Document And Entity Information
Document And Entity Information - shares | 9 Months Ended | |
Sep. 30, 2016 | Feb. 06, 2018 | |
Document And Entity Information | ||
Entity Registrant Name | US Highland, Inc. | |
Entity Central Index Key | 1,381,871 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2016 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Is Entity a Well-known Seasoned Issuer | No | |
Is Entity a Voluntary Filer? | No | |
Is Entity's Reporting Status Current? | No | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 345,450,049 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2,016 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 |
Current Assets | ||
Cash and cash equivalents | $ 501 | $ 13,563 |
Prepaid expenses | 93,029 | |
Deposit on Highlon acquisition | 150,000 | |
Total Current Assets | 501 | 256,592 |
Deposits | 4,664 | |
Property and equipment, net | 4,708 | |
Total Assets | 501 | 265,964 |
Current Liabilities | ||
Accounts payable | 274,097 | 626,883 |
Accrued liabilities ($151,330 and $267,598 related parties, respectively) | 488,215 | 615,324 |
Advances from Highlon | 26,000 | |
Convertible debentures, net of discounts of $621,387 and $500,000, respectively | 99,989 | 52,333 |
Derivative liabilities | 268,245 | 16,886,192 |
Loans payable ($370,000 and $180,000 related parties, respectively) | 481,000 | 367,000 |
Total Liabilities | 1,611,546 | 18,573,732 |
Stockholders’ Deficit | ||
Preferred stock | ||
Common stock, 500,000,000 shares authorized, $0.01 par value; 212,631,202 and 58,162,669 shares issued and outstanding at September 30, 2016 and December 31, 2015 respectively | 2,126,312 | 581,627 |
Common stock reserved for future issuance; 316,500 shares, at December 31, 2015 | 197,865 | |
Treasury stock, at cost – 58,333 shares | (773,500) | (773,500) |
Additional Paid-in capital | 69,892,158 | 69,697,929 |
Accumulated deficit | (72,889,880) | (88,045,554) |
Total Stockholder's Deficit | (1,611,045) | (18,307,768) |
Total Liabilities and Stockholder's Deficit | 501 | 265,964 |
Series A Preferred Stock [Member] | ||
Stockholders’ Deficit | ||
Preferred stock | 33,815 | 33,815 |
Series B Preferred Stock [Member] | ||
Stockholders’ Deficit | ||
Preferred stock | $ 50 | $ 50 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 |
Current Liabilities | ||
Accrued liabilities - related parties | $ 151,330 | $ 267,596 |
Convertible debentures | 621,387 | 500,000 |
Loans payable - related parties current | $ 370,000 | $ 180,000 |
Stockholders' Deficiency | ||
Preferred Stock, shares authorized | 40,000 | 40,000 |
Preferred Stock, par value (in Dollars per share) | $ 0.01 | $ 0.01 |
Preferred Stock, shares issued | 0 | 0 |
Preferred Stock, shares outstanding | 0 | 0 |
Common Stock, shares authorized | 500,000,000 | 500,000,000 |
Common Stock, par value (in Dollars per share) | $ 0.01 | $ 0.01 |
Common Stock, shares issued | 212,631,202 | 58,162,669 |
Common Stock, shares outstanding | 212,631,202 | 58,162,669 |
Common stock reserved for future issuance | 316,500 | |
Treasury Stock - shares | 58,333 | 58,333 |
Series A Preferred Stock [Member] | ||
Stockholders' Deficiency | ||
Preferred Stock, shares authorized | 3,500,000 | 3,500,000 |
Preferred Stock, par value (in Dollars per share) | $ 0.01 | $ 0.01 |
Preferred Stock, shares issued | 3,381,520 | 3,381,520 |
Preferred Stock, shares outstanding | 3,381,520 | 3,381,520 |
Series B Preferred Stock [Member] | ||
Stockholders' Deficiency | ||
Preferred Stock, shares authorized | 10,000 | 10,000 |
Preferred Stock, par value (in Dollars per share) | $ 0.01 | $ 0.01 |
Preferred Stock, shares issued | 5,000 | 5,000 |
Preferred Stock, shares outstanding | 5,000 | 5,000 |
Consolidated Statements of Oper
Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Consolidated Statements Of Operations | ||||
Revenue | ||||
Operating Expenses | ||||
Depreciation | 1,153 | 2,252 | 4,454 | |
General and administrative | 18,314 | 84,460 | 36,492 | 272,236 |
Professional fees | 74,305 | 85,683 | 192,294 | 140,603 |
Total Operating Expenses | 92,619 | 171,296 | 231,038 | 417,293 |
Operating Loss | (92,619) | (171,296) | (231,038) | (417,293) |
Other Income (Expense) | ||||
Interest expense | (96,720) | (412,818) | (346,541) | (669,099) |
Change in fair value of derivatives | 583,695 | 56,260,943 | 17,067,061 | 12,454,383 |
Gain/Loss on settlement of debt | 624,966 | 1,495,529 | 624,966 | 1,495,529 |
Loss on Disposal of Assets | (73,912) | (211,681) | ||
Loss on Convertible Notes | (1,749,404) | (1,749,404) | ||
Other income | 2 | 2,311 | 27 | |
Total Other Income (Expense) | (711,375) | 57,343,656 | 15,386,712 | 13,280,840 |
Net (Loss) Income | $ (803,994) | $ 57,172,360 | $ 15,155,674 | $ 12,863,547 |
Net Earnings (Loss) Per Common Share - Basic | $ (0.01) | $ 0.74 | $ 0.22 | $ 0.17 |
Net Earnings (Loss) Per Common Share - Diluted | $ (0.01) | $ 0.44 | $ 0.08 | $ 0.10 |
Basic weighted average common shares outstanding | 88,870,474 | 77,727,669 | 68,473,319 | 77,727,669 |
Diluted weighted average common shares outstanding | 88,870,474 | 129,147,995 | 184,074,234 | 129,147,951 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | |
Operating Activities | |||||
Net income (loss) | $ (803,994) | $ 57,172,360 | $ 15,155,674 | $ 12,863,547 | |
Adjustments to reconcile net income (loss) to cash used in operating activities: | |||||
Depreciation expense | 2,252 | 4,454 | |||
Accretion expense | 253,113 | 461,731 | |||
Change in fair value of derivatives | (583,695) | (56,260,943) | (17,067,061) | (12,454,383) | |
Loss/Gain on Settlement of Debt | (624,966) | (1,495,529) | (624,966) | (1,495,529) | |
Shares issuable for interest expense | 39,864 | ||||
Loss on Convertible Debt | 1,749,404 | 1,749,404 | |||
Changes in operating assets and liabilities: | |||||
Prepaid expenses and deposits | 4,467 | ||||
Accounts payable and accrued liabilities | 94,594 | 129,696 | |||
Accrued liabilities related parties | (56,572) | 136,048 | |||
Net Cash Used in Operating Activities | (493,562) | (310,105) | |||
Net Cash Used in Investing Activities | |||||
Financing Activities | |||||
Proceeds from convertible debentures | 285,500 | ||||
Proceeds from loans payable | 195,000 | 194,000 | |||
Proceeds from loans payable – related parties | 140,200 | ||||
Repayment of loans | (8,500) | ||||
Repayment of loans – related parties | (13,200) | ||||
Net Cash Provided by Financing Activities | 480,500 | 312,500 | |||
Increase (Decrease) In Cash | 13,062 | 2,395 | |||
Cash - Beginning of Period | 13,563 | 14,035 | $ 14,035 | ||
Cash - End of Period | $ 501 | $ 16,430 | 501 | 16,430 | $ 13,563 |
Supplemental Cash Flows Information: | |||||
Cash paid for Income Taxes: | |||||
Cash paid for interest | 4,580 | ||||
Non-cash Investing and Financing Activities | |||||
Preferred shares issued to settle debt | 14,778,083 | ||||
Common shares issued for principal on convertible notes | $ 1,738,913 |
Summary of Business and Basis o
Summary of Business and Basis of Presentation | 9 Months Ended |
Sep. 30, 2016 | |
Notes to Financial Statements | |
