Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Mar. 02, 2018 | Jun. 30, 2017 | |
Details | |||
Registrant Name | TRXADE GROUP, INC. | ||
Registrant CIK | 1,382,574 | ||
SEC Form | 10-K | ||
Period End date | Dec. 31, 2017 | ||
Fiscal Year End | --12-31 | ||
Trading Symbol | trxd | ||
Tax Identification Number (TIN) | 463,673,928 | ||
Number of common stock shares outstanding | 31,985,827 | ||
Public Float | $ 3,295,043 | ||
Filer Category | Smaller Reporting Company | ||
Current with reporting | Yes | ||
Voluntary filer | No | ||
Well-known Seasoned Issuer | No | ||
Amendment Flag | false | ||
Document Fiscal Year Focus | 2,017 | ||
Document Fiscal Period Focus | FY | ||
Contained File Information, File Number | 000-55218 | ||
Entity Incorporation, State Country Name | Delaware | ||
Entity Address, Address Line One | 3840 Land O’ Lakes Blvd. | ||
Entity Address, Postal Zip Code | 34,639 | ||
Entity Address, City or Town | Land O’ Lakes | ||
Entity Address, State or Province | Florida | ||
City Area Code | (800) | ||
Local Phone Number | 261-0281 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Current Assets | ||
Cash | $ 183,914 | $ 14,679 |
Accounts Receivable, net | 319,467 | 299,113 |
Prepaid Assets | 102,095 | 22,438 |
Other Current Assets | 2,000 | 894 |
Total Current Assets | 607,476 | 337,124 |
Other Assets | ||
Deposit | 10,000 | 0 |
Total Assets | 617,476 | 337,124 |
Current Liabilities | ||
Accounts Payable | 106,084 | 236,849 |
Accrued Liabilities | 156,961 | 466,982 |
Short Term Notes Payable | 10,587 | 392,379 |
Short Term Convertible Notes Payable, net of $0 and $0 discount | 0 | 165,000 |
Short Term Notes Payable - Related Party | 0 | 10,000 |
Short term Convertible Notes Payable - Related Parties | 251,725 | 203,384 |
Total Current Liabilities | 525,357 | 1,474,594 |
Long Term Liabilities | ||
Convertible Note Payable | 181,500 | 0 |
Notes Payable, net of $0 and $152 discount | 0 | 10,587 |
Notes Payable - Related Parties | 222,552 | 0 |
Total Liabilities | 929,409 | 1,485,181 |
Shareholders' Deficit | ||
Preferred Stock, Value, Issued | 0 | |
Common Stock, Value, Issued | 320 | 316 |
Additional Paid-in Capital | 7,807,860 | 7,260,723 |
Accumulated Deficit | (8,120,113) | (8,409,096) |
Total Shareholder's Deficit | (311,933) | (1,148,057) |
Total Liabilities and Shareholders' Deficit | $ 617,476 | $ 337,124 |
Consolidated Balance Sheets - P
Consolidated Balance Sheets - Parenthetical - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Preferred Stock, Par or Stated Value Per Share | $ 0.00001 | $ 0.00001 |
Preferred Stock, Shares Authorized | 10,000,000 | 10,000,000 |
Preferred Stock, Shares Issued | 0 | 0 |
Preferred Stock, Shares Outstanding | 0 | 0 |
Common Stock, Par or Stated Value Per Share | $ 0.00001 | $ 0.00001 |
Common Stock, Shares Authorized | 100,000,000 | 100,000,000 |
Common Stock, Shares, Issued | 31,985,827 | 31,660,827 |
Common Stock, Shares, Outstanding | 31,985,827 | 31,660,827 |
Short Term Notes Payable | ||
Debt Instrument, Unamortized Discount, Current | $ 152 | $ 40,306 |
Short Term Convertible Notes Payable | ||
Debt Instrument, Unamortized Discount, Current | 0 | 0 |
Short Term Convertible Notes Payable - Related Parties | ||
Debt Instrument, Unamortized Discount, Current | 0 | 48,341 |
Notes Payable | ||
Debt Instrument, Unamortized Discount, Current | $ 0 | $ 152 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Details | ||
Revenues | $ 2,931,280 | $ 2,481,866 |
Operating Expenses | ||
General and Administrative | 2,536,185 | 3,489,145 |
Operating Income (Loss) | 395,095 | (1,007,279) |
Other Income | 67,500 | 23,250 |
Loss on Extinguishment of Debt | (16,556) | (37,579) |
Interest Expense | (157,056) | (151,500) |
Income (Loss) from Continuing Operations | 288,983 | (1,173,108) |
Loss from Discontinued Operations | 0 | (1,784,625) |
Gain from sale of Discontinued Operations | 0 | 197,608 |
Net Income (Loss) | $ 288,983 | $ (2,760,125) |
Earnings Per Share, Basic | ||
Income (Loss) from Continuing Operations, Per Basic Share | $ 0.01 | $ (0.04) |
Discontinued Operation, Income (Loss) from Discontinued Operation, Net of Tax, Per Basic Share | 0 | (0.05) |
Earnings Per Share, Basic | 0.01 | (0.09) |
Earnings Per Share, Diluted | ||
Income (Loss) from Continuing Operations, Per Diluted Share | 0.01 | (0.04) |
Discontinued Operation, Income (Loss) from Discontinued Operation, Net of Tax, Per Diluted Share | 0 | (0.05) |
Earnings Per Share, Diluted | $ 0.01 | $ (0.09) |
Weighted Average Number of Shares Outstanding, Basic | 31,955,416 | 31,544,868 |
Weighted Average Number of Shares Outstanding, Diluted | 34,086,251 | 31,544,868 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Shareholders' Deficit - USD ($) | Preferred Stock | Common Stock | Additional Paid-in Capital | Retained Earnings | Total |
Equity Balance, Starting at Dec. 31, 2015 | $ 0 | $ 314 | $ 5,915,674 | $ (5,648,971) | $ 267,017 |
Shares Outstanding, Starting at Dec. 31, 2015 | 0 | 31,435,827 | |||
Common Stock Issued for Cash | $ 0 | $ 2 | 300,238 | 0 | 300,240 |
Common Stock Issued for Cash, Shares | 0 | 225,000 | |||
Warrants Issued for debt Amendment | $ 0 | $ 0 | 37,579 | 0 | 37,579 |
Warrants Issued for debt Amendment, Shares | 0 | 0 | |||
Warrants Issued for sale of Westminster | $ 0 | $ 0 | 688,143 | 0 | 688,143 |
Warrants Issued for sale of Westminster, Shares | 0 | 0 | |||
Options Expense | $ 0 | $ 0 | 147,630 | 0 | 147,630 |
Beneficial Conversion features and Relative fair value of warrant | 0 | 0 | 171,459 | 0 | 171,459 |
Net Income (Loss) | $ 0 | $ 0 | 0 | (2,760,125) | (2,760,125) |
Shares Outstanding, Ending at Dec. 31, 2016 | 0 | 31,660,827 | |||
Equity Balance, Ending at Dec. 31, 2016 | $ 0 | $ 316 | 7,260,723 | (8,409,096) | (1,148,057) |
Common Stock Issued for Cash | $ 0 | $ 3 | 249,997 | 0 | 250,000 |
Common Stock Issued for Cash, Shares | 0 | 250,000 | |||
Warrants Issued for debt Amendment | $ 0 | $ 0 | 16,556 | 0 | 16,556 |
Warrants Issued for debt Amendment, Shares | 0 | 0 | |||
Options Expense | $ 0 | $ 0 | 267,835 | 0 | 267,835 |
Stock Issued During Period, Value, Issued for Services | $ 0 | $ 1 | 12,499 | 0 | 12,500 |
Stock Issued During Period, Shares, Issued for Services | 0 | 50,000 | |||
Warrants Exercised | $ 0 | $ 0 | 250 | 0 | 250 |
Warrants Exercised, Shares | 0 | 25,000 | |||
Net Income (Loss) | $ 0 | $ 0 | 0 | 288,983 | 288,983 |
Shares Outstanding, Ending at Dec. 31, 2017 | 0 | 31,985,827 | |||
Equity Balance, Ending at Dec. 31, 2017 | $ 0 | $ 320 | $ 7,807,860 | $ (8,120,113) | $ (311,933) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Operating Activities: | ||
Net Income/(Loss) | $ 288,983 | $ (2,760,125) |
Loss From discontinued operations | 0 | (1,587,017) |
Net Income/(Loss) from continuing operations | 288,983 | (1,173,108) |
Adjustments to reconcile net income (loss) to net cash provided by (used in) Operating activities: | ||
Recovery of Bad Debt | 0 | (150) |
Options expense | 267,835 | 147,630 |
Loss on Debt Extinguishment | 16,556 | 37,579 |
Amortization of Debt Discount | 88,647 | 111,288 |
Stock Issued for Services | 12,500 | 0 |
Changes in operating assets and liabilities: | ||
Accounts Receivable | (20,354) | 55,779 |
Prepaid Assets and Other Assets | (90,763) | 67,366 |
Accounts Payable | (98,213) | 16,498 |
Accrued Liabilities and Other Liabilities | (293,521) | 233,589 |
Net Cash provided by (used in) operating activities | 171,670 | (503,529) |
Financing Activities: | ||
Cash paid as Original Issue Discount | 0 | (45,000) |
Proceeds from Debt - Related Parties | 0 | 10,000 |
Repayments of Debt Note Payable | (432,685) | (54,735) |
Proceeds from Debt Note Payable | 0 | 209,159 |
Repayments of Convertible Note | 0 | (50,000) |
Proceeds from Convertible Note - Related Parties | 180,000 | 251,725 |
Proceeds from Issuance of Common Stock | 250,000 | 300,000 |
Proceeds from Warrants exercise | 250 | 240 |
Net Cash (used in)/provided by financing activities | (2,435) | 621,389 |
Discontinued Operations: | ||
Net cash used in operating activities | 0 | (809,889) |
Net cash used in investing activities | 0 | (78,000) |
Net cash used in financing activities | 0 | 550,000 |
Net cash used in discontinued operations | 0 | (181,889) |
Net increase or (Decrease) in Cash | 169,235 | (64,029) |
Cash and Cash Equivalents, at Carrying Value, Beginning Balance | 14,679 | 78,708 |
Cash and Cash Equivalents, at Carrying Value, Ending Balance | 183,914 | 14,679 |
Supplemental Cash Flow Information | ||
Cash Paid for Interest | 71,210 | 23,556 |
Cash Paid for Income Taxes | 0 | 0 |
Non-Cash Transactions | ||
Reclass from accrued interest to short term convertible notes | 16,500 | 15,000 |
Arrangement to move related party accounts payable to notes payable | 32,552 | 0 |
Beneficial conversion features and relative fair value of warrants | $ 0 | $ 171,459 |
NOTE 1 - ORGANIZATION
NOTE 1 - ORGANIZATION | 12 Months Ended |
Dec. 31, 2017 | |
Notes | |
