Document And Entity Information
Document And Entity Information - shares | 3 Months Ended | |
Mar. 31, 2018 | May 15, 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 | Mar. 31, 2018 | |
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? | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 435,981,911 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2,018 |
Consolidated Condensed Balance
Consolidated Condensed Balance Sheets - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Current Assets | ||
Cash | $ 8,143 | $ 3,066 |
Deposit in acquisition | 115,000 | 75,000 |
Total Current Assets | 123,143 | 78,066 |
Total Assets | 123,143 | 78,066 |
Current Liabilities | ||
Accounts payable | 347,965 | 350,465 |
Accrued liabilities | 734,839 | 704,987 |
Convertible debentures, net of discounts of $35,240 and $180,716 respectively | 810,104 | 768,753 |
Derivative liabilities | 320,360 | 409,948 |
Loans payable ($0 and $370,000 related parties, respectively | 481,000 | 481,000 |
Total Liabilities | 2,694,268 | 2,715,154 |
Commitments and Contingencies | ||
Stockholders' Equity (Deficit): | ||
Preferred stock | ||
Common stock, 1,000,000,000 shares authorized, $0.01 par value; 401,391,827 and 345,450,049 shares and outstanding at March 31, 2018 and December 31, 2017, respectively | 4,013,921 | 3,454,502 |
Treasury stock, at cost - 58,333 shares | (773,500) | (773,500) |
Additional paid-in capital | 69,342,437 | 69,892,158 |
Accumulated deficit | (75,187,848) | (75,244,112) |
Total Stockholder's Deficit | (2,571,125) | (2,637,087) |
Total Liabilities and Stockholders' Equity | 123,143 | 78,066 |
Series A Preferred Stock | ||
Stockholders' Equity (Deficit): | ||
Preferred stock | 33,815 | 33,815 |
Series B Preferred Stock | ||
Stockholders' Equity (Deficit): | ||
Preferred stock | $ 50 | $ 50 |
Consolidated Condensed Balance3
Consolidated Condensed Balance Sheets (Parenthetical) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Current Liabilities | ||
Convertible debentures, net of discounts | $ 35,240 | $ 180,716 |
Loans payable - related parties | $ 0 | $ 370,000 |
Stockholders' Equity (Deficit): | ||
Common Stock, shares authorized | 1,000,000,000 | 1,000,000,000 |
Common Stock, par value (in Dollars per share) | $ 0.01 | $ 0.01 |
Common Stock, shares issued | 401,391,827 | 345,450,049 |
Common Stock, shares outstanding | 401,391,827 | 345,450,049 |
Treasury Stock - shares | 58,333 | 58,333 |
Series A Preferred Stock | ||
Stockholders' Equity (Deficit): | ||
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 | ||
Stockholders' Equity (Deficit): | ||
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 Condensed Statemen
Consolidated Condensed Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Consolidated Condensed Statements Of Operations | ||
Revenue | ||
Operating Expenses | ||
General and administrative | 25,423 | |
Professional fees | 37,000 | 27,562 |
Total Operating Expenses | 62,423 | 27,562 |
Loss from operations | (62,423) | (27,562) |
Other Income (Expense) | ||
Interest expense | (39,742) | (192,249) |
Change in fair value of derivatives | 194,734 | (27,242) |
Loss on convertible notes | (36,305) | |
Total other income (expense) | 118,687 | (219,491) |
Income (loss) before provision for income taxes | 56,264 | (247,053) |
Provision for income taxes | ||
Net Income (Loss) | $ 56,264 | $ (247,053) |
Income (loss) per share, basic | $ 0 | $ 0 |
Income (loss) per share, diluted | $ 0 | $ 0 |
Weighted average shares outstanding, basic | 362,573,320 | 315,661,069 |
Weighted average shares outstanding, diluted | 680,091,502 | 315,661,069 |
Consolidated Condensed Stateme5
Consolidated Condensed Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
CASH FLOW FROM OPERATING ACTIVITES: | ||
Net income (loss) | $ 56,264 | $ (247,053) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Accretion expense | 165,122 | |
Change in fair value of derivatives | (194,734) | 27,242 |
Loss on Convertible debt | 36,305 | |
Debt discount amortization | 1,510 | |
Changes in Operating Assets and Liabilities: | ||
Prepaid expenses and deposit | (40,000) | |
Accounts payable and accrued liabilities | (2,500) | 6,472 |
Accrued liabilities - related parties | 38,232 | 48,127 |
Net Cash Used in Operating Activities | (104,923) | (90) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from convertible debt | 110,000 | |
Net Cash Provided by Financing Activities | 110,000 | |
Net Increase (Decrease) in Cash | 5,077 | (90) |
Cash at Beginning of Period | 3,066 | 260 |
Cash at End of Period | 8,143 | 170 |
Cash paid during the period for: | ||
Interest | ||
Income taxes |
Summary of Business and Basis o