1. Summary of Business and Basis of Presentation | Organization and Business US Highland, Inc. was originally formed as a limited liability company on February 5, 1999 under the name The Powerhouse, L.L.C. pursuant to the laws of the State of Oklahoma. On November 9, 2006, Powerhouse Productions, L.L.C. filed Articles of Conversion changing the entity from a limited liability company to a corporation under the name Harcom Productions, Inc. On January 25, 2010, Articles of Merger were filed with the State of Oklahoma merging U.S. Highland, Inc., an Oklahoma corporation into Harcom Productions, Inc. and the name of the corporation was changed to US Highland, Inc. US Highland, Inc. (the Company) is a recreational power sports Original Equipment Manufacturer (OEM), developing motorcycles, quads, single cylinder engines, and v-twin engines under its own brand and for other OEMs. On September 23, 2015, the Company incorporated two wholly-owned subsidiaries, USH Distribution Corp., a Nevada corporation, and Powersports Brand Alliance, Inc., a Nevada corporation. The subsidiaries were formed to provide sales, marketing and distribution services of their power sport products and accessories. On September 25, 2015, the Company entered into a Joint Venture Agreement with M&M Sourcing Sdn. Bhd., a Malaysian entity (M&M) and jointly formed Lahva, Inc., a Nevada corporation (Lahva). The Companys and M&Ms equity stake in Lahva is 40% and 60%, respectively. This agreement has been cancelled. Basis of Presentation The Companys consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States. These consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, USH Distribution Corp., and Powersports Brand Alliance, Inc. All significant intercompany transactions and balances have been eliminated. The unaudited consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (the SEC) and reflect all adjustments (consisting of normal recurring adjustments unless otherwise indicated) which, in the opinion of management, are necessary for a fair presentation of the results for the interim periods presented. Certain prior year amounts have been reclassified to conform to current year presentation. Certain information in footnote disclosures normally included in the financial statements were prepared in conformity with accounting principles generally accepted in the United States of America and have been condensed or omitted pursuant to such principles and the financial results for the periods presented may not be indicative of the full years results. The Company believes the disclosures are adequate to make the information presented not misleading. These financial statements should be read in conjunction with the Companys audited financial statements and the notes thereto for the fiscal year ended December 31, 2015 included in the Companys Annual Report on Form 10-K filed on April 15, 2016 (the 2015 Annual Report). Significant Accounting Policies There have been no material changes in the Companys significant accounting policies to those previously disclosed in the 2015 Annual Report. Going Concern The accompanying consolidated financial statements have been prepared in conformity with generally accepted accounting principles which contemplate continuation of the Company as a going-concern basis. The going concern basis assumes that assets are realized and liabilities are extinguished in the ordinary course of business at amounts disclosed in the consolidated financial statements. The Company has incurred recurring losses from operations, and as of September 30, 2016, current liabilities exceed current assets by $1,611,045 and the Company has an accumulated deficit of $72,889,880. The Companys ability to continue as a going concern depends upon its ability to obtain adequate funding to support its operations through continuing investments of debt and/or equity by qualified investors/creditors, internally generated working capital and monetization of intellectual property assets. These factors raise substantial doubt about the Companys ability to continue as a going concern. These consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. Management is currently pursuing a business strategy which includes raising the necessary funds to finance the Company's development and marketing efforts. Description of New Business Decisions On September 30, 2016, the company recognized write off of debt and prepaid expenses under the Oklahoma Statutes, Title 12, Section 12-95.A.1. and Section 12-95.A.2. for expired period of limitations. |
Deposit on Highlon Distribution
Deposit on Highlon Distribution Inc. Acquisition | 9 Months Ended |
Sep. 30, 2016 | |
Notes to Financial Statements | |
2. Deposit on Highlon Distribution Inc. Acquisition | On December 30, 2014, the Company entered into a share exchange agreement with Highlon Distribution, Inc. (Highlon). Per the agreement, the Company will exchange 100 shares of the Companys common stock for 100% of the Highlon shares. In addition, the Company will transfer $150,000 to Highlon within five days from the execution of the agreement. Highlon is a distribution management business focusing on marketing existing product in logistics area. During the nine months ended September 30, 2016, the Company wrote-off the deposit of $150,000 pursuant to a subsequent settlement agreement with Highlon and the former President of the Company. Pursuant to the settlement agreement, the Company also agreed to pay the former President of the Company an additional $20,185, offset by advances from Highlon of $26,000 and accounts payable to the former President of the Company of $5,885, resulting in a loss on settlement of debt of $138,300. |
Property and Equipment
Property and Equipment | 9 Months Ended |
Sep. 30, 2016 | |
Notes to Financial Statements | |
3. Property and Equipment | Depreciation expense amounted to $2,252 and $4,454 for the nine months ended September 30, 2016 and 2015, respectively. On September 30, 2016, the company wrote off the property and equipment that was disposed. |
Loans Payable
Loans Payable | 9 Months Ended |
Sep. 30, 2016 | |
Notes to Financial Statements | |
4. Loans Payable | Loans payable consist of the following: September 30, 2016 December 31, 2015 a) Loans payable that are unsecured, non-guaranteed, past due and are non-interest bearing on September 30, 2016, the company recognized write off of debt under the Oklahoma Statutes, Title 12, Section 12-95.A.1. and Section 12-95.A.2. for expired period of limitations. $ 25,000 b) On January 15, 2011, the Company entered into 8 unsecured, non-guaranteed, loan agreements pursuant to which the Company received proceeds of $56,000. If the loans were not repaid within 90 days they then bear interest at 1% per month. In addition, if the loan was not repaid within 90 days, the Company is required to issue 167 common shares every month until the loan is repaid in full. As at September 30, 2016, and December 31, 2015, the Company recognized the fair value of $136,082 and $135,365, respectively, of the 177,500 and 176,500 common shares issuable for interest expense as shares reserved for future issuance. The Company has not yet issued these common shares. As at September 30, 2016, the Company has also accrued interest expense of $36,680 (December 31, 2015 - $33,320). September 30, 2016, the company recognized write off of debt under the Oklahoma Statutes, Title 12, Section 12-95.A.1. and Section 12-95.A.2. for expired period of limitations. $ 56,000 c) On May 30, 2013 and August 12, 2013, the Company received advances from a director for $2,000 and $25,000, respectively. On August 12, 2013, the Company entered into an unsecured, non-guaranteed, demand loan agreement with the director for $27,000. The loan bears interest at 1% per annum compounded monthly. $ 27,000 $ 27,000 d) On February 27, 2014, and March 19, 2015, the Company received advances from a director of $6,000, and $10,200, respectively. During the year ended December 31, 2015, the Company repaid $13,200. The advances are unsecured, due on demand and bears interest at 1% per annum compounded and calculated monthly. $ 3,000 $ 3,000 e) On September 18, 2014, May 29, 2015, July 3, 2015, December 2, 2015, and January 4, 2016, the Company entered into unsecured, non-guaranteed, loan agreements pursuant to which the Company received proceeds of $35,000, $4,000, $5,000, $22,000, and $45,000, respectively. The loans bear interest at 8% per annum compounded annually and are due 1 year after the date of issuance. $ 111,000 $ 66,000 f) On December 4, 2014, January 29, 2015, August 12, 2015, August 21, 2015, September 1, 2015, September 15, 2015, November 13, 2015, and December 23, 2015, the Company issued unsecured notes payable of $20,000, $20,000, $20,000, $25,000, $40,000, $25,000, $30,000 and $10,000, respectively, to a significant shareholder. The notes bear interest at an annual rate of 8% per annum, are uncollateralized, and due 1 year after the date of issuance. $ 190,000 $ 190,000 g) On September 2, 2016 the Company issued an unsecured note payable of $100,000 respectively to a significant shareholder. The note bears interest at an annual rate of 5% per annum, is uncollateralized, and due 1 year after the date of issuance. $ 100,000 - h) On September 2, 2016 the Company issued an unsecured note payable of $50,000 respectively to a significant shareholder. The note bears interest at an annual rate of 5% per annum, is uncollateralized, and due 1 year after the date of issuance. $ 50,000 - Total $ 481,000 $ 367,000 Less Short-Term Portion (481,000) (367,000 ) Long Term Loans Payable $ - $ - |