NOTE 1 - ORGANIZATION | NOTE 1 – ORGANIZATION Trxade Group, Inc. (“we”, “our”, “Trxade”, the “Company”) owns 100% of Trxade, Inc., Integra Pharma Solutions, LLC and ShopRX, Ltd. The merger of Trxade, Inc. and Trxade Group, Inc. occurred in May 2013. ShopRx, Ltd. was formed in 2016. Trxade, Inc. operates a web based market platform that enables trade among healthcare buyers and sellers of pharmaceuticals, accessories and services. In December 2016 the Company sold Westminster Pharmaceutical LLC. Westminster provided US state licensed pharmacies and other buying groups with FDA approved pharmaceuticals. The Westminster Pharmaceuticals LLC division, which was sold in December 2016, is included in the consolidated financial statements and is presented as discontinued operations as more fully described in Note 3 - DISCONTINUED OPERATIONS. In December 2016 the Company ceased operation of ShopRX, Ltd. the Company’s UK based subsidiary. The Company had hoped to establish a similar business to Trxade, Inc. in the United Kingdom in the future under this entity. The startup costs were expensed. |
NOTE 2 - SUMMARY OF SIGNIFICANT
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2017 | |
Notes | |
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”), and include all the notes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments considered necessary for fair presentation of the financial statements have been included. The summary of significant accounting policies presented below is designed to assist in understanding the Company’s financial statements. Such financial statements and accompanying notes are the representations of the Company’s management, who are responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America (“GAAP”) in all material respects, and have been consistently applied in preparing the accompanying financial statements. Basis of Presentation – The Company has incurred losses for the past several years while pursuing the development of private label pharmaceutical products through Westminster Pharmaceuticals, LLC. The net losses incurred were $2.7 million in 2016. Westminster Pharmaceuticals, LLC was sold in December 2016. See NOTE 3 – Discontinued operations. Historically, operations have been funded primarily through the sale of equity or debt securities and operating activities. In 2017, the Company restructured outstanding debt from short term to long term (See Note 5), raised capital (See Note 6) and had positive operating cash flow from operations. The Company has the ability to maintain the current level of spending or reduce expenditures to maintain operations if funding is not available. The Company’s financial statements for the prior year December 31, 2016 disclosed substantial doubt about the company’s ability to continue as a going concern. Based on management’s plans, capital raised, restructure of debt obligations and operating results during the subsequent year ended December 31, 2017, that substantial doubt has been resolved. Use of Estimates – In preparing these financial statements, management is required to make estimates and assumptions that effect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amount of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Reclassification – Certain prior year amounts have been reclassified to conform to the current year presentation. Principle of Consolidation – The Company’s consolidated financial statements include the accounts of Trxade Group, Inc., Trxade, Inc., and Integra Pharma Solutions, Inc. (Pinnacle Tek, Inc). All significant intercompany accounts and transactions have been eliminated. The Westminster Pharmaceuticals LLC division, which was sold in December 2016, is included in the consolidated financial statements and is presented as discontinued operations as more fully described in Note 3 - DISCONTINUED OPERATIONS. Cash and Cash Equivalents – Cash in bank accounts are at risk to the extent that they exceed U.S. Federal Deposit Insurance Corporation insured amounts. All investments purchased with a maturity of three months or less are cash equivalents. Cash and cash equivalents are available on demand and are generally within of FDIC insurance limits for 2017. Accounts Receivable – The Company’s receivables are from customers and are collected within 90 days. The Company determines the allowance based on known troubled accounts, historical experience, and other currently available evidence. During the year ended December 31, 2017 and 2016, $0 of bad debt expense and $150 of recovery of bad debt was recognized, respectively. Beneficial Conversion Features – The intrinsic value of a beneficial conversion feature inherent to a convertible note payable, which is not bifurcated and accounted for separately from the convertible note payable and may not be settled in cash upon conversion, is treated as a discount to the convertible note payable. This discount is amortized over the period from the date of issuance to the date the note is due using the effective interest method. If the note payable is retired prior to the end of its contractual term, the unamortized discount is expensed in the period of retirement to interest expense. In general, the beneficial conversion feature is measured by comparing the effective conversion price, after considering the relative value of detachable instruments included in the financing transaction, if any, to the fair value of the common shares at the commitment date to be received upon conversion. Derivative financial instruments – The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. For stock-based derivative financial instruments, the Company uses a Black-Scholes option pricing model, assuming maximum value, in accordance with ASC 815-15 “ Derivative and Hedging” to value the derivative instruments at inception and on subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date. Fair Value of Financial Instruments – The Company measures its financial assets and liabilities in accordance with the requirements of FASB ASC 820, “Fair Value Measurements and Disclosures”. ASC 820 clarifies the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value as follows: Level 1 – Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 1 primarily consists of financial instruments such as exchange-traded derivatives, marketable securities and listed equities. Level 2 – Pricing inputs are other than quoted prices in active markets included in level 1, which are either directly or indirectly observable as of the reported date and includes those financial instruments that are valued using models or other valuation methodologies. These models are primarily industry-standard models that consider various assumptions, including quoted forward prices for commodities, time value, volatility factors, and current market and contractual prices for the underlying instruments, as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace throughout the full term of the instrument, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace. Instruments in this category generally include non-exchange-traded derivatives such as commodity swaps, interest rate swaps, options and collars. Level 3 – Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value. The Company does not have any assets or liabilities that are required to be measured and recorded at fair value on a recurring basis. The carrying amounts of cash, accounts receivable, accounts payable, accrued liabilities and short-term debt approximate fair value because of the short-term nature of these instruments. The carrying amount of long-term debt approximates fair value because the debt is based on current rates at which the Company could borrow funds with similar maturities. Revenue Recognition – In general the Company accounts for revenue recognition in accordance with ASC 605, “Revenue Recognition”. Trxade, Inc. generates net fee income as a percentage of the total transactions between the buyer (independent pharmacies) and the seller (wholesaler) of pharmaceutical drugs on the Trxade web-based platform. Revenue is recognized when (1) the price is fixed and determined as the buyer orders the drugs from the wholesaler. (2) The wholesaler has signed a contract with Trxade, Inc. which recognizes that an arrangement exists. (3) The wholesaler ships the drugs purchased to the buyer. (4) The collectability is reasonably assured by the wholesaler through prior credit checks and payment experience. Westminster Pharmaceutical LLC generated gross revenues from the sale of pharmaceutical drugs to independent pharmacies or wholesalers. The revenue is recognized when (1) the price is fixed and determinable at the time of the transaction with an invoice. (2) The invoice is also persuasive evidence that an arrangement exists. (3) The products are delivered to the buyer. (4) The collectability of the resulting receivable is reasonably assured by credit check prior to the transaction and experience with the customer. The Westminster revenue is presented as discontinued operations and is fully described in Note 3 - DISCONTINUED OPERATIONS. In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2014-09 (Topic 606) "Revenue from Contracts with Customers." Topic 606 supersedes the revenue recognition requirements in Accounting Standards Codification Topic 605, “Revenue Recognition”, and requires entities to recognize revenue when they transfer control of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. The Company will adopt ASU 2014-09 using the modified retrospective approach effective January 1, 2018, under which prior periods will not be retrospectively adjusted. We expect the adoption of Topic 606 will not have a material impact to our consolidated financial statements, including the presentation of revenues in our Consolidated Statements of Operations. Stock-Based Compensation – The Company accounts for stock-based compensation to non-employees in accordance with the provision of ASC 505, “Equity Based Payments