Summary of Business and Basis of Presentation | 3 Months Ended |
Mar. 31, 2018 | |
Notes to Financial Statements | |
NOTE 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. During 2017, the Company exited the recreational power sports OEM and leisure activity vehicles markets. 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, 2017 included in the Companys Annual Report on Form 10-K filed on April 4, 2018 (the 2017 Annual Report). Recently issued accounting pronouncements The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations. 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 March 31, 2018 current liabilities exceed current assets by $2,571,125 and the Company has an accumulated deficit of $75,187,848. 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. |
Deposits on acquisition
Deposits on acquisition | 3 Months Ended |
Mar. 31, 2018 | |
Notes to Financial Statements | |
Note 2 - Deposits on acquisition | On March 8, 2018, the Company entered into a share exchange agreement with TruFood Provisions Co (TruFood). Per the agreement, the Company will exchange 65% of the issued and outstanding stocks of US Highland, and cash, for 100% of the equity of TruFood. It is expected that all other debt related to the operation of TruFood will be retired at or prior to the closing date. As of March 31, 2018, the Company had deposited $115,000 related to this acquisition. |
Loans Payable
Loans Payable | 3 Months Ended |
Mar. 31, 2018 | |
Notes to Financial Statements | |
NOTE 3 - Loans Payable | Loans payable consist of the following: March 31, 2018 December 31, 2017 a) 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 b) 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 c) 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. On May 31, 2017, the Company executed a conversion addendum for each of the original loans for $22,000 and $45,000. The terms per the addendum allow the note holder to convert any portion of the principal and accrued interest into shares of common stock at $0.0001 per share. $ 111,000 $ 111,000 d) 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 f) 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 $ 100,000 g) 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 $ 50,000 Total $ 481,000 $ 481,000 Less Short-Term Portion (481,000 ) (481,000 ) Long Term Loans Payable $ - $ - Above notes are past due as of the issuance of these financial statements. |
Convertible Debentures
Convertible Debentures | 3 Months Ended |
Mar. 31, 2018 | |
Notes to Financial Statements | |
NOTE 4 - Convertible Debentures | a) 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. 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 March 31, 2018 and December 31, 2017, the carrying value of the note was $500,000. b) 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 year ended December 31, 2017, the entire balance of the discounts and costs were recognized in full. At March 31, 2018 and December 31, 2017, the carrying value of the notes was $275,000 and $275,000 with unamortized discount of $nil and $0, respectively. These notes are past due as of the issuance of these financial statements, as a result the interest rate increased to 24%. c) 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. At March 31, 2018 and December 31, 2017, the carrying value of the notes was $35,400 and $59,400 with unamortized discount of $nil and $0, respectively. These notes are past due as of the issuance of these financial statements, as a result the interest rate increased to 24%. d) On October 30, 2017, the Company entered into a convertible promissory note for $25,000, pursuant to which the Company received proceeds of $25,000. The notes are convertible at any time after September 13, 2018 at a mutually agreed upon conversion price, bearing interest rate at 10% per annum and due on October 30, 2019. Due to these provisions, the embedded conversion options does not currently qualify for derivative accounting and bifurcation under ASC 815-15 Derivatives and Hedging. At March 31, 2018 and December 31, 2017, the carrying value of the note was $25,000 and $25,000, respectively. e) On November 18, 2017, the Company entered into a convertible promissory note for $25,000, pursuant to which the Company received proceeds of $25,000. The notes are convertible at any time after September 13, 2018 at a mutually agree upon conversion price, bearing interest rate at 10% per annum and due on November 30, 2019. Due to these provisions, the embedded conversion options does not currently quality for derivative accounting and bifurcation under ASC 815-15 Derivatives and Hedging. During January and February 2018, the Company received an additional $75,000 under the same terms as the preciously issued convertible promissory note. At March 31, 2018 and December 31, 2017, the carrying value of the notes was $100,000 and $25,000, respectively. f) On March 16, 2018, the Company entered into a convertible promissory note for $36,750, pursuant to which the Company received proceeds of $35,000, net of an original issue discount of fees of $1,750. The note is 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 March 15, 2019. 