, or c) the lowest effective price granted to any person or entity after the effective date to acquire common stock. The fair value of the note has been determined by using the Black-Scholes pricing model with an expected life of eighteen (18) months. | ||||||||||||||||||
Amortization of debt discount recognized as interest expense | 35,886 | ||||||||||||||||||
Debt Instrument, Fair Value Disclosure | 500,000 | ||||||||||||||||||
Securities Purchase Agreements Unsecured Convertible Notes 6 | |||||||||||||||||||
Debt Instrument, Face Amount | 128,000 | ||||||||||||||||||
Debt Instrument, Description | The notes are convertible into shares of common stock of the Company at a conversion price equal to the lesser of $0.101 per share of common stock or the closing price per share of common stock recorded on the trading day immediately preceding the date of conversion. The notes mature two (2) years from their effective dates. | ||||||||||||||||||
Fair Value Measurements, Valuation Techniques | Black-Scholes pricing model | ||||||||||||||||||
Weighted average expected option life | 2 years | ||||||||||||||||||
Amortization of debt discount recognized as interest expense | 11,818 | ||||||||||||||||||
Securities Purchase Agreements Unsecured Convertible Notes 6 | Chief Executive Officer | |||||||||||||||||||
Debt Instrument, Interest Rate, Stated Percentage | 5.00% | ||||||||||||||||||
Debt Instrument, Face Amount | 68,000 | ||||||||||||||||||
Securities Purchase Agreements Unsecured Convertible Notes 6 | Officer | |||||||||||||||||||
Debt Instrument, Interest Rate, Stated Percentage | 5.00% | ||||||||||||||||||
Debt Instrument, Face Amount | 61,000 | ||||||||||||||||||
Securities Purchase Agreements Unsecured Convertible Notes 7 | |||||||||||||||||||
Debt Instrument, Interest Rate, Stated Percentage | 10.00% | ||||||||||||||||||
Debt Instrument, Face Amount | 500,000 | ||||||||||||||||||
Proceeds from convertible promissory notes | 135,000 | 50,000 | |||||||||||||||||
Long-term Debt, Gross | 185,000 | ||||||||||||||||||
Debt Instrument, Description | The note matures nine months from the effective date of each advance. The note is convertible into shares of common stock of the Company at a price equal to a variable conversion price of a) the lesser of $0.15 per share of common stock, b) fifty percent (50%) of the lowest trade price recorded since the original effective date of the note, or c) the lowest effective price per share granted to any person or entity after the effective date to acquire common stock. | ||||||||||||||||||
Fair Value Measurements, Valuation Techniques | Black-Scholes pricing model | ||||||||||||||||||
Weighted average expected option life | 9 months | ||||||||||||||||||
Amortization of debt discount recognized as interest expense | $5,214 |
6_Derivative_Liabilities_Detai
6. Derivative Liabilities (Details) (USD $) | 3 Months Ended | ||
Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 | |
Debt Conversion, Original Debt, Amount | $10,000 | ||
Gain on change in derivative liability | 485,233 | 45,004 | |
Derivative liability | 2,879,877 | 3,320,943 | |
Convertible Debt | |||
Fair value of the conversion feature | 44,167 | ||
Gain on change in derivative liability | $495,774 |
6_Derivative_Liabilities_Sched1
6. Derivative Liabilities: Schedule of Derivative Liabilities Valuation Assumptions (Details) | 3 Months Ended |
Mar. 31, 2015 | |
Fair Value Measurements, Valuation Techniques | Black Scholes valuation |
Expected dividend yield | 0.00% |
Minimum | |
Risk free interest rate | 0.03% |
Stock volatility factor | 130.11% |
Weighted average expected option life | 6 months |
Maximum | |
Risk free interest rate | 0.58% |
Stock volatility factor | 158.46% |
Weighted average expected option life | 2 years |
7_Subsequent_Event_Details
7. Subsequent Event (Details) (USD $) | 3 Months Ended | 0 Months Ended | 3 Months Ended | 0 Months Ended | 3 Months Ended | 0 Months Ended | |
Mar. 31, 2015 | Apr. 23, 2015 | Mar. 31, 2014 | Apr. 17, 2015 | Dec. 31, 2014 | Apr. 21, 2015 | Apr. 28, 2015 | |
Debt Conversion, Original Debt, Amount | $10,000 | ||||||
Interest | |||||||
Debt Conversion, Original Debt, Amount | 1,939 | ||||||
Subsequent Event | |||||||
Options, Cancelled | 808,333 | ||||||
Common Stock | |||||||
Debt Conversion, Converted Instrument, Shares Issued | 325,525 | ||||||
Securities Purchase Agreements Unsecured Convertible Notes 3 | Principal | |||||||
Debt Conversion, Original Debt, Amount | 55,000 | ||||||
Securities Purchase Agreements Unsecured Convertible Notes 3 | Interest | |||||||
Debt Conversion, Original Debt, Amount | 2,063 | ||||||
Securities Purchase Agreements Unsecured Convertible Notes 3 | Subsequent Event | Principal | |||||||
Debt Conversion, Original Debt, Amount | 130,000 | ||||||
Securities Purchase Agreements Unsecured Convertible Notes 3 | Subsequent Event | Interest | |||||||
Debt Conversion, Original Debt, Amount | 12,200 | ||||||
Securities Purchase Agreements Unsecured Convertible Notes 3 | Common Stock | |||||||
Debt Conversion, Converted Instrument, Shares Issued | 694,191 | ||||||
Securities Purchase Agreements Unsecured Convertible Notes 3 | Common Stock | Subsequent Event | |||||||
Debt Conversion, Converted Instrument, Shares Issued | 2,187,692 | ||||||
Securities Purchase Agreements Unsecured Convertible Notes 2 | Principal | |||||||
Debt Conversion, Original Debt, Amount | 10,000 | 20,000 | |||||
Securities Purchase Agreements Unsecured Convertible Notes 2 | Interest | |||||||
Debt Conversion, Original Debt, Amount | 1,939 | 11,001 | |||||
Securities Purchase Agreements Unsecured Convertible Notes 2 | Subsequent Event | Principal | |||||||
Debt Conversion, Original Debt, Amount | 5,000 | ||||||
Securities Purchase Agreements Unsecured Convertible Notes 2 | Subsequent Event | Interest | |||||||
Debt Conversion, Original Debt, Amount | 1,071 | ||||||
Securities Purchase Agreements Unsecured Convertible Notes 2 | Common Stock | |||||||
Debt Conversion, Converted Instrument, Shares Issued | 325,525 | ||||||
Securities Purchase Agreements Unsecured Convertible Notes 2 | Common Stock | Subsequent Event | |||||||
Debt Conversion, Converted Instrument, Shares Issued | 182,319 | ||||||
Securities Purchase Agreements Unsecured Convertible Notes 4 | Subsequent Event | Principal | |||||||
Debt Conversion, Original Debt, Amount | 5,000 | ||||||
Securities Purchase Agreements Unsecured Convertible Notes 4 | Subsequent Event | Interest | |||||||
Debt Conversion, Original Debt, Amount | $495 | ||||||
Securities Purchase Agreements Unsecured Convertible Notes 4 | Common Stock | Subsequent Event | |||||||
Debt Conversion, Converted Instrument, Shares Issued | 413,122 |