to Non-Employees” (“ASC 505”), which requires that such equity instruments are recorded at their fair value on the measurement date. The measurement of stock-based compensation is subject to periodic adjustment as the underlying instruments vest. The Company accounts for stock-based compensation to employees in accordance with ASC 718, “Compensation-Stock Compensation”. ASC 718 requires companies to measure the cost of employee services received in exchange for an award of equity instruments, including stock options, based on the grant date fair value of the award and to recognize it as compensation expense over the period the employee is required to provide service in exchange for the award, usually the vesting period. Stock option forfeitures are recognized at the date of employee termination. Income Taxes – The Company accounts for income taxes utilizing ASC 740, “Income Taxes” (SFAS No. 109). ASC 740 requires the measurement of deferred tax assets for deductible temporary differences and operating loss carry forwards, and of deferred tax liabilities for taxable temporary differences. Measurement of current and deferred tax liabilities and assets is based on provisions of enacted tax law. The effects of future changes in tax rates are not included in the measurement. The Company recognizes the amount of taxes payable or refundable for the current year and recognizes deferred tax liabilities and assets for the expected future tax consequences of events and transactions that have been recognized in the Company’s financial statements or tax returns. The Company currently has substantial net operating loss carry forwards. The Company has recorded a 100% valuation allowance against net deferred tax assets due to uncertainty of their ultimate realization. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Tax years from 2014 forward are open to examination by the Internal Revenue Service. Income (loss) Per Share – Basic net income (loss) per common share is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding. Diluted net loss per common share is computed similar to basic net loss per common share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. The dilutive effect of the Company's options and warrants is computed using the treasury stock method while the dilutive effect of our convertible notes is computed using the if-converted method. The following table sets forth the computation of basic and diluted Loss per Share: December 31, 2017 December 31, 2016 Numerator: Net Income (Loss) $ 288,983 $ (2,760,125) Net Loss from discontinued operations - (1,587,017) Net Income (Loss) from continuing operations 288,983 (1,173,108) Numerator for basic and diluted EPS – income (loss) Available to common shareholders 288,983 (2,760,125) Numerator for basic and diluted EPS – income (loss) From discontinued operations - (1,587,017) Denominator: Denominator for basic EPS – Weighted average shares 31,955,416 31,544,868 Dilutive Effect of Warrants 2,130,835 - Denominator for diluted EPS – adjusted weighted-average shares and assumed conversions 34,086,251 31,544,868 Basic and Diluted income (loss) per common share $ 0.01 $ (0.09) Basic and Diluted income (loss) per common share from discontinued Operations $ - $ (0.05) Basic and Diluted income (loss) per common share from continuing Operations $ 0.01 $ (0.04) Concentration Of Credit Risks And Major Customers - Financial instruments that potentially subject the company to credit risk consist principally of cash and cash equivalents and receivables. The Company places its cash and cash equivalents with financial institutions. Deposits are insured to Federal Deposit Insurance Corp limits. At December 31, 2017 and 2016, there were no uninsured cash or cash equivalents. During the years ending December 31, 2017 and 2016, sales to two customers represent individually greater than 10% of revenue. Recent Accounting Pronouncements – The Company has implemented all new relevant accounting pronouncements that are in effect through the date of these financial statements. The 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 consolidated financial position or results of operations. |
NOTE 3 - DISCONTINUED OPERATION
NOTE 3 - DISCONTINUED OPERATIONS | 12 Months Ended |
Dec. 31, 2017 | |
Notes | |
NOTE 3 - DISCONTINUED OPERATIONS | NOTE 3 – DISCONTINUED OPERATIONS On December 31, 2016, the Company entered into and consummated the sale of 100% of its equity interests in its wholly-owned subsidiary, Westminster Pharmaceuticals, LLC, a Delaware limited liability company (“Westminster”). The purchase price was the transfer of $1,197,354 assets, the transfer of $(3,908,296) of liabilities, 1,500,000 warrants issued with a fair market value of $688,143 which was calculated based on the Black-Scholes model, cancellation of $1,557,810 intercompany balance due to Trxade Group, Inc. and remaining debt discount of $267,381 being written off. The transaction resulted in a gain of $197,608. The schedule below summarizes the sale arrangement: Assumed Assets $ 1,197,354 Assumed Liabilities $ (3,908,296) Cancellation of intercompany payables $ 1,557,810 Write-off unamortized debt discount $ 267,381 Issuance of 1,500,000 warrants $ 688,143 Gain on sale of Westminster $ (197,608) Results of Discontinued Operations for the: Year Ended December 31, 2016 Revenue $ 2,966,411 Cost of Goods Sold $ 2,673,338 Operating Expenses $ 2,077,698 Loss from discontinued operations $ (1,784,625) Assets and Liabilities of Discontinued Operations as of December 31, 2016 Cash $ 65,386 Accounts Receivable 30,499 Inventory, net of $30,413 obsolescence reserve 641,525 Prepaid Assets and other advances 75,221 Fixed Assets, net of accumulated amortization 65,000 Other Assets 319,723 Total Assets $ 1,197,354 December 31, 2016 Intercompany payable $ 1,557,810 Accounts payable 620,881 Accrued Liabilities 229,605 Convertible Note 1,500,000 Total Liabilities $ 3,908,296 In July 2016, the purchase of ERP software was completed. The cost of the acquisition was $78,000 and the total balance was outstanding at December 31, 2016. The depreciation for the current year is $13,000. Convertible Promissory Note Assumed The convertible promissory notes assumed were originally issued to the buyer of Westminster Pharmaceuticals, Inc. Secured convertible promissory notes were issued in the aggregate amount of $950,000 in November and December 2015. The original term of the notes was three years. In June 2016, the note was extended to a four-year maturity for consideration of a senior secured position on the assets of the Company. Interest rate is a “Royalty Payment” which consists of a percentage of net Profit of certain transactions, payable within 45 days of the end of each quarter. Prior to maturity the notes may be converted for common stock at a conversion price of $2.50. The holders of the notes were granted a warrant to purchase 316,667 shares of common stock at a strike price of $0.01 and an expiration date of five years from date of issuance. In June, October and December 2016, an additional $250,000, $200,000 and $100,000, respectively, was issued under the secured convertible promissory notes. The holders of the notes were granted additional warrants (under the same terms above) to purchase 83,334, 66,667 and 33,334, respectively, shares of common stock at a strike price of $0.01. The Company evaluated the embedded conversion feature within the above convertible notes under ASC 815-15 and ASC 815 40 and determined embedded conversion feature does not meet the definition of a liability. Then the Company evaluated the conversion feature for a beneficial conversion feature at inception. The Company accounted for the intrinsic value of a Beneficial Conversion Feature inherent to the convertible note payable and a total debt discount of $0 was recorded. The Company also uses the Black-Scholes pricing model to estimate the fair value of the warrants issued along with convertible notes on the date of grant. The Company accounted for relative fair value of the warrants issued and a total debt discount of $251,883 was recorded in 2015. An additional discount of $106,069 was recorded in 2016. During 2016, a debt discount of $80,298 was amortized. As part of the purchase and sale agreement the $1,500,000 note was cancelled and the remaining debt discount of $267,381 was expensed immediately at December 31, 2016. |
NOTE 4 - SHORT-TERM DEBT AND RE
NOTE 4 - SHORT-TERM DEBT AND RELATED PARTIES DEBT | 12 Months Ended |
Dec. 31, 2017 | |
Notes | |