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 $71,305 resulted in a full discount to the note payable of $36,750 and the recognition of $36,305 as a loss on the issuance of a convertible note. |
Derivative Liabilities
Derivative Liabilities | 3 Months Ended |
Mar. 31, 2018 | |
Notes to Financial Statements | |
NOTE 5 - Derivative Liabilities | The embedded conversion options of the Companys convertible debentures described in Note 3 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: March 31, 2018 December 31, 2017 Balance at the beginning of the period $ 409,948 $ 402,881 Addition of new derivative liabilities 71,305 - Change in fair value of embedded conversion option (127,052 ) 44,084 Derecognition of derivatives upon settlement of convertible notes (33,841 ) (37,017 ) Balance at the end of the period $ 320,360 $ 409,948 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, 2017 335 % 1.39 % 0 % 0.25 2.50 At March 31, 2018 140.0% 344.5 % 1.73%-2.07 % 0 % 0.25 - .95 |
Preferred Stock
Preferred Stock | 3 Months Ended |
Mar. 31, 2018 | |
Notes to Financial Statements | |
NOTE 6 - 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 | 3 Months Ended |
Mar. 31, 2018 | |
Notes to Financial Statements | |
NOTE 7 - Common Stock | During the three months ended March 31, 2018, the Company issued 55,941,778 shares of common stock to settle $35,159 of principal and $8,380 of accrued interest on its convertible notes. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2018 | |
Notes to Financial Statements | |
NOTE 8 - Subsequent Events | In accordance with ASC 855-140, Subsequent Events, Subsequent to March 31, 2018, the Company issued 34,590,084 shares of common stock to settle $11,798 of principal and $4,805 of accrued interest on a convertible note. On May 1, 2018, the Company entered into a Letter of Intent (LOI) regarding the proposed acquisition which is anticipated to be by a newly formed Canadian acquisition subsidiary of UHLN, of the assets of Supreme Sweets, Inc. |
Summary of Business and Basis14
Summary of Business and Basis of Presentation (Policies) | 3 Months Ended |
Mar. 31, 2018 | |
Summary Of Business And Basis Of Presentation Policies | |
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. During 2017, the Company exited the recreational power sports OEM and leisure activity vehicles markets. |
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, 2017 included in the Companys Annual Report on Form 10-K filed on April 4, 2018 (the 2017 Annual Report). |
Recently issued accounting pronouncements | The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations. |
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 March 31, 2018 current liabilities exceed current assets by $2,571,125 and the Company has an accumulated deficit of $75,187,848. 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. |
Loans Payable (Tables)
Loans Payable (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Loans Payable Tables | |
Schedule of Debt | Loans payable consist of the following: March 31, 2018 December 31, 2017 a) 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 b) 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 c) 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. On May 31, 2017, the Company executed a conversion addendum for each of the original loans for $22,000 and $45,000. The terms per the addendum allow the note holder to convert any portion of the principal and accrued interest into shares of common stock at $0.0001 per share. $ 111,000 $ 111,000 d) 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 f) 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 $ 100,000 g) 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 $ 50,000 Total $ 481,000 $ 481,000 Less Short-Term Portion (481,000 ) (481,000 ) Long Term Loans Payable $ - $ - |
Derivative Liabilities (Tables)
Derivative Liabilities (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Derivative Liabilities Tables | |