Convertible Debentures
Convertible Debentures | 9 Months Ended |
Sep. 30, 2016 | |
Notes to Financial Statements | |
5. Convertible Debentures | a) Effective January 25, 2010, the Company issued a convertible note for $225,000. Pursuant to the terms of the agreement, the loan was unsecured, non-interest bearing, and was due on December 21, 2010. The note was convertible into shares of the Companys common stock at any time at a variable conversion price equal to 65% of the average of the closing bid prices of the common stock during the 28 trading days prior to the date of the conversion notice and was subject to adjustment upon the issuance of certain dilutive instruments. Due to these provisions, the embedded conversion option qualified for derivative accounting and bifurcation under ASC 815-15 Derivatives and Hedging On June 2, 2010, the Company issued 6,386 restricted shares of common stock upon the conversion of the principal amount of $166,667. The fair value of the derivative liability at June 2, 2010, was $266,425 and $197,352 was reclassified to additional paid-in capital upon conversion. During the year ended December 31, 2013, the Company repaid $2,000 of the note, during the year ended December 31, 2014, the Company repaid an additional $3,000 and during the year ended December 31, 2015, the Company repaid $1,000. At December 31, 2015 and 2014, the carrying value of the note was $52,333 and $53,333, respectively. The note is in default at December 31, 2015. The note was written off during the quarter ended September 30, 2016. b) On July 25, 2013, the Company issued a convertible note for up to $500,000 and warrants to purchase 12,500,000 underlying shares of the Companys common stock. The warrants are exercisable into 10,000,000 common shares of the Company at $0.05 per share and 2,500,000 shares at an exercise price of $0.10 per share until July 31, 2014. During the year ended December 31, 2013, the Company received proceeds of $500,000 under the note. The note bears interest at 8% per annum compounded monthly, and principal and interest are due on July 31, 2014. In addition, so long as any amounts are due hereunder, the Company is obligated to remit to the lender 100% of all revenues, payments and receivables from the sale of the first 50 engines sold by the Company. The note is secured against substantially all of the assets of the Company. The note may be prepaid by the Company without penalty with 30 days prior notice. The note is convertible into shares of the Companys common stock at any time at a conversion price equal to $0.02 per share and is subject to adjustment upon the issuance of certain dilutive instruments and other events. The conversion price was subsequently reduced to $0.01 per share upon the failure to file various reports with the SEC within 120 days of the issuance of the note. Due to the potential adjustments to the conversion feature and the inability to conclude that the Company has enough unissued-authorized common shares to settle the warrants, the embedded conversion option and the warrants qualify for derivative accounting and bifurcation under ASC 815-15 Derivatives and Hedging On July 24, 2014, the Company and the note holder agreed to extend the maturity date to December 31, 2014, and increase the interest rate to 12% starting on August 1, 2014. The Company accounted for the modification in accordance with ASC 405-20 and ASC 470-50-40. As the present value of the future cash flows was more than 10% different than the cash flows of the original debt, it was determined that the original and new debt instruments are substantially different and the Company treated the original convertible note extinguished and exchanged for a new convertible note. The Company recorded a loss on extinguishment of debt of $474,668. The Company also recognized the fair value of the embedded conversion feature of $24,501,757 as a derivative liability and reduced the value of the convertible loan to $nil. On December 31, 2014, the Company and the note holder agreed to extend the maturity date to December 31, 2015. Interest shall accrue at 12% per annum but may be reduced to 8% for any period of time in which the interest is paid in cash and not accrued. The Company accounted for the modification in accordance with ASC 405-20 and ASC 470-50-40. As the present value of the future cash flows was more than 10% different than the cash flows of the original debt, it was determined that the original and new debt instruments are substantially different and the Company treated the original convertible note extinguished and exchanged for a new convertible note. The Company recorded a loss on extinguishment of debt of $411,820. The Company also recognized the fair value of the embedded conversion feature of $25,088,180 as a derivative liability and reduced the value of the convertible loan to $nil. On December 31, 2015, the Company and the note holder agreed to extend the maturity date to December 31, 2016. Interest shall accrue at 12% per annum but may be reduced to 8% for any period of time in which the interest is paid in cash and not accrued. The Company accounted for the modification in accordance with ASC 405-20 and ASC 470-50-40. As the present value of the future cash flows was more than 10% different than the cash flows of the original debt, it was determined that the original and new debt instruments are substantially different and the Company treated the original convertible note extinguished and exchanged for a new convertible note. The Company recorded a gain on extinguishment of debt of $492,585. The Company also recognized the fair value of the embedded conversion feature of $16,507,415 as a derivative liability and reduced the value of the convertible loan to $nil. During the year ended December 31, 2015, the Company recorded total accretion of $500,000. At September 30, 2016 and December 31, 2015, the carrying value of the note was $ 188,030 and $nil with unamortized discount of $311,970 and $500,000, respectively. c) On February 11, 2016, the Company entered into two convertible promissory notes for a total of $275,000, pursuant to which the Company received proceeds of $237,500, net of an original issue discount of $25,000 and legal fees of $12,500. The notes are convertible at a price equal to 60% of the lowest trading price of the Company's common stock for the 20 prior trading days, bearing interest at 8% per annum and due on February 11, 2017. Due to these provisions, the embedded conversion options qualified for derivative accounting and bifurcation under ASC 815-15 Derivatives and Hedging . The initial fair value of the derivative liabilities of $308,492 resulted in a full discount to the note payable of $250,000 and the recognition of $59,492 as additional interest expense. During the nine months ended September 30, 2016, the Company recorded total accretion of $8,704 and amortization of deferred financing cost of $396. At September 30, 2016, the carrying value of the notes was $8,704 with unamortized discount of $266,296 and deferred financing cost of $12,104. d) On May 17, 2016, the Company entered into a convertible promissory note for $55,000, pursuant to which the Company received proceeds of $48,000, net of an original issue discount of $5,000 and legal fees of $2,000. The notes are convertible at a price equal to 55% of the lowest trading price of the Company's common stock for the 20 prior trading days, bearing interest at 8% per annum and due on May 17, 2017. Due to these provisions, the embedded conversion options qualified for derivative accounting and bifurcation under ASC 815-15 Derivatives and Hedging. The initial fair value of the derivative liabilities of $95,047 resulted in a full discount to the note payable of $50,000 and the recognition of $45,047 as additional interest expense. During the nine months ended September 30, 2016, the Company recorded total accretion of $2,919. At September 30, 2016, the carrying value of the notes was $2,919, with an unamortized discount of $52,081. |