NOTE 4 - SHORT-TERM DEBT AND RELATED PARTIES DEBT | NOTE 4 – SHORT-TERM DEBT AND RELATED PARTIES DEBT Convertible Promissory Note Convertible promissory notes were issued in the aggregate amount of $200,000 in April and May 2015. The term of the notes was one year. Simple interest of 10% was payable at the maturity date of the note. Prior to maturity the notes may be converted for common stock at a conversion price of $1.50. The holders of the notes were granted warrants at one share of common stock for every $4.00 of the note principal amount, which totaled a warrant to purchase 50,000 shares of common stock. These warrants were issued at a strike price of $1.50 and an expiration date of five years from date of issuance. The Company used the Black-Scholes pricing model to estimate the fair value of the warrants issued along with convertible notes on the date of grant. The Company accounted for the relative fair value of the warrants issued and a total debt discount $53,546 was recorded. In April and May 2016, $50,000 of the $200,000 in convertible promissory notes (plus $5,000 in interest) was repaid. A one-year extension was executed on the remaining notes and the interest owed, totaling $15,000 became part of the adjusted principal of notes and the balance of $165,000 is due May 2017. In connection with the one-year extension of the maturity date of the outstanding notes, the holders of the notes were granted warrants at one common stock for $4.00 of the note amount, and warrants to purchase 41,250 shares of common stock were issued at a strike price of $1.50 and an expiration date of five years from date of issuance. The amendment of the note was considered a debt extinguishment and a loss on extinguishment of debt was booked in the amount of $37,579. In April 2017, $165,000 in convertible promissory notes (plus $5,500 in interest) was amended. A two-year extension was executed on the remaining notes and the interest owed, totaling $16,500 became part of the adjusted principal of the notes and the balance of $181,500 is due May 2019. The conversion price was adjusted to $0.85 per share. In connection with the two-year extension of the maturity date of the outstanding notes, the holders of the notes were granted warrants to purchase 18,150 shares of common stock that was issued at a strike price of $0.65 and an expiration date of five years from date of issuance. The amendment of the note was considered a debt extinguishment and a loss on extinguishment of debt was booked in the amount of $11,512. The Company evaluated the embedded conversion feature within the above convertible notes under ASC 815-15 and ASC 815-40 and determined that the embedded conversion feature does not meet the definition of a derivative liability. Then the Company evaluated the conversion feature for a beneficial conversion feature at inception. The Company accounted for the intrinsic value of a Beneficial Conversion Feature inherent to the convertible note payable the conversion was not beneficial and a total debt discount from the issued warrants of $53,546 was recorded in 2015 and $0 as of the date of the debt modification. During 2016, a debt discount of $35,697 was amortized. As of December 31, 2016, the short term convertible notes had a principal balance of $165,000 with an unamortized debt discount of $0. During 2017, debt discount of $0 was amortized. As of December 31, 2017, short-term convertible note has a balance of $0, net of $0 unamortized debt discount. See NOTE 5 – LONG TERM DEBT Promissory Note In May 2016, a promissory note that was issued in May 2015 was renewed in the face amount of $250,000 and the term was extended an additional year. The note has an original issuance discount of $45,000 and this amount was paid in cash at the renewal. During 2016, a debt discount of $45,000 was amortized. As of December 31, 2016, the promissory note has a balance of $250,000 with an unamortized debt discount of $15,000. During 2017 the debt discount of $15,000 was fully amortized and the balance of $250,000 was paid. In October 2016, a promissory note was issued in the face amount of $12,159. The term of the note was 30 days. It was paid in November of 2016. In October 2016, a promissory note was issued in the face amount of $47,000. The term of the note was one year. Payments are made daily and $3,917 of principal was paid in 2016. At December 31, 2016 the balance was $43,083. In 2017 $43,083 of principal was paid and at December 31, 2017 the balance was $0. In September 2016, a promissory note was issued for $189,000. The term of the note is 494 days. The debt discount was $39,000 thus the initial net proceeds were $150,000. At December 31, 2016, $139,602 was classified as short term with a discount of $25,306 and $10,739 was classified as long term with a discount of $152. Payments are made each weekday in the amount of $537. In 2017, $139,602 was paid off by cash and debt discount of $25,306 was amortized. As of December 31, 2017, short term promissory notes have a balance of $10,739, net of $152 unamortized debt discount. Related Party Convertible Promissory Note In August 2016, $40,000 in promissory notes were issued to Mr. Shilpa Patel, a relative of Mr. Prashant Patel. The term of the note was one year. Simple interest of 10% is payable at the maturity date of the note. Prior to maturity the note may be converted for common stock at a conversion price of $1.50. In August 2017, $40,000 in convertible promissory notes was amended. A one-year extension was executed to August 2018. In connection with the one-year extension of the maturity date of the outstanding notes, the holder of the notes was granted warrants to purchase 10,000 shares of common stock that was issued at a strike price of $0.80 and an expiration date of five years from date of issuance. The amendment of the note was considered a debt extinguishment and a loss on extinguishment of debt was booked in the amount of $5,044. The Company evaluated the embedded conversion feature within the above convertible notes under ASC 815-15 and ASC 815-40 and determined that the embedded conversion feature does not meet the definition of a derivative liability. Then the Company evaluated the conversion feature for a beneficial conversion feature at inception. The Company accounted for the intrinsic value of a Beneficial Conversion Feature inherent to the convertible note payable and $0 was recorded as of the grant date. In September and October 2016, convertible promissory notes were issued in the aggregate amount of $211,725 to a related party, Mr. Nitel Patel, the brother of Mr. Prashant Patel. The term of the notes was one year. Simple interest of 10% is payable at the maturity date of the notes. Prior to maturity the notes may be converted for common stock at a conversion price of $0.62. In connection with the notes, the holders of the notes were granted warrants to purchase 52,861 shares of common stock. These warrants were issued at a strike price of $.62 and an expiration date of five years from date of issuance. In April 2017, a $61,725 related party note was renewed for a one-year extension at the same interest rate of 10%, due April 2018. In September 2017, a $150,000 related party note was renewed for a six-month extension at the same interest rate of 10%, due in February 2018. The Company evaluated the embedded conversion feature within the above convertible notes under ASC 815-15 and ASC 815-40 and determined that the embedded conversion feature does not meet the definition of a derivative liability. Then the Company evaluated the conversion feature for a beneficial conversion feature at inception. The Company accounted for the intrinsic value of a Beneficial Conversion Feature inherent to the convertible note payable and the beneficial feature was not beneficial and a total debt discount of $65,390 due to the warrants was recorded as of the grant date. During 2016, a debt discount of $17,049 was amortized. As of December 31, 2016, the short term related party convertible notes had a principal balance of $251,725 with an unamortized debt discount of $48,341. During 2017, the remaining debt discount of $48,341 was fully amortized. As of December 31, 2017, the short term related party convertible notes had a principal balance of $251,725, net of an unamortized debt discount of $0. Related Party Promissory Note In November 2016, Mr. Prashant Patel loaned the Company $10,000. The term of the loan is 90 days and is at zero percent interest. The balance at December 31, 2016 was $10,000. In February 2017, $7,280 of accounts payable to Mr. Patel was added to the loan. The term of the loan was extended for 90 days and is at zero interest rate. An additional $25,272 of accounts payable was added to the loan in the second quarter and the balance of $42,552 was converted to long-term debt in July 2017 and will mature in July 2020. See NOTE 5 – LONG TERM DEBT. |
NOTE 5 - LONG TERM DEBT
NOTE 5 - LONG TERM DEBT | 12 Months Ended |
Dec. 31, 2017 | |
Notes | |
NOTE 5 - LONG TERM DEBT | NOTE 5 – LONG TERM DEBT There are $181,500 in convertible promissory notes due in May 2019 as described in NOTE 4 – SHORT TERM DEBT. Related Party Promissory Notes In June 2017, the Company satisfied an outstanding promissory note, dated May 8, 2016, as amended, in the principal amount of $250,000 (the “NPR Note”), made by between the Company and NPR INVESTMENT GROUP, LLC (the “Lender”). The NPR Note included a personal guarantee from Suren Ajjarapu and Prashant Patel, who both serve on the Board of Directors of the Company and are controlling stockholders of the Company. Further, Mr. Ajjarapu is the CEO and President of the Company and Mr. Patel is Vice Chairman and Executive Director of Strategy. In connection with the foregoing satisfaction of the NPR Note above, the Company received funds in June 2017 and entered into a promissory note agreement on July 1, 2017, whereby the Company borrowed $100,000 and $80,000 from Sansur Associates, LLC, a limited liability company controlled by Mr. Ajjarapu, and Mr. Patel, respectively (the “Promissory Notes”). The term of each of these N otes is three years and they each bear interest at 6%, which is payable annually. The note due to Mr. Patel is $ At December 31, 2017, total related party long term debt was $222,552. Future maturities of both short-term and long-term debt in the next five years are as follows: Due in 2018 $ 262,464 Due in 2019 $ 181,500 Due in 2020 $ 222,552 Due in 2021 $ - Due in 2022 $ - Total Debt $ 666,516 |