Summary of Changes in Fair Value of Financial Liabilities | March 31, 2018 December 31, 2017 Balance at the beginning of the period $ 409,948 $ 402,881 Addition of new derivative liabilities 71,305 - Change in fair value of embedded conversion option (127,052 ) 44,084 Derecognition of derivatives upon settlement of convertible notes (33,841 ) (37,017 ) Balance at the end of the period $ 320,360 $ 409,948 |
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, 2017 335 % 1.39 % 0 % 0.25 2.50 At March 31, 2018 140.0% 344.5 % 1.73%-2.07 % 0 % 0.25 - .95 |
Summary of Business and Basis17
Summary of Business and Basis of Presentation (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Dec. 31, 2017 | |
Summary Of Business And Basis Of Presentation Details Narrative | ||
State of incorporation | Oklahoma | |
Date of incorporation | Feb. 5, 1999 | |
Stockholder's Deficit | $ (2,571,125) | $ (2,637,087) |
Accumulated deficit | $ (75,187,848) | $ (75,244,112) |
Deposits on acquisition (Detail
Deposits on acquisition (Details Narrative) - USD ($) | Mar. 31, 2018 | Mar. 08, 2018 | Dec. 31, 2017 |
Deposit in acquisition | $ 115,000 | $ 75,000 | |
TruFood Provisions Co [Member] | Share exchange agreement [Member] | |||
Exchange of issued and outstanding shares, percentage | 65.00% | ||
Ownership percentage to be acquired under agreement | 100.00% | ||
Deposit in acquisition | $ 115,000 |
Loans Payable (Details)
Loans Payable (Details) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Loan Payable | $ 481,000 | $ 481,000 |
Less Short Term | (481,000) | (481,000) |
Long Term | ||
Loan 1 [Member] | ||
Loan Payable | 27,000 | 27,000 |
Loan 2 [Member] | ||
Loan Payable | 3,000 | 3,000 |
Loan 3 [Member] | ||
Loan Payable | 111,000 | 111,000 |
Loan 4 [Member] | ||
Loan Payable | 190,000 | 190,000 |
Loan 5 [Member] | ||
Loan Payable | 100,000 | 100,000 |
Loan 6 [Member] | ||
Loan Payable | $ 50,000 | $ 50,000 |
Loans Payable (Details Narrativ
Loans Payable (Details Narrative) - USD ($) | Sep. 02, 2016 | Jan. 04, 2016 | Dec. 02, 2015 | Nov. 13, 2015 | Sep. 01, 2015 | Aug. 12, 2015 | Jul. 03, 2015 | Dec. 04, 2014 | Aug. 12, 2013 | May 31, 2017 | Dec. 23, 2015 | Sep. 15, 2015 | Aug. 21, 2015 | May 29, 2015 | Jan. 29, 2015 | Sep. 18, 2014 | Dec. 31, 2015 | Mar. 31, 2018 | Dec. 31, 2017 | Mar. 19, 2015 | Feb. 27, 2014 | May 30, 2013 |
Conversion into common stock per share | $ 0.01 | $ 0.01 | ||||||||||||||||||||
Loan 6 [Member] | Unsecured Notes Payable [Member] | ||||||||||||||||||||||
Interest rate | 5.00% | |||||||||||||||||||||
Maturity period | 1 year | |||||||||||||||||||||
Notes payable | $ 50,000 | |||||||||||||||||||||
Loan 5 [Member] | Unsecured Notes Payable [Member] | ||||||||||||||||||||||
Interest rate | 5.00% | |||||||||||||||||||||
Maturity period | 1 year | |||||||||||||||||||||
Notes payable | $ 100,000 | |||||||||||||||||||||
Loan 4 [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 3 [Member] | ||||||||||||||||||||||
Conversion of loans | $ 22,000 | |||||||||||||||||||||
Conversion into common stock per share | $ 0.0001 | |||||||||||||||||||||
Loan 3 [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 3 One [Member] | ||||||||||||||||||||||
Conversion of loans | $ 45,000 | |||||||||||||||||||||
Loan 2 [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 1 [Member] | Director [Member] | ||||||||||||||||||||||
Due to related party | $ 25,000 | $ 2,000 | ||||||||||||||||||||
Interest rate | 1.00% | 1.00% | ||||||||||||||||||||
Loan 1 [Member] | Director [Member] | Unsecured, Non-Guaranteed Loan Agreement [Member] | ||||||||||||||||||||||
Proceeds from issuance of debt | $ 27,000 |
Convertible Debentures (Details
Convertible Debentures (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | Dec. 31, 2015 | |
Proceeds from Convertible notes | $ 110,000 | |||
Interest expense | 39,742 | 192,249 | ||
Amortization of debt discount | 1,510 | |||
Convertible Note [Member] | ||||
Note payable | $ 500,000 | $ 500,000 | ||
Accretion expense | $ 500,000 | |||
December 31, 2015 [Member] | Convertible Note [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% | |||
July 25, 2013 [Member] | Convertible Note [Member] | ||||
Convertible note | $ 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 | |||
Common stock shares issuable upon exercise of warrants | 12,500,000 | |||
Interest rate | 8.00% | |||
Unamortized discount | $ 500,000 | |||
Revenues percentage | 100.00% | |||
July 25, 2013 [Member] | Convertible Note [Member] | Exercise price 0.10 [Member] | ||||
Common stock shares issuable upon exercise of warrants | 2,500,000 | |||
Exercise price | $ 0.10 | |||
July 25, 2013 [Member] | Convertible Note [Member] | Exercise price 0.05 [Member] | ||||
Common stock shares issuable upon exercise of warrants | 10,000,000 | |||