Derivative Liabilities
Derivative Liabilities | 9 Months Ended |
Sep. 30, 2016 | |
Notes to Financial Statements | |
6. Derivative Liabilities | The embedded conversion options of the Companys convertible debentures described in Note 5 contain conversion features that qualify for embedded derivative classification. The fair value of these liabilities will be re-measured at the end of every reporting period and the change in fair value will be reported in the statement of operations as a gain or loss on derivative financial instruments. The table below sets forth a summary of changes in the fair value of the Companys Level 3 financial liabilities: Nine Months Ended September 30, 2016 December 31, 2015 Balance at the beginning of the period 16,886,192 $ 46,065,517 Addition of new derivative liabilities 403,539 - Change in fair value of warrants (289,021 ) (763,397 ) Change in fair value of embedded conversion option (16,732,465 ) (3,840,491 ) Modification of embedded conversion options - 7,415 Derecongnize of derivative liabilities upon settlement of convertible notes - (14,582,852 ) Balance at the end of the period 268,245 $ 16,886,192 The Company uses Level 3 inputs for its valuation methodology for the warrant derivative liabilities and embedded conversion option liabilities as their fair values were determined by using the Black- Scholes option pricing model based on various assumptions. The model incorporates the price of a share of the Companys common stock (as quoted on the Over the Counter Bulletin Board), volatility, risk free rate, dividend rate and estimated life. Significant changes in any of these inputs in isolation would result in a significant change in the fair value measurement. As, required, these are classified based on the lowest level of input that is significant to the fair value measurement. The following table shows the assumptions used in the calculations: Expected Volatility Risk-free Interest Rate Expected Dividend Yield Expected Life (in years) At December 31, 2015 134% - 216% 0.20% - 1.03% 0 % 0.25 - 2.50 At September 30, 2016 264% - 278% 0.33% - 0.58% 0 % 0.37 0.63 |
Preferred Stock
Preferred Stock | 9 Months Ended |
Sep. 30, 2016 | |
Notes to Financial Statements | |
7 . Preferred Stock | a) On September 30, 2015, the Company designated 3,500,000 shares of the Companys 3,550,000 authorized blank check preferred stock as Series A Convertible Preferred Stock. The Series A Convertible Preferred Stock shall, with respect to dividend rights, rights on liquidation, winding up and dissolution, rank senior to (i) all classes of common stock of the Company and (ii) any class or series of capital stock of the Company hereafter created (unless, with the consent of the holders of Series A Convertible Preferred Stock). The holders of the Series A Preferred Stock shall not entitled to receive any dividends and shall have the voting equivalency of 10 shares of common stock. Each holder of Series A Preferred Stock shall have the right at any time or from time to time from and after the day immediately following the date the Series A Preferred Stock is first issued, to convert each share of Series A Preferred Stock into 10 fully-paid and non-assessable share of common stock, par value $0.01 per share, of the Company. In connection with any conversion hereunder, each holder of Series A Convertible Preferred Stock if such conversion would cause such holder or any of its assignees to beneficially own more than 4.99% of the common stock of the Company. b) On September 30, 2015, the Company issued an aggregate of 3,381,520 shares of Series A Convertible Preferred Stock at a fair value of $12,849,776 to settle convertible and promissory notes in the amount of $1,487,000 and accrued interest of $203,760. The Company recorded a gain on settlement of debt of $1,495,529. c) On November 20, 2015, the Company designated 10,000 shares of the Companys 3,550,000 authorized blank check preferred stock as Series B Convertible Preferred Stock. The Series B Convertible Preferred Stock shall, with respect to dividend rights, rights on liquidation, winding up and dissolution, rank senior to (i) all classes of common stock of the Company and (ii) any class or series of capital stock of the Company hereafter created (unless, with the consent of the holders of Series B Convertible Preferred Stock). The holders of the Series B Preferred Stock shall not entitled to receive any dividends and shall have the voting equivalency of 4,000 shares of common stock. Each holder of Series B Preferred Stock shall have the right at any time or from time to time from and after the day immediately following the date the Series B Preferred Stock is first issued, to convert each share of Series B Preferred Stock into 4,000 fully-paid and non-assessable share of common stock, par value $0.01 per share, of the Company. In connection with any conversion hereunder, each holder of Series B Convertible Preferred Stock if such conversion occurred would cause such holder or any of its assignees to beneficially own more than 4.99% of the common stock of the Company. |
Common Stock
Common Stock | 9 Months Ended |
Sep. 30, 2016 | |
Notes to Financial Statements | |
8 . Common Stock | a) On October 8, 2015, the Company issued 435,000 shares of common stock for proceeds of $217 upon the exercise of warrants. b) On November 20, 2015, the Company entered into a share exchange agreement with a significant shareholder of the Company, whereby the shareholder exchanged 20,000,000 shares of common stock for 5,000 shares of Series B Convertible Preferred Stock. c) During August, 2016, the Company issued 38,479,487 shares of common stock to settle $47,904 on debt conversions with two significant shareholders of the Company. d) During September, 2016, the Company issued 115,989,052 shares of common stock to settle $56,552 on a debt conversion with two significant shareholders of the Company. |
Commitments
Commitments | 9 Months Ended |
Sep. 30, 2016 | |
Notes to Financial Statements | |
9. Commitments | a) On September 28, 2015, USH Distribution, Corp., a wholly owned subsidiary of the Company, (USH Distribution) entered into a consignment agreement whereby USH Distribution will sell workwear apparel manufactured by the consignor in the United States. The agreement expired and terminated, due to nonperformance. b) On February 22, 2016, the Company entered into a Release of Claims and Settlement Agreement with John R. Fitzpatrick, III, Steven Pfaff, and certain of the Companys officers and directors. Pursuant to the settlement agreement, the parties discharged each other from all claims actions, demands, costs, losses, damages, and expenses relating to Mr. Fitzpatricks and Mr. Pfaffs previous employment with the Company in consideration for an aggregate settlement amount of $200,000 in two installments. The Company and the directors also agreed to execute and deliver a pocket judgement against them which shall not be filed unless the Company fails to make the scheduled payments under the settlement agreement. On September 6, 2016, the company paid the remaining $150,000 to settle this dispute in full. |