NOTE 6 - SHAREHOLDERS' EQUITY
NOTE 6 - SHAREHOLDERS' EQUITY | 12 Months Ended |
Dec. 31, 2017 | |
Notes | |
NOTE 6 - SHAREHOLDERS' EQUITY | NOTE 6 – SHAREHOLDERS’ EQUITY 2016 Under a Private Offer Memorandum, 200,000 shares of common stock were issued for $300,000 cash, which included 100,000 shares in June 2016 and 100,000 shares in August. The common stock was sold at $1.50 per share. In connection with this common stock offering warrants to purchase 50,000 shares of common stock were issued at a strike price of $0.01 and an expiration date of five years. Warrants were exercised for 25,000 shares of common stock at $.01 for $240. 2017 In January 2017, under a Private Offer Memorandum, 250,000 shares of common stock were issued for $250,000 cash. The common stock was sold at $1.00 per share. In connection with this common stock offering warrants to purchase 87,500 shares of common stock were issued with a strike price of $0.01 and an expiration date of five years. In February 2017, 25,000 shares were issued when warrants were exercised at $.01 grant price for $250. In March 2017, 50,000 shares were issued for services performed for the Company and valued at fair value of $12,500. |
NOTE 7 - WARRANTS
NOTE 7 - WARRANTS | 12 Months Ended |
Dec. 31, 2017 | |
Notes | |
NOTE 7 - WARRANTS | NOTE 7 - WARRANTS In 2016, 41,250 warrants were issued as consideration of the debt amendment. See Note 4. In 2016, 236,196 warrants were issued along with convertible debt. See Notes 4 and 5. In 2016, 25,000 warrants were exercised at the price of $240 and 50,000 warrants were issued along with stock subscription. See Note 6. In December 2016, 1,500,000 warrants were issued in connection with the sale of Westminster. The fair value of the warrants were calculated based on the Black-Scholes model. See Note 3. In 2017, 87,500 warrants were issued related to common shares sold for cash. See Note 6. Likewise, 28,150 were issued for renewal of convertible debt (see Note 4) and 25,000 warrants were exercised. No warrants were forfeited in 2017 and 2016. The following table summarizes the assumptions used to estimate the fair value of warrants granted during the years ended December 31, 2017 and 2016: 2017 2016 Expected dividend yield 0% 0% Weighted-average expected volatility 200% 200% Weighted-average risk-free interest rate 1.81% - 1.84% 1.35% - 1.36% Expected life of warrants 5 years 5 years The CompanyÂ’s outstanding and exercisable warrants as of December 31, 2017 and 2016 are presented below: Number Outstanding Weighted Average Exercise Price Contractual Life in Years Intrinsic Value Warrants Outstanding as of December 31, 2015 845,000 $ 0.61 3.77 $ 435,900 Warrants granted 1,827,446 0.06 5.00 - Warrants Forfeited - - - - Warrants Exercised (25,000) 0.01 - - Warrants Outstanding and Exercisable as of December 31, 2016 2,647,446 $ 0.24 4.24 $ 930,751 Warrants granted 115,650 0.18 5.00 - Warrants Forfeited - - - - Warrants Exercised (25,000) 0.01 - - Warrants Outstanding and Exercisable as of December 31, 2017 2,738,096 $ 0.24 3.28 $ 937,567 |
NOTE 8 - OPTIONS
NOTE 8 - OPTIONS | 12 Months Ended |
Dec. 31, 2017 | |
Notes | |
NOTE 8 - OPTIONS | NOTE 8 - OPTIONS The Company maintains a stock option plan under which certain employees and management are awarded option grants based on a combination of performance and tenure. All options may be exercised for a period up to four ½ years following the grant date, after which they expire. Options are vested up to 5 years from the grant date. The Board has authorized the use of 2,000,000 shares for option grants. Stock options were granted during 2017 and 2016 to employees totaling, 263,846 and 189,000 respectively. These options vest over a period of 5 years, are granted with an exercise price of between $0.41 - $1.02 per share and have a term of 10 years. The last options expire October 2027. Under the Black-Scholes option price model, fair value of the option granted in 2017 and 2016 were $169,100 and $184,697, respectively. During the year ended December 31, 2016, 300,750 options were forfeited due to employee resignation. The options were not vested and the option expense reversed was $139,954. During the year ended December 31, 2016, another 43,750 options expired. In April 2017, 253,846 options were granted with an exercise price of $0.65 and a term of 10 years from the grant date. The options vest over a period of one and four years. During the year ended December 31, 2017, 35,500 were forfeited and 75,000 expired. In April 2017, four option grants, totaling 650,000 options, were amended to extend the exercise term to 10 years from the date of grant. Incremental option expense recognized as a result of the amendment amounted to $69,611. The Company uses the Black-Scholes option pricing model to estimate the fair value of stock-based awards on the date of grant. The following table summarizes the assumptions used to estimate the fair value of stock options granted during the years ended December 31, 2017 and 2016: 2017 2016 Expected dividend yield 0% 0% Weighted-average expected volatility 200% 200% Weighted-average risk-free interest rate 1.92% 1.24% - 1.56% Expected life of options 4.74 to 7.50 years 5 years Total compensation cost related to stock options was $267,835 and $147,630 for the years ended December 31, 2017 and 2016, respectively. As of December 31, 2017, there was $95,181 of unrecognized compensation costs related to stock options, which is expected to be recognized over a weighted average period of 6.78 years. The following table represents stock option activity for the two years ended December 31, 2017: Number of Options Weighted Average Exercise Price Contractual Life in Years Intrinsic Value Outstanding at December 31, 2015 1,200,000 1.07 5.19 Exercisable at December 31, 2015 332,000 1.04 3.34 28,000 Forfeited (300,750) 1.03 7.87 - Granted 189,000 - - - Expired (43,750) 1.16 8.08 - Outstanding at December 31, 2016 1,044,500 0.92 3.38 - Exercisable at December 31, 2016 584,000 1.05 3.02 - Forfeited (35,000) 1.02 8.25 - Granted 263,846 0.64 9.05 - Expired (75,500) 1.13 4.54 - Outstanding at December 31, 2017 1,197,846 0.97 6.96 - Exercisable at December 31, 2017 781,300 1.02 6.3 - |
NOTE 9 - INCOME TAXES
NOTE 9 - INCOME TAXES | 12 Months Ended |
Dec. 31, 2017 | |
Notes | |
NOTE 9 - INCOME TAXES | NOTE 9 – INCOME TAXES On December 22, 2017 H.R. 1, originally known as the Tax Cuts and Jobs Act, (the “Tax Act”) was enacted. Among the significant changes to the U.S. Internal Revenue Code, the Tax Act lowers the U.S. federal corporate income tax rate (“Federal Tax Rate”) from 35% to 21% effective January 1, 2018. The statutory tax rate is the percentage imposed by law; the effective tax rate is the percentage of income actually paid by a company after taking into account tax deductions, exemptions, credits and operating loss carry forwards. At December 31, 2017 and 2016 deferred tax assets consist of the following: December 31, 2017 December 31, 2016 Federal loss carry forwards $ 963,833 $ 1,840,249 Less: valuation allowance (963,833) (1,840,249) $ - $ - The Company has established a valuation allowance equal to the full amount of the deferred tax asset primarily due to uncertainty in the utilization of the net operating loss carry forwards. The estimated net operating loss carry forwards of approximately $4,589,682 will be available based on the new carryover rules in section 172(a) passed with the Tax Cuts and Jobs Acts. |
NOTE 10 - RELATED PARTIES
NOTE 10 - RELATED PARTIES | 12 Months Ended |
Dec. 31, 2017 | |
Notes | |
NOTE 10 - RELATED PARTIES | NOTE 10 – RELATED PARTIES In January 2017 Mr. Ajjarapu and Mr. Patel suspended their executive salaries of $165,000 and $125,000, respectively, for a period of five and six months. All of our executives are at-will employees or consultants. Each of Messrs. Ajjarapu and Patel are parties to an at-will executive employment agreement. The Company owed management wages to Mr. Prashant Patel and Mr. Suren Ajjarapu at December 31, 2017 of $62,500 and $0, respectively and at December 31, 2016 of $132,012 and $76,971, respectively. See related party debt activities in Notes 4 and 5. |
NOTE 11 - COMMITMENTS AND CONTI
NOTE 11 - COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2017 | |
Notes | |
NOTE 11 - COMMITMENTS AND CONTINGENCIES | NOTE 11 – COMMITMENTS AND CONTINGENCIES The Company leases its premises in Land O’ Lakes, Florida under an operating lease that expires in 2021. Future minimum rental payments under these non-cancelable operating leases as of December 31, 2017 are: 2018 $ 92,400 2019 $ 103,824 2020 $ 106,939 2021 $ 9,179 Total $ 312,342 On November 19, 2015, Family Medicine Pharmacy, LLC filed a class-action claim against Trxade Group, Inc. and its wholly owned subsidiary Westminster Pharmaceutical, LLC, Inc. (Family Medicine Pharmacy, LLC v. Trxade Group, Inc. and Westminster, Inc., Case No.: 1:15-CV-00590-KD-B, United States District Court, Southern District of Alabama, Mobile Division). Family Medicine has served Trxade for allegedly utilizing a “junk fax” advertising program. On June 6, 2016, we entered into a binding memorandum of understanding with the plaintiff related to this litigation to resolve all claims in exchange for Trxade funding a settlement fund in the amount of $200,000. An accrual of $200,000 is recorded on book as of December 31, 2016. The final judgment, approval and payment was entered into on March 17, 2017 for $200,000. |