Exercise price | $ 0.05 | |||
Convertible Promissory Notes [Member] | ||||
Note payable | $ 275,000 | $ 275,000 | ||
Interest rate | 24.00% | |||
Unamortized discount | $ 0 | |||
Convertible Promissory Notes [Member] | March 16, 2018 [Member] | ||||
Convertible note | $ 36,750 | |||
Due date | Mar. 15, 2019 | |||
Terms of conversion feature | The note is 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 March 15, 2019. | |||
Fair value of derivative liability | $ 71,305 | |||
Proceeds from Convertible notes | $ 35,000 | |||
Interest rate | 8.00% | |||
Gain/Loss on settlement of debt | $ 36,305 | |||
Legal fees | 1,750 | |||
Amortization of debt discount | 36,750 | |||
Convertible Promissory Notes [Member] | February 11, 2016 [Member] | ||||
Convertible note | $ 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 derivative liability | $ 308,492 | |||
Note payable | 250,000 | |||
Proceeds from Convertible notes | $ 237,500 | |||
Interest rate | 8.00% | |||
Unamortized discount | $ 25,000 | |||
Legal fees | 12,500 | |||
Interest expense | 59,492 | |||
Convertible Promissory Notes Foure [Member] | January and February, 2018 [Member] | ||||
Convertible note | 75,000 | |||
Convertible Promissory Notes Three [Member] | ||||
Note payable | 100,000 | 25,000 | ||
Convertible Promissory Notes Three [Member] | November 18, 2017 [Member] | ||||
Convertible note | $ 25,000 | |||
Due date | Nov. 30, 2019 | |||
Proceeds from Convertible notes | $ 25,000 | |||
Interest rate | 10.00% | |||
Convertible Promissory Notes Two [Member] | ||||
Note payable | $ 25,000 | 25,000 | ||
Convertible Promissory Notes Two [Member] | October 30, 2017 [Member] | ||||
Convertible note | $ 25,000 | |||
Due date | Oct. 30, 2019 | |||
Proceeds from Convertible notes | $ 25,000 | |||
Interest rate | 10.00% | |||
Convertible Promissory Notes One [Member] | ||||
Note payable | $ 35,400 | 59,400 | ||
Interest rate | 24.00% | |||
Unamortized discount | $ 0 | |||
Convertible Promissory Notes One [Member] | May 17, 2016 [Member] | ||||
Convertible note | $ 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 derivative liability | $ 95,047 | |||
Note payable | 50,000 | |||
Proceeds from Convertible notes | $ 48,000 | |||
Interest rate | 8.00% | |||
Unamortized discount | $ 5,000 | |||
Legal fees | 2,000 | |||
Interest expense | $ 45,047 |
Derivative Liabilities (Details
Derivative Liabilities (Details) - USD ($) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2018 | Dec. 31, 2017 | |
Derivative Liabilities Details | ||
Balance at the beginning of period | $ 409,948 | $ 402,881 |
Addition of new derivative liabilities | 71,305 | |
Change in fair value of embedded conversion option | (127,052) | 44,084 |
Derecognition of derivatives upon settlement of convertible notes | (33,841) | (37,017) |
Balance at the end of the period | $ 320,360 | $ 409,948 |
Derivative Liabilities (Detai23
Derivative Liabilities (Details 1) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2018 | Dec. 31, 2017 | |
Expected Volatility | 335.00% | |
Risk-free Interest Rate | 1.39% | |
Expected Dividend Yield | 0.00% | 0.00% |
Minimum [Member] | ||
Expected Volatility | 140.00% | |
Risk-free Interest Rate | 1.73% | |
Expected Life (in years) | 3 months | 3 months |
Maximum [Member] | ||
Expected Volatility | 344.50% | |
Risk-free Interest Rate | 2.07% | |
Expected Life (in years) | 11 months 12 days | 2 years 6 months |
Preferred Stock (Details Narrat
Preferred Stock (Details Narrative) - USD ($) | Sep. 30, 2015 | Nov. 20, 2015 |
Series B Preferred Stock | ||
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 | ||
Convertible Preferred Stock, designated | 3,500,000 | |
Convertible Preferred Stock, authorized | 3,550,000 | |
Shares issued | 3,381,520 | |
Preferred stock at a fair value | $ 12,849,776 | |
Convertible and promissory notes settlement amount | 1,487,000 | |
Accrued interest settle amount | 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 $0.01 per share, of the Company. | |
Ownership percentage after conversion | 4.99% |
Common Stock (Details Narrative
Common Stock (Details Narrative) - Convertible Note [Member] | 3 Months Ended |
Mar. 31, 2018USD ($)shares | |
Debt conversion, converted instrument, shares Issued | shares | 55,941,778 |
Debt conversion, converted instrument, amount | $ 35,159 |
Accrued interest | $ 8,380 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - Subsequent Event [Member] | 3 Months Ended |
Mar. 31, 2018USD ($)shares | |
Debt conversion, converted instrument, shares Issued | shares | 34,590,084 |
Debt conversion, converted instrument, amount | $ 11,798 |
Accrued interest | $ 4,805 |