Earnings (Loss) Per Share
Earnings (Loss) Per Share | 9 Months Ended |
Sep. 30, 2016 | |
Notes to Financial Statements | |
10. Earnings (Loss) Per Share | A reconciliation of the components of basic and diluted net income per common share is presented in the tables below: For the Three Months Ended September 30, 2016 2015 Income (Loss) Weighted Average Common Shares Outstanding Per Share Income (Loss) Weighted Average Common Shares Outstanding Per Share Basic: Income (loss) attributable to common stock $ (803,994 ) 88,870,474 $ (0.01 ) $ 57,172,360 77,727,669 $ 0.74 Diluted: Income (loss) attributable to common stock, including assumed conversions $ (803,994 ) 88,870,474 $ (0.01 ) $ 57,172,360 129,147,995 $ 0.44 For the Nine Months Ended September 30, 2016 2015 Income (Loss) Weighted Average Common Shares Outstanding Per Share Income (Loss) Weighted Average Common Shares Outstanding Per Share Basic: Income (loss) attributable to common stock $ 15,155,674 68,473,319 $ 0.22 $ 12,863,547 77,727,669 $ 0.17 Diluted: Income (loss) attributable to common stock, including assumed conversions $ 15,155,674 184,074,234 $ 0.08 $ 12,863,547 129,147,995 $ 0.10 |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2016 | |
Notes to Financial Statements | |
11. Subsequent Events | a) On October 6, 2016, the Company issued 24,705,278 shares of common stock to settle $4,330 on a debt conversion with two significant shareholders of the Company. b) On November 1, 2016, the Company issued 11,840,583 shares of common stock to settle $1,575 on a debt conversion with a significant shareholder of the Company. c) On November 3, 2016, the Company issued 11,800,000 shares of common stock to settle $1,640 on a debt conversion with a significant shareholder of the Company. d) On November 4, 2016, the Company issued 11,833,333 shares of common stock to settle $1,668 on a debt conversion with a significant shareholder of the Company. e) On November 6, 2016, the Company issued 27,900,667 shares of common stock to settle $4,116 on a debt conversion with a significant shareholder of the Company. f) On November 15, 2016, the Company issued 15,000,000 shares of common stock to settle $2,235 on a debt conversion with a significant shareholder of the Company. g) On June 15, 2017, Kevin G. Malone resigned as President and as a member of the Board of Directors (the Board) of the Company. The Board appointed Everett M. Dickson as President and Chief Executive Officer of the Company, and the Board appointed Mr. Dickson to fill the Board seat vacated by Mr. Malone. h) On July 13, 2017, the Company issued 29,788,980 shares of common stock to settle $8,800 on a debt conversion with a significant shareholder of the Company. I) On October 30, 2017 the Company issued a convertible note payable of $25,000. The note bears interest at an annual rate of 10% per annum, is uncollateralized, and due 2 years after the date of issuance.The notes will become convertible at a mutually agreed upon rate one year after the issuance date. j) One November 18, 2017 the Company issued a convertible note payable of $25,000. The note bears interest at an annual rate of 10% per annum, is uncollateralized and due 2 years after the date of issuance.The notes will become convertible at a mutually agreed upon rate one year after the issuance date. |
Summary of Business and Basis17
Summary of Business and Basis of Presentation (Policies) | 9 Months Ended |
Sep. 30, 2016 | |
Summary Of Business And Basis Of Presentation Policies | |
Organization and Business | Organization and Business US Highland, Inc. was originally formed as a limited liability company on February 5, 1999 under the name The Powerhouse, L.L.C. pursuant to the laws of the State of Oklahoma. On November 9, 2006, Powerhouse Productions, L.L.C. filed Articles of Conversion changing the entity from a limited liability company to a corporation under the name Harcom Productions, Inc. On January 25, 2010, Articles of Merger were filed with the State of Oklahoma merging U.S. Highland, Inc., an Oklahoma corporation into Harcom Productions, Inc. and the name of the corporation was changed to US Highland, Inc. US Highland, Inc. (the Company) is a recreational power sports Original Equipment Manufacturer (OEM), developing motorcycles, quads, single cylinder engines, and v-twin engines under its own brand and for other OEMs. On September 23, 2015, the Company incorporated two wholly-owned subsidiaries, USH Distribution Corp., a Nevada corporation, and Powersports Brand Alliance, Inc., a Nevada corporation. The subsidiaries were formed to provide sales, marketing and distribution services of their power sport products and accessories. On September 25, 2015, the Company entered into a Joint Venture Agreement with M&M Sourcing Sdn. Bhd., a Malaysian entity (M&M) and jointly formed Lahva, Inc., a Nevada corporation (Lahva). The Companys and M&Ms equity stake in Lahva is 40% and 60%, respectively. This agreement has been cancelled. |
Basis of Presentation | The Companys consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States. These consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, USH Distribution Corp., and Powersports Brand Alliance, Inc. All significant intercompany transactions and balances have been eliminated. The unaudited consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (the SEC) and reflect all adjustments (consisting of normal recurring adjustments unless otherwise indicated) which, in the opinion of management, are necessary for a fair presentation of the results for the interim periods presented. Certain prior year amounts have been reclassified to conform to current year presentation. Certain information in footnote disclosures normally included in the financial statements were prepared in conformity with accounting principles generally accepted in the United States of America and have been condensed or omitted pursuant to such principles and the financial results for the periods presented may not be indicative of the full years results. The Company believes the disclosures are adequate to make the information presented not misleading. These financial statements should be read in conjunction with the Companys audited financial statements and the notes thereto for the fiscal year ended December 31, 2015 included in the Companys Annual Report on Form 10-K filed on April 15, 2016 (the 2015 Annual Report). |
Significant Accounting Policies | There have been no material changes in the Companys significant accounting policies to those previously disclosed in the 2015 Annual Report. |
Going Concern | The accompanying consolidated financial statements have been prepared in conformity with generally accepted accounting principles which contemplate continuation of the Company as a going-concern basis. The going concern basis assumes that assets are realized and liabilities are extinguished in the ordinary course of business at amounts disclosed in the consolidated financial statements. The Company has incurred recurring losses from operations, and as of September 30, 2016, current liabilities exceed current assets by $1,611,045 and the Company has an accumulated deficit of $72,889,880. The Companys ability to continue as a going concern depends upon its ability to obtain adequate funding to support its operations through continuing investments of debt and/or equity by qualified investors/creditors, internally generated working capital and monetization of intellectual property assets. These factors raise substantial doubt about the Companys ability to continue as a going concern. These consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. Management is currently pursuing a business strategy which includes raising the necessary funds to finance the Company's development and marketing efforts. |