NOTE 12 - SUBSEQUENT EVENTS
NOTE 12 - SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2017 | |
Notes | |
NOTE 12 - SUBSEQUENT EVENTS | NOTE 12 - SUBSEQUENT EVENTS In January 2018 Mr. Ajjarapu and Mr. Patel executive salaries were amended from $165,000 and $125,000, to $200,000 and $150,000 respectively. All of our executives are at-will employees or consultants. Each of Messrs. Ajjarapu and Patel are parties to an at-will executive employment agreement. In February 2018, $100,000 of the $150,000 related party note was extended to July 2018 at the same interest rate of 10% and $50,000 of note principal and interest were paid. |
NOTE 2 - SUMMARY OF SIGNIFICA19
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Basis of Accounting, Policy (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
Policies | |
Basis of Accounting, Policy | Basis of Presentation – The Company has incurred losses for the past several years while pursuing the development of private label pharmaceutical products through Westminster Pharmaceuticals, LLC. The net losses incurred were $2.7 million in 2016. Westminster Pharmaceuticals, LLC was sold in December 2016. See NOTE 3 – Discontinued operations. Historically, operations have been funded primarily through the sale of equity or debt securities and operating activities. In 2017, the Company restructured outstanding debt from short term to long term (See Note 5), raised capital (See Note 6) and had positive operating cash flow from operations. The Company has the ability to maintain the current level of spending or reduce expenditures to maintain operations if funding is not available. The Company’s financial statements for the prior year December 31, 2016 disclosed substantial doubt about the company’s ability to continue as a going concern. Based on management’s plans, capital raised, restructure of debt obligations and operating results during the subsequent year ended December 31, 2017, that substantial doubt has been resolved. |
NOTE 2 - SUMMARY OF SIGNIFICA20
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Use of Estimates (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
Policies | |
Use of Estimates | Use of Estimates – In preparing these financial statements, management is required to make estimates and assumptions that effect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amount of revenues and expenses during the reporting periods. Actual results could differ from those estimates. |
NOTE 2 - SUMMARY OF SIGNIFICA21
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Reclassification (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
Policies | |
Reclassification | Reclassification – Certain prior year amounts have been reclassified to conform to the current year presentation. |
NOTE 2 - SUMMARY OF SIGNIFICA22
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Principle of Consolidation (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
Policies | |
Principle of Consolidation | Principle of Consolidation – The Company’s consolidated financial statements include the accounts of Trxade Group, Inc., Trxade, Inc., and Integra Pharma Solutions, Inc. (Pinnacle Tek, Inc). All significant intercompany accounts and transactions have been eliminated. The Westminster Pharmaceuticals LLC division, which was sold in December 2016, is included in the consolidated financial statements and is presented as discontinued operations as more fully described in Note 3 - DISCONTINUED OPERATIONS. |
NOTE 2 - SUMMARY OF SIGNIFICA23
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Cash and Cash Equivalents (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
Policies | |
Cash and Cash Equivalents | Cash and Cash Equivalents – Cash in bank accounts are at risk to the extent that they exceed U.S. Federal Deposit Insurance Corporation insured amounts. All investments purchased with a maturity of three months or less are cash equivalents. Cash and cash equivalents are available on demand and are generally within of FDIC insurance limits for 2017. |
NOTE 2 - SUMMARY OF SIGNIFICA24
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Accounts Receivable (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
Policies | |
Accounts Receivable | Accounts Receivable – The Company’s receivables are from customers and are collected within 90 days. The Company determines the allowance based on known troubled accounts, historical experience, and other currently available evidence. During the year ended December 31, 2017 and 2016, $0 of bad debt expense and $150 of recovery of bad debt was recognized, respectively. |
NOTE 2 - SUMMARY OF SIGNIFICA25
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Beneficial Conversion Features (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
Policies | |
Beneficial Conversion Features | Beneficial Conversion Features – The intrinsic value of a beneficial conversion feature inherent to a convertible note payable, which is not bifurcated and accounted for separately from the convertible note payable and may not be settled in cash upon conversion, is treated as a discount to the convertible note payable. This discount is amortized over the period from the date of issuance to the date the note is due using the effective interest method. If the note payable is retired prior to the end of its contractual term, the unamortized discount is expensed in the period of retirement to interest expense. In general, the beneficial conversion feature is measured by comparing the effective conversion price, after considering the relative value of detachable instruments included in the financing transaction, if any, to the fair value of the common shares at the commitment date to be received upon conversion. |
NOTE 2 - SUMMARY OF SIGNIFICA26
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Derivative financial instruments (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
Policies | |
Derivative financial instruments | Derivative financial instruments – The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. For stock-based derivative financial instruments, the Company uses a Black-Scholes option pricing model, assuming maximum value, in accordance with ASC 815-15 “ Derivative and Hedging” to value the derivative instruments at inception and on subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date. |
NOTE 2 - SUMMARY OF SIGNIFICA27
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Fair Value of Financial Instruments (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
Policies | |
Fair Value of Financial Instruments | Fair Value of Financial Instruments – The Company measures its financial assets and liabilities in accordance with the requirements of FASB ASC 820, “Fair Value Measurements and Disclosures”. ASC 820 clarifies the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value as follows: Level 1 – Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 1 primarily consists of financial instruments such as exchange-traded derivatives, marketable securities and listed equities. Level 2 – Pricing inputs are other than quoted prices in active markets included in level 1, which are either directly or indirectly observable as of the reported date and includes those financial instruments that are valued using models or other valuation methodologies. These models are primarily industry-standard models that consider various assumptions, including quoted forward prices for commodities, time value, volatility factors, and current market and contractual prices for the underlying instruments, as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace throughout the full term of the instrument, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace. Instruments in this category generally include non-exchange-traded derivatives such as commodity swaps, interest rate swaps, options and collars. Level 3 – Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value. The Company does not have any assets or liabilities that are required to be measured and recorded at fair value on a recurring basis. The carrying amounts of cash, accounts receivable, accounts payable, accrued liabilities and short-term debt approximate fair value because of the short-term nature of these instruments. The carrying amount of long-term debt approximates fair value because the debt is based on current rates at which the Company could borrow funds with similar maturities. |
NOTE 2 - SUMMARY OF SIGNIFICA28
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Revenue Recognition (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
Policies | |