Description of New Business Decisions | On September 30, 2016, the company recognized write off of debt and prepaid expenses under the Oklahoma Statutes, Title 12, Section 12-95.A.1. and Section 12-95.A.2. for expired period of limitations. |
Loans Payable (Tables)
Loans Payable (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Loans Payable Tables | |
Schedule of Debt | Loans payable consist of the following: September 30, 2016 December 31, 2015 a) Loans payable that are unsecured, non-guaranteed, past due and are non-interest bearing on September 30, 2016, the company recognized write off of debt under the Oklahoma Statutes, Title 12, Section 12-95.A.1. and Section 12-95.A.2. for expired period of limitations. $ 25,000 b) On January 15, 2011, the Company entered into 8 unsecured, non-guaranteed, loan agreements pursuant to which the Company received proceeds of $56,000. If the loans were not repaid within 90 days they then bear interest at 1% per month. In addition, if the loan was not repaid within 90 days, the Company is required to issue 167 common shares every month until the loan is repaid in full. As at September 30, 2016, and December 31, 2015, the Company recognized the fair value of $136,082 and $135,365, respectively, of the 177,500 and 176,500 common shares issuable for interest expense as shares reserved for future issuance. The Company has not yet issued these common shares. As at September 30, 2016, the Company has also accrued interest expense of $36,680 (December 31, 2015 - $33,320). September 30, 2016, the company recognized write off of debt under the Oklahoma Statutes, Title 12, Section 12-95.A.1. and Section 12-95.A.2. for expired period of limitations. $ 56,000 c) On May 30, 2013 and August 12, 2013, the Company received advances from a director for $2,000 and $25,000, respectively. On August 12, 2013, the Company entered into an unsecured, non-guaranteed, demand loan agreement with the director for $27,000. The loan bears interest at 1% per annum compounded monthly. $ 27,000 $ 27,000 d) On February 27, 2014, and March 19, 2015, the Company received advances from a director of $6,000, and $10,200, respectively. During the year ended December 31, 2015, the Company repaid $13,200. The advances are unsecured, due on demand and bears interest at 1% per annum compounded and calculated monthly. $ 3,000 $ 3,000 e) On September 18, 2014, May 29, 2015, July 3, 2015, December 2, 2015, and January 4, 2016, the Company entered into unsecured, non-guaranteed, loan agreements pursuant to which the Company received proceeds of $35,000, $4,000, $5,000, $22,000, and $45,000, respectively. The loans bear interest at 8% per annum compounded annually and are due 1 year after the date of issuance. $ 111,000 $ 66,000 f) On December 4, 2014, January 29, 2015, August 12, 2015, August 21, 2015, September 1, 2015, September 15, 2015, November 13, 2015, and December 23, 2015, the Company issued unsecured notes payable of $20,000, $20,000, $20,000, $25,000, $40,000, $25,000, $30,000 and $10,000, respectively, to a significant shareholder. The notes bear interest at an annual rate of 8% per annum, are uncollateralized, and due 1 year after the date of issuance. $ 190,000 $ 190,000 g) On September 2, 2016 the Company issued an unsecured note payable of $100,000 respectively to a significant shareholder. The note bears interest at an annual rate of 5% per annum, is uncollateralized, and due 1 year after the date of issuance. $ 100,000 - h) On September 2, 2016 the Company issued an unsecured note payable of $50,000 respectively to a significant shareholder. The note bears interest at an annual rate of 5% per annum, is uncollateralized, and due 1 year after the date of issuance. $ 50,000 - Total $ 481,000 $ 367,000 Less Short-Term Portion (481,000) (367,000 ) Long Term Loans Payable $ - $ - |
Derivative Liabilities (Tables)
Derivative Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Derivative Liabilities Tables | |
Summary of Changes in Fair Value of Financial Liabilities | Nine Months Ended September 30, 2016 December 31, 2015 Balance at the beginning of the period 16,886,192 $ 46,065,517 Addition of new derivative liabilities 403,539 - Change in fair value of warrants (289,021 ) (763,397 ) Change in fair value of embedded conversion option (16,732,465 ) (3,840,491 ) Modification of embedded conversion options - 7,415 Derecongnize of derivative liabilities upon settlement of convertible notes - (14,582,852 ) Balance at the end of the period 268,245 $ 16,886,192 |
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions | Expected Volatility Risk-free Interest Rate Expected Dividend Yield Expected Life (in years) At December 31, 2015 134% - 216% 0.20% - 1.03% 0 % 0.25 - 2.50 At September 30, 2016 264% - 278% 0.33% - 0.58% 0 % 0.37 0.63 |
Earnings (Loss) Per Share (Tabl
Earnings (Loss) Per Share (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Earnings Loss Per Share Tables | |
Earnings (Loss) Per Share | For the Three Months Ended September 30, 2016 2015 Income (Loss) Weighted Average Common Shares Outstanding Per Share Income (Loss) Weighted Average Common Shares Outstanding Per Share Basic: Income (loss) attributable to common stock $ (803,994 ) 88,870,474 $ (0.01 ) $ 57,172,360 77,727,669 $ 0.74 Diluted: Income (loss) attributable to common stock, including assumed conversions $ (803,994 ) 88,870,474 $ (0.01 ) $ 57,172,360 129,147,995 $ 0.44 For the Nine Months Ended September 30, 2016 2015 Income (Loss) Weighted Average Common Shares Outstanding Per Share Income (Loss) Weighted Average Common Shares Outstanding Per Share Basic: Income (loss) attributable to common stock $ 15,155,674 68,473,319 $ 0.22 $ 12,863,547 77,727,669 $ 0.17 Diluted: Income (loss) attributable to common stock, including assumed conversions $ 15,155,674 184,074,234 $ 0.08 $ 12,863,547 129,147,995 $ 0.10 |
Summary of Business and Basis21
Summary of Business and Basis of Presentation (Details Narrative) - USD ($) | 1 Months Ended | 9 Months Ended | |
Sep. 25, 2015 | Sep. 30, 2016 | Dec. 31, 2015 | |
Summary Of Business And Basis Of Presentation Details Narrative | |||
State or Country of incorporation | Oklahoma | ||
Date of incorporation | Feb. 5, 1999 | ||
Working capital deficit | $ 1,611,045 | ||
Accumulated deficit | $ (72,889,880) | $ (88,045,554) | |
Description for ownership percentage in joint venture | On September 25, 2015, the Company entered into a Joint Venture Agreement with M&M Sourcing Sdn. Bhd., a Malaysian entity (M&M) and jointly formed Lahva, Inc., a Nevada corporation (Lahva). The Companys and M&Ms equity stake in Lahva is 40% and 60%, respectively |
Deposit on Highlon Distributi22
Deposit on Highlon Distribution Inc. Acquisition (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||
Dec. 30, 2014 | Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | |
Advances from Highlon | $ 26,000 | |||||
Accounts payable | 274,097 | 274,097 | $ 626,883 | |||
Loss on settlement of debt | 624,966 | $ 1,495,529 | 624,966 | $ 1,495,529 | ||
Settlement agreement [Member] | ||||||
Loss on settlement of debt | 138,300 | |||||
Settlement agreement [Member] | Highlon Distribution, Inc. [Member] | ||||||
Amount wrote-off under agreement | 150,000 | |||||
Advances from Highlon | 26,000 | 26,000 | ||||
Settlement agreement [Member] | Former President [Member] | ||||||
Accounts payable | 5,885 | 5,885 | ||||
Settlement agreement [Member] | President [Member] | Highlon Distribution, Inc. [Member] | ||||||
Additional amount payable under agreement | $ 20,185 | $ 20,185 | ||||
Share exchange agreement [Member] | Highlon Distribution, Inc. [Member] | ||||||
Common stock shares issuable under agreement | 100 | |||||
Ownership interest to be acquired under agreement | 100.00% | |||||
Business acquisition consideration transferred or transferrable | $ 150,000 |
Property and Equipment (Details
Property and Equipment (Details Narrative) - USD ($) | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Property And Equipment Details Narrative | ||
Depreciation expense | $ 2,252 | $ 4,454 |
Loans Payable (Details)
Loans Payable (Details) - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 |
Loan Payable Portion Including Current and Non-Current | $ 481,000 | $ 367,000 |
Less Short-Term Portion | (481,000) | (367,000) |
Long Term Loans Payable | ||
Loan 1 [Member] | ||
Loan Payable Portion Including Current and Non-Current | 25,000 | |
Loan 2 [Member] | ||
Loan Payable Portion Including Current and Non-Current | 56,000 | |
Loan 3 [Member] | ||
Loan Payable Portion Including Current and Non-Current | 27,000 | 27,000 |
Loan 4 [Member] | ||
Loan Payable Portion Including Current and Non-Current | 3,000 | 3,000 |
Loan 5 [Member] | ||
Loan Payable Portion Including Current and Non-Current | 111,000 | 66,000 |
Loan 6 [Member] | ||
Loan Payable Portion Including Current and Non-Current | 190,000 | 190,000 |
Loan 7 [Member] | ||
Loan Payable Portion Including Current and Non-Current | 100,000 | |
Loan 8 [Member] | ||
Loan Payable Portion Including Current and Non-Current | $ 50,000 |
Loans Payable (Details Narrativ
Loans Payable (Details Narrative) | Sep. 02, 2016USD ($) | Jan. 04, 2016USD ($) | Dec. 02, 2015USD ($) | Nov. 13, 2015USD ($) | Sep. 01, 2015USD ($) | Aug. 12, 2015USD ($) | Jul. 03, 2015USD ($) | Dec. 04, 2014USD ($) | Aug. 12, 2013USD ($) | Jan. 15, 2011USD ($)Integer | Dec. 23, 2015USD ($) | Sep. 15, 2015USD ($) | Aug. 21, 2015USD ($) | May 29, 2015USD ($) | Jan. 29, 2015USD ($) | Sep. 18, 2014USD ($) | Sep. 30, 2016USD ($)shares | Sep. 30, 2015USD ($) | Dec. 31, 2015USD ($)shares | Mar. 19, 2015USD ($) | Feb. 27, 2014USD ($) | May 20, 2013USD ($) |
Common stock shares reserved for future issuance, shares | shares | 316,500 | |||||||||||||||||||||
Repayment of related party debt | $ 13,200 | |||||||||||||||||||||
Loan 8 [Member] | Unsecured Notes Payable [Member] | ||||||||||||||||||||||
Interest rate | 5.00% | |||||||||||||||||||||
Maturity period | 1 year | |||||||||||||||||||||
Notes payable | $ 50,000 | |||||||||||||||||||||
Loan 7 [Member] | Unsecured Notes Payable [Member] | ||||||||||||||||||||||
Interest rate | 5.00% | |||||||||||||||||||||
Maturity period | 1 year | |||||||||||||||||||||
Notes payable | $ 100,000 | |||||||||||||||||||||
Loan 6 [Member] | Unsecured Notes Payable [Member] | Significant shareholder [Member] | ||||||||||||||||||||||
Interest rate | 8.00% | 8.00% | 8.00% | 8.00% | 8.00% | 8.00% | 8.00% | 8.00% | ||||||||||||||
Maturity period | 1 year | 1 year | 1 year | 1 year | 1 year | 1 year | 1 year | 1 year | ||||||||||||||
Notes payable | $ 30,000 | $ 40,000 | $ 20,000 | $ 20,000 | $ 10,000 | $ 25,000 | $ 25,000 | $ 20,000 | ||||||||||||||
Loan 5 [Member] | Unsecured, Non-Guaranteed Loan Agreement [Member] | ||||||||||||||||||||||
Proceeds from issuance of debt | $ 45,000 | $ 22,000 | $ 5,000 | $ 4,000 | $ 35,000 | |||||||||||||||||
Interest rate | 8.00% | 8.00% | 8.00% | 8.00% | 8.00% | |||||||||||||||||
Maturity period | 1 year | 1 year | 1 year | 1 year | 1 year | |||||||||||||||||
Loan 4 [Member] | Director [Member] | ||||||||||||||||||||||
Due to related party | $ 10,200 | $ 6,000 | ||||||||||||||||||||
Interest rate | 1.00% | 1.00% | ||||||||||||||||||||
Repayment of related party debt | $ 13,200 | |||||||||||||||||||||
Loan 3 [Member] | Director [Member] | ||||||||||||||||||||||
Due to related party | $ 25,000 | $ 2,000 | ||||||||||||||||||||
Interest rate | 1.00% | |||||||||||||||||||||
Loan 3 [Member] | Director [Member] | Unsecured, Non-Guaranteed Loan Agreement [Member] | ||||||||||||||||||||||
Proceeds from issuance of debt | $ 27,000 | |||||||||||||||||||||
Loan 2 [Member] | Unsecured, Non-Guaranteed Loan Agreement [Member] | ||||||||||||||||||||||
Number of unsecured and non-guaranteed loan agreements | Integer | 8 | |||||||||||||||||||||
Proceeds from issuance of debt | $ 56,000 | |||||||||||||||||||||
Description for debt default | If the loans were not repaid within 90 days they then bear interest at 1% per month. In addition, if the loan was not repaid within 90 days, the Company is required to issue 167 common shares every month until the loan is repaid in full | |||||||||||||||||||||
Common stock shares reserved for future issuance, value | $ 136,082 | $ 135,365 | ||||||||||||||||||||
Common stock shares reserved for future issuance, shares | shares | 177,500 | 176,500 | ||||||||||||||||||||
Accrued interest | $ 36,680 | $ 33,320 |
Convertible Debentures (Details
Convertible Debentures (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Convertible notes proceeds | $ 285,500 | ||||||
Gain/Loss on settlement of debt | $ 624,966 | $ 1,495,529 | 624,966 | 1,495,529 | |||
Interest expense | 96,720 | $ 412,818 | 346,541 | $ 669,099 | |||
Convertible Promissory Notes One [Member] | |||||||
Note payable | 2,919 | 2,919 | |||||
Unamortized discount | 52,081 | 52,081 | |||||
Recorded accretion | 2,919 | ||||||
Convertible Promissory Notes [Member] | |||||||
Note payable | 8,704 | 8,704 | |||||
Unamortized discount | 266,296 | 266,296 | |||||
Recorded accretion | 8,704 | ||||||
Amortization of deferred financing cost | 396 | ||||||
Deferred financing cost | 12,104 | 12,104 | |||||
May 17, 2016 [Member] | Convertible Promissory Notes One [Member] | |||||||
Convertible note | 55,000 | $ 55,000 | |||||
Due date | May 17, 2017 | ||||||
Terms of conversion feature | The notes are convertible at a price equal to 55% of the lowest trading price of the Company's common stock for the 20 prior trading days, bearing interest at 8% per annum and due on May 17, 2017 | ||||||
Fair value of the derivative liability | 95,047 | $ 95,047 | |||||
Note payable | 50,000 | 50,000 | |||||
Convertible notes proceeds | $ 48,000 | ||||||
Interest rate | 8.00% | ||||||
Unamortized discount | 5,000 | $ 5,000 | |||||
Legal fees | 2,000 | ||||||
Interest expense | 45,047 | ||||||
February 11, 2016 [Member] | Convertible Promissory Notes [Member] | |||||||
Convertible note | 275,000 | $ 275,000 | |||||
Due date | Feb. 11, 2017 | ||||||
Terms of conversion feature | The notes are convertible at a price equal to 60% of the lowest trading price of the Company's common stock for the 20 prior trading days, bearing interest at 8% per annum and due on February 11, 2017 | ||||||
Fair value of the derivative liability | 308,492 | $ 308,492 | |||||
Note payable | 250,000 | 250,000 | |||||
Convertible notes proceeds | $ 237,500 | ||||||
Interest rate | 8.00% | ||||||
Unamortized discount | 25,000 | $ 25,000 | |||||
Legal fees | 12,500 | ||||||
Interest expense | 59,492 | ||||||
Convertible Note [Member] | |||||||
Note payable | 188,030 | 188,030 | $ 0 | ||||
Unamortized discount | 311,970 | 311,970 | 500,000 | ||||
Recorded accretion | 500,000 | ||||||
Convertible Note [Member] | July 25, 2013 [Member] | |||||||
Convertible note | 500,000 | $ 500,000 | |||||
Due date | Jul. 31, 2014 | ||||||
Terms of conversion feature | The note is convertible into shares of the Companys common stock at any time at a conversion price equal to $0.02 per share and is subject to adjustment upon the issuance of certain dilutive instruments and other events. The conversion price was subsequently reduced to $0.01 per share upon the failure to file various reports with the SEC within 120 days of the issuance of the note | ||||||
Description for prepayment of note | The note may be prepaid by the Company without penalty with 30 days prior notice | ||||||
Note payable | $ 500,000 | $ 500,000 | |||||
Loss on derivatives | $ 9,383,810 | ||||||
Common stock shares issuable upon exercise of warrants | 12,500,000 | 12,500,000 | |||||
Interest rate | 8.00% | ||||||
Warrants, value | $ 3,169,531 | ||||||
Fair value of the conversion feature | 6,714,279 | ||||||
Unamortized discount | $ 500,000 | $ 500,000 | |||||
Revenues percentage | 100.00% | ||||||
Convertible Note [Member] | July 25, 2013 [Member] | Exercise price 0.05 [Member] | |||||||