Revenue Recognition | Revenue Recognition – In general the Company accounts for revenue recognition in accordance with ASC 605, “Revenue Recognition”. Trxade, Inc. generates net fee income as a percentage of the total transactions between the buyer (independent pharmacies) and the seller (wholesaler) of pharmaceutical drugs on the Trxade web-based platform. Revenue is recognized when (1) the price is fixed and determined as the buyer orders the drugs from the wholesaler. (2) The wholesaler has signed a contract with Trxade, Inc. which recognizes that an arrangement exists. (3) The wholesaler ships the drugs purchased to the buyer. (4) The collectability is reasonably assured by the wholesaler through prior credit checks and payment experience. Westminster Pharmaceutical LLC generated gross revenues from the sale of pharmaceutical drugs to independent pharmacies or wholesalers. The revenue is recognized when (1) the price is fixed and determinable at the time of the transaction with an invoice. (2) The invoice is also persuasive evidence that an arrangement exists. (3) The products are delivered to the buyer. (4) The collectability of the resulting receivable is reasonably assured by credit check prior to the transaction and experience with the customer. The Westminster revenue is presented as discontinued operations and is fully described in Note 3 - DISCONTINUED OPERATIONS. In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2014-09 (Topic 606) "Revenue from Contracts with Customers." Topic 606 supersedes the revenue recognition requirements in Accounting Standards Codification Topic 605, “Revenue Recognition”, and requires entities to recognize revenue when they transfer control of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. The Company will adopt ASU 2014-09 using the modified retrospective approach effective January 1, 2018, under which prior periods will not be retrospectively adjusted. We expect the adoption of Topic 606 will not have a material impact to our consolidated financial statements, including the presentation of revenues in our Consolidated Statements of Operations. |
NOTE 2 - SUMMARY OF SIGNIFICA29
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Stock-Based Compensation (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
Policies | |
Stock-Based Compensation | Stock-Based Compensation – The Company accounts for stock-based compensation to non-employees in accordance with the provision of ASC 505, “Equity Based Payments to Non-Employees” (“ASC 505”), which requires that such equity instruments are recorded at their fair value on the measurement date. The measurement of stock-based compensation is subject to periodic adjustment as the underlying instruments vest. The Company accounts for stock-based compensation to employees in accordance with ASC 718, “Compensation-Stock Compensation”. ASC 718 requires companies to measure the cost of employee services received in exchange for an award of equity instruments, including stock options, based on the grant date fair value of the award and to recognize it as compensation expense over the period the employee is required to provide service in exchange for the award, usually the vesting period. Stock option forfeitures are recognized at the date of employee termination. |
NOTE 2 - SUMMARY OF SIGNIFICA30
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Income Taxes (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
Policies | |
Income Taxes | Income Taxes – The Company accounts for income taxes utilizing ASC 740, “Income Taxes” (SFAS No. 109). ASC 740 requires the measurement of deferred tax assets for deductible temporary differences and operating loss carry forwards, and of deferred tax liabilities for taxable temporary differences. Measurement of current and deferred tax liabilities and assets is based on provisions of enacted tax law. The effects of future changes in tax rates are not included in the measurement. The Company recognizes the amount of taxes payable or refundable for the current year and recognizes deferred tax liabilities and assets for the expected future tax consequences of events and transactions that have been recognized in the Company’s financial statements or tax returns. The Company currently has substantial net operating loss carry forwards. The Company has recorded a 100% valuation allowance against net deferred tax assets due to uncertainty of their ultimate realization. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Tax years from 2014 forward are open to examination by the Internal Revenue Service. |
NOTE 2 - SUMMARY OF SIGNIFICA31
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Earnings Per Share, Policy (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
Policies | |
Earnings Per Share, Policy | Income (loss) Per Share – Basic net income (loss) per common share is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding. Diluted net loss per common share is computed similar to basic net loss per common share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. The dilutive effect of the Company's options and warrants is computed using the treasury stock method while the dilutive effect of our convertible notes is computed using the if-converted method. The following table sets forth the computation of basic and diluted Loss per Share: December 31, 2017 December 31, 2016 Numerator: Net Income (Loss) $ 288,983 $ (2,760,125) Net Loss from discontinued operations - (1,587,017) Net Income (Loss) from continuing operations 288,983 (1,173,108) Numerator for basic and diluted EPS – income (loss) Available to common shareholders 288,983 (2,760,125) Numerator for basic and diluted EPS – income (loss) From discontinued operations - (1,587,017) Denominator: Denominator for basic EPS – Weighted average shares 31,955,416 31,544,868 Dilutive Effect of Warrants 2,130,835 - Denominator for diluted EPS – adjusted weighted-average shares and assumed conversions 34,086,251 31,544,868 Basic and Diluted income (loss) per common share $ 0.01 $ (0.09) Basic and Diluted income (loss) per common share from discontinued Operations $ - $ (0.05) Basic and Diluted income (loss) per common share from continuing Operations $ 0.01 $ (0.04) |
NOTE 2 - SUMMARY OF SIGNIFICA32
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Concentration Of Credit Risks And Major Customers (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
Policies | |
Concentration Of Credit Risks And Major Customers | Concentration Of Credit Risks And Major Customers - Financial instruments that potentially subject the company to credit risk consist principally of cash and cash equivalents and receivables. The Company places its cash and cash equivalents with financial institutions. Deposits are insured to Federal Deposit Insurance Corp limits. At December 31, 2017 and 2016, there were no uninsured cash or cash equivalents. During the years ending December 31, 2017 and 2016, sales to two customers represent individually greater than 10% of revenue. |
NOTE 2 - SUMMARY OF SIGNIFICA33
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: New Accounting Pronouncements, Policy (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
Policies | |
New Accounting Pronouncements, Policy | Recent Accounting Pronouncements – The Company has implemented all new relevant accounting pronouncements that are in effect through the date of these financial statements. The 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 consolidated financial position or results of operations. |
NOTE 2 - SUMMARY OF SIGNIFICA34
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Earnings Per Share, Policy: Schedule of Earnings Per Share, Basic and Diluted (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Tables/Schedules | |
Schedule of Earnings Per Share, Basic and Diluted | December 31, 2017 December 31, 2016 Numerator: Net Income (Loss) $ 288,983 $ (2,760,125) Net Loss from discontinued operations - (1,587,017) Net Income (Loss) from continuing operations 288,983 (1,173,108) Numerator for basic and diluted EPS – income (loss) Available to common shareholders 288,983 (2,760,125) Numerator for basic and diluted EPS – income (loss) From discontinued operations - (1,587,017) Denominator: Denominator for basic EPS – Weighted average shares 31,955,416 31,544,868 Dilutive Effect of Warrants 2,130,835 - Denominator for diluted EPS – adjusted weighted-average shares and assumed conversions 34,086,251 31,544,868 Basic and Diluted income (loss) per common share $ 0.01 $ (0.09) Basic and Diluted income (loss) per common share from discontinued Operations $ - $ (0.05) Basic and Diluted income (loss) per common share from continuing Operations $ 0.01 $ (0.04) |
NOTE 3 - DISCONTINUED OPERATI35
NOTE 3 - DISCONTINUED OPERATIONS: Schedule of Discontinued Operations - Sale Arrangement (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Tables/Schedules | |
Schedule of Discontinued Operations - Sale Arrangement | Assumed Assets $ 1,197,354 Assumed Liabilities $ (3,908,296) Cancellation of intercompany payables $ 1,557,810 Write-off unamortized debt discount $ 267,381 Issuance of 1,500,000 warrants $ 688,143 Gain on sale of Westminster $ (197,608) |
NOTE 3 - DISCONTINUED OPERATI36
NOTE 3 - DISCONTINUED OPERATIONS: Schedule of Discontinued Operations - Results (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Tables/Schedules | |
Schedule of Discontinued Operations - Results | Year Ended December 31, 2016 Revenue $ 2,966,411 Cost of Goods Sold $ 2,673,338 Operating Expenses $ 2,077,698 Loss from discontinued operations $ (1,784,625) |
NOTE 3 - DISCONTINUED OPERATI37
NOTE 3 - DISCONTINUED OPERATIONS: Schedule of Assets and Liabilities of Discontinued Operations (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Tables/Schedules | |
Schedule of Assets and Liabilities of Discontinued Operations | December 31, 2016 Cash $ 65,386 Accounts Receivable 30,499 Inventory, net of $30,413 obsolescence reserve 641,525 Prepaid Assets and other advances 75,221 Fixed Assets, net of accumulated amortization 65,000 Other Assets 319,723 Total Assets $ 1,197,354 December 31, 2016 Intercompany payable $ 1,557,810 Accounts payable 620,881 Accrued Liabilities 229,605 Convertible Note 1,500,000 Total Liabilities $ 3,908,296 |
NOTE 5 - LONG TERM DEBT_ Schedu
NOTE 5 - LONG TERM DEBT: Schedule of Future maturities of both short-term and long-term debt (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Tables/Schedules | |
Schedule of Future maturities of both short-term and long-term debt | Due in 2018 $ 262,464 Due in 2019 $ 181,500 Due in 2020 $ 222,552 Due in 2021 $ - Due in 2022 $ - Total Debt $ 666,516 |
NOTE 7 - WARRANTS_ Schedule of
NOTE 7 - WARRANTS: Schedule of assumptions used to estimate the fair value of warrants (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Tables/Schedules | |
Schedule of assumptions used to estimate the fair value of warrants | 2017 2016 Expected dividend yield 0% 0% Weighted-average expected volatility 200% 200% Weighted-average risk-free interest rate 1.81% - 1.84% 1.35% - 1.36% Expected life of warrants 5 years 5 years |
NOTE 7 - WARRANTS_ Schedule o40
NOTE 7 - WARRANTS: Schedule of Outstanding and Exercisable Warrants (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Tables/Schedules | |
Schedule of Outstanding and Exercisable Warrants | Number Outstanding Weighted Average Exercise Price Contractual Life in Years Intrinsic Value Warrants Outstanding as of December 31, 2015 845,000 $ 0.61 3.77 $ 435,900 Warrants granted 1,827,446 0.06 5.00 - Warrants Forfeited - - - - Warrants Exercised (25,000) 0.01 - - Warrants Outstanding and Exercisable as of December 31, 2016 2,647,446 $ 0.24 4.24 $ 930,751 Warrants granted 115,650 0.18 5.00 - Warrants Forfeited - - - - Warrants Exercised (25,000) 0.01 - - Warrants Outstanding and Exercisable as of December 31, 2017 2,738,096 $ 0.24 3.28 $ 937,567 |
NOTE 8 - OPTIONS_ Schedule of S
NOTE 8 - OPTIONS: Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Tables/Schedules | |
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions | 2017 2016 Expected dividend yield 0% 0% Weighted-average expected volatility 200% 200% Weighted-average risk-free interest rate 1.92% 1.24% - 1.56% Expected life of options 4.74 to 7.50 years 5 years |
NOTE 8 - OPTIONS_ Schedule of42
NOTE 8 - OPTIONS: Schedule of Stock Options Roll Forward (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Tables/Schedules | |
Schedule of Stock Options Roll Forward | Number of Options Weighted Average Exercise Price Contractual Life in Years Intrinsic Value Outstanding at December 31, 2015 1,200,000 1.07 5.19 Exercisable at December 31, 2015 332,000 1.04 3.34 28,000 Forfeited (300,750) 1.03 7.87 - Granted 189,000 - - - Expired (43,750) 1.16 8.08 - Outstanding at December 31, 2016 1,044,500 0.92 3.38 - Exercisable at December 31, 2016 584,000 1.05 3.02 - Forfeited (35,000) 1.02 8.25 - Granted 263,846 0.64 9.05 - Expired (75,500) 1.13 4.54 - Outstanding at December 31, 2017 1,197,846 0.97 6.96 - Exercisable at December 31, 2017 781,300 1.02 6.3 - |
NOTE 9 - INCOME TAXES_ Schedule
NOTE 9 - INCOME TAXES: Schedule of Effective Income Tax Rate Reconciliation (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Tables/Schedules | |
Schedule of Effective Income Tax Rate Reconciliation | December 31, 2017 December 31, 2016 Federal loss carry forwards $ 963,833 $ 1,840,249 Less: valuation allowance (963,833) (1,840,249) $ - $ - |
NOTE 11 - COMMITMENTS AND CON44
NOTE 11 - COMMITMENTS AND CONTINGENCIES: Schedule of future minimum rental payments under non-cancelable operating leases (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Tables/Schedules | |
Schedule of future minimum rental payments under non-cancelable operating leases | 2018 $ 92,400 2019 $ 103,824 2020 $ 106,939 2021 $ 9,179 Total $ 312,342 |
NOTE 2 - SUMMARY OF SIGNIFICA45
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Accounts Receivable (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Details | ||
Bad debt expense | $ 0 | |
Recovery of bad debt | $ 150 |
NOTE 2 - SUMMARY OF SIGNIFICA46
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Earnings Per Share, Policy: Schedule of Earnings Per Share, Basic and Diluted (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Numerator: | ||
Net Income (Loss) | $ 288,983 | $ (2,760,125) |
Loss From discontinued operations | 0 | (1,587,017) |
Income (Loss) from Continuing Operations, Net of Tax, Attributable to Parent | 288,983 | (1,173,108) |
Numerator for basic and diluted EPS - income (loss) Available to common shareholders | 288,983 | (2,760,125) |
Numerator for basic and diluted EPS - income (loss) From discontinued operations | $ 0 | $ (1,587,017) |
Denominator: | ||
Denominator for basic EPS - Weighted average shares | 31,955,416 | 31,544,868 |
Dilutive Effect of Warrants | 2,130,835 | 0 |
Denominator for diluted EPS - adjusted weighted-average shares and assumed conversions | 34,086,251 | 31,544,868 |
Earnings Per Share, Basic and Diluted | $ 0.01 | $ (0.09) |
Basic and Diluted income (loss) per common share from discontinued Operations | 0 | (0.05) |
Basic and Diluted income (loss) per common share from continuing Operations | $ 0.01 | $ (0.04) |
NOTE 3 - DISCONTINUED OPERATI47
NOTE 3 - DISCONTINUED OPERATIONS: Schedule of Discontinued Operations - Sale Arrangement (Details) | 12 Months Ended |
Dec. 31, 2017USD ($) | |
Details | |
Assumed Assets | $ 1,197,354 |
Assumed Liabilities | (3,908,296) |
Cancellation of intercompany payables | 1,557,810 |
Write-off unamortized debt discount | 267,381 |
Issuance of 1,500,000 warrants | 688,143 |
Gain on sale of Westminster | $ (197,608) |
NOTE 3 - DISCONTINUED OPERATI48
NOTE 3 - DISCONTINUED OPERATIONS: Schedule of Discontinued Operations - Results (Details) | 12 Months Ended |
Dec. 31, 2016USD ($) | |
Details | |
Revenue | $ 2,966,411 |
Cost of Goods Sold | 2,673,338 |
Operating Expenses | 2,077,698 |
Loss from discontinued operations | $ (1,784,625) |
NOTE 3 - DISCONTINUED OPERATI49
NOTE 3 - DISCONTINUED OPERATIONS: Schedule of Assets and Liabilities of Discontinued Operations (Details) | Dec. 31, 2016USD ($) |
Details | |
Cash | $ 65,386 |
Accounts Receivable | 30,499 |
Inventory, net of $30,413 obsolescence reserve | 641,525 |
Prepaid Assets and other advances | 75,221 |
Fixed Assets, net of accumulated amortization | 65,000 |
Other Assets | 319,723 |
Total Assets | 1,197,354 |
Intercompany payable | 1,557,810 |
Accounts payable | 620,881 |
Accrued Liabilities | 229,605 |
Convertible Note | 1,500,000 |
Total Liabilities | $ 3,908,296 |
NOTE 3 - DISCONTINUED OPERATI50
NOTE 3 - DISCONTINUED OPERATIONS (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Details | ||
Acquisition Costs, Period Cost | $ 78,000 | |
Acquisition, balance outstanding | $ 78,000 | |
Depreciation | $ 13,000 |
NOTE 3 - DISCONTINUED OPERATI51
NOTE 3 - DISCONTINUED OPERATIONS: Convertible Promissory Note Assumed (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Details | ||
Debt discount | $ 106,069 | $ 251,883 |
Debt Discount Amortized | 80,298 | |
Debt Discount Expensed | $ 267,381 |
NOTE 4 - SHORT-TERM DEBT AND 52
NOTE 4 - SHORT-TERM DEBT AND RELATED PARTIES DEBT: Convertible Promissory Note (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Details | ||
Debt Discount Amortized | $ 0 | $ 35,697 |
Short-term notes, principal balance | 0 | 165,000 |
Unamortized Debt Discount | $ 0 | $ 0 |
NOTE 4 - SHORT-TERM DEBT AND 53
NOTE 4 - SHORT-TERM DEBT AND RELATED PARTIES DEBT: Promissory Note (Details) | Dec. 31, 2017USD ($) |
Details | |
Short-term Promissory Notes, balance, net of unamortized debt discount | $ 10,739 |
Unamortized debt discount | $ 152 |
NOTE 4 - SHORT-TERM DEBT AND 54
NOTE 4 - SHORT-TERM DEBT AND RELATED PARTIES DEBT: Related Party Convertible Promissory Note (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Details | ||
Debt discount amortized | $ 48,341 | $ 17,049 |
Short term related party convertible notes, principal balance | 251,725 | 251,725 |
Unamortized Debt Discount | $ 0 | $ 48,341 |
NOTE 4 - SHORT-TERM DEBT AND 55
NOTE 4 - SHORT-TERM DEBT AND RELATED PARTIES DEBT: Related Party Promissory Note (Details) | 12 Months Ended |
Dec. 31, 2017USD ($) | |
Details | |
Notes converted to long-term debt | $ 42,552 |
NOTE 5 - LONG TERM DEBT (Detail
NOTE 5 - LONG TERM DEBT (Details) | Dec. 31, 2017USD ($) |
Details | |
Total related party long term debt | $ 222,552 |
NOTE 5 - LONG TERM DEBT_ Sche57
NOTE 5 - LONG TERM DEBT: Schedule of Future maturities of both short-term and long-term debt (Details) | Dec. 31, 2017USD ($) |
Details | |
Long-term Debt, Maturities, Repayments of Principal in Next Twelve Months | $ 262,464 |
Long-term Debt, Maturities, Repayments of Principal in Year Two | 181,500 |
Long-term Debt, Maturities, Repayments of Principal in Year Three | 222,552 |
Long-term Debt, Maturities, Repayments of Principal in Year Four | 0 |
Long-term Debt, Maturities, Repayments of Principal in Year Five | 0 |
Long-term Debt | $ 666,516 |
NOTE 6 - SHAREHOLDERS' EQUITY (
NOTE 6 - SHAREHOLDERS' EQUITY (Details) | Dec. 31, 2017shares |
In 2,016 | |
Shares, Issued | 200,000 |
Warrants Issued | 50,000 |
In January 2017 | |
Shares, Issued | 250,000 |
Also In January 2017 | |
Warrants Issued | 87,500 |
In February 2017 | |
Shares, Issued | 25,000 |
In March 2017 | |
Shares, Issued | 50,000 |
NOTE 7 - WARRANTS_ Schedule o59
NOTE 7 - WARRANTS: Schedule of assumptions used to estimate the fair value of warrants (Details) - Warrants | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Expected dividend yield | 0.00% | 0.00% |
Weighted-average