Common stock shares issuable upon exercise of warrants | 10,000,000 | 10,000,000 | |||||
Exercise price | $ 0.05 | $ 0.05 | |||||
Convertible Note [Member] | July 25, 2013 [Member] | Exercise price 0.10 [Member] | |||||||
Common stock shares issuable upon exercise of warrants | 2,500,000 | 2,500,000 | |||||
Exercise price | $ 0.10 | $ 0.10 | |||||
Convertible Note [Member] | June 2, 2010 [Member] | |||||||
Fair value of the derivative liability | $ 266,425 | $ 266,425 | |||||
Note payable | 52,333 | $ 53,333 | |||||
Common stock restricted shares issued upon conversion of debt | 6,386 | ||||||
Amount of derivative liability reclassified to additional paid-in capital upon conversion | 197,352 | $ 197,352 | |||||
Repayment of debt | $ 1,000 | $ 3,000 | $ 2,000 | ||||
Amount of debt converted | $ 166,667 | ||||||
Convertible Note [Member] | December 31, 2015 [Member] | |||||||
Due date | Dec. 31, 2016 | ||||||
Fair value of the conversion feature | $ 16,507,415 | ||||||
Interest rate | 12.00% | ||||||
Present value of the future cash flows | 10.00% | ||||||
Gain/Loss on settlement of debt | $ 492,585 | ||||||
Reduced interest rate | 8.00% | ||||||
Convertible Note [Member] | December 31, 2014 [Member] | |||||||
Due date | Dec. 31, 2015 | ||||||
Fair value of the conversion feature | $ 25,088,180 | ||||||
Interest rate | 12.00% | ||||||
Present value of the future cash flows | 10.00% | ||||||
Gain/Loss on settlement of debt | $ 411,820 | ||||||
Reduced interest rate | 8.00% | ||||||
Convertible Note [Member] | July 24, 2014 [Member] | |||||||
Due date | Dec. 31, 2014 | ||||||
Fair value of the conversion feature | $ 24,501,757 | ||||||
Interest rate | 12.00% | ||||||
Present value of the future cash flows | 10.00% | ||||||
Gain/Loss on settlement of debt | $ 474,668 | ||||||
Convertible Note [Member] | January 25, 2010 [Member] | |||||||
Convertible note | 225,000 | $ 225,000 | |||||
Due date | Dec. 21, 2010 | ||||||
Terms of conversion feature | The note was convertible into shares of the Companys common stock at any time at a variable conversion price equal to 65% of the average of the closing bid prices of the common stock during the 28 trading days prior to the date of the conversion notice and was subject to adjustment upon the issuance of certain dilutive instruments | ||||||
Fair value of the derivative liability | 538,249 | $ 538,249 | |||||
Loss on derivatives | 313,249 | ||||||
Unamortized discount | $ 225,000 | $ 225,000 |
Derivative Liabilities (Details
Derivative Liabilities (Details) - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2016 | Dec. 31, 2015 | |
Derivative Liabilities Details | ||
Balance at the beginning of period | $ 16,886,192 | $ 46,065,517 |
Addition of new derivative liabilities | 403,539 | |
Change in fair value of warrants | (289,021) | (763,397) |
Change in fair value of embedded conversion option | (16,732,465) | (3,840,491) |
Modification of embedded conversion options | 7,415 | |
Derecognize of derivative liabilities upon settlement of convertible notes | (14,582,852) | |
Balance at the end of the period | $ 268,245 | $ 16,886,192 |
Derivative Liabilities (Detai28
Derivative Liabilities (Details 1) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2016 | Dec. 31, 2015 | |
Expected Dividend Yield | 0.00% | 0.00% |
Minimum [Member] | ||
Expected Volatility | 264.00% | 134.00% |
Risk-free Interest Rate | 0.33% | 0.20% |
Expected Life (in years) | 4 months 13 days | 2 months 30 days |
Maximum [Member] | ||
Expected Volatility | 278.00% | 216.00% |
Risk-free Interest Rate | 0.58% | 1.03% |
Expected Life (in years) | 7 months 17 days | 2 years 6 months |
Preferred Stock (Details Narrat
Preferred Stock (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||
Nov. 20, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Oct. 08, 2015 | |
Shares issued | 435,000 | |||||
Gain/Loss on settlement of debt | $ 624,966 | $ 1,495,529 | $ 624,966 | $ 1,495,529 | ||
Series B Preferred Stock [Member] | ||||||
Convertible Preferred Stock, designated | 10,000 | |||||
Convertible Preferred Stock, authorized | 3,550,000 | |||||
Series A Convertible Preferred Stock conversion description | Each holder of Series B Preferred Stock shall have the right at any time or from time to time from and after the day immediately following the date the Series B Preferred Stock is first issued, to convert each share of Series B Preferred Stock into 4,000 fully-paid and non-assessable share of common stock, par value $0.01 per share, of the Company. | |||||
Ownership percentage after conversion | 4.99% | |||||
Series A Preferred Stock [Member] | ||||||
Convertible Preferred Stock, designated | 3,500,000 | 3,500,000 | ||||
Convertible Preferred Stock, authorized | 3,550,000 | 3,550,000 | ||||
Shares issued | 3,381,520 | 3,381,520 | ||||
Preferred stock at a fair value | $ 12,849,776 | $ 12,849,776 | ||||
Convertible and promissory notes settle amount | 1,487,000 | 1,487,000 | ||||
Accrued interest settle amount | $ 203,760 | 203,760 | ||||
Gain/Loss on settlement of debt | $ 1,495,529 | |||||
Series A Convertible Preferred Stock conversion description | Each share of Series A Preferred Stock into 10 fully-paid and non-assessable share of common stock, par value $0.01 per share, of the Company. | |||||
Ownership percentage after conversion | 4.99% |
Common Stock (Details Narrative
Common Stock (Details Narrative) - USD ($) | Oct. 08, 2015 | Aug. 31, 2016 | Sep. 30, 2016 | Nov. 20, 2015 |
Shares issued | 435,000 | |||
Proceeds from issuance of common stock | $ 217 | |||
Debt conversion, converted instrument, shares Issued | 38,479,487 | 115,989,052 | ||
Debt conversion, converted instrument, amount | $ 47,904 | $ 56,552 | ||
Common Stock [Member] | ||||
Shares exchanged, shares | 20,000,000 | |||
Series B Preferred Stock [Member] | ||||
Shares exchanged, shares | 5,000 |
Commitments (Details Narrative)
Commitments (Details Narrative) - USD ($) | Sep. 06, 2016 | Feb. 22, 2016 |
Remaining amount of settlement, paid | $ 150,000 | |
Two installment [Member] | ||
Aggregate settlement amount | $ 200,000 |
Earnings (Loss) Per Share (Deta
Earnings (Loss) Per Share (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Basic: | ||||
Income (loss) attributable to common stock | $ (803,994) | $ 57,172,360 | $ 15,155,674 | $ 12,863,547 |
Diluted: | ||||
Income (loss) attributable to common stock, including assumed conversions | $ (803,994) | $ 57,172,360 | $ 15,155,674 | $ 12,863,547 |
Weighted Average Common Shares Outstanding | ||||
Income (loss) attributable to common stock | 88,870,474 | 77,727,669 | 68,473,319 | 77,727,669 |
Diluted: | ||||
Income (loss) attributable to common stock, including assumed conversions | 88,870,474 | 129,147,995 | 184,074,234 | 129,147,995 |
Basic: | ||||
Income (loss) attributable to common stock | $ (0.01) | $ 0.74 | $ 0.22 | $ 0.17 |
Diluted: | ||||
Income (loss) attributable to common stock, including assumed conversions | $ (0.01) | $ 0.44 | $ 0.08 | $ 0.10 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - USD ($) | Jul. 13, 2017 | Oct. 06, 2016 | Nov. 06, 2016 | Nov. 04, 2016 | Nov. 03, 2016 | Nov. 01, 2016 | Nov. 15, 2016 | Nov. 18, 2017 | Oct. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2015 |
Common stock, shares issued | 212,631,202 | 58,162,669 | |||||||||
Subsequent Event [Member] | |||||||||||
Convertible note payable, issued | $ 25,000 | $ 25,000 | |||||||||
Convertible note payable, bearing interest rate, annualy | 10.00% | 10.00% | |||||||||
Subsequent Event [Member] | Two significant shareholders [Member] | |||||||||||
Common stock, shares issued | 24,705,278 | ||||||||||
Debt conversion, Amount | $ 4,330 | ||||||||||
Subsequent Event [Member] | Significant shareholders [Member] | |||||||||||
Common stock, shares issued | 29,788,980 | 27,900,667 | 11,833,333 | 11,800,000 | 11,840,583 | 15,000,000 | |||||
Debt conversion, Amount | $ 8,800 | $ 4,116 | $ 1,668 | $ 1,640 | $ 1,575 | $ 2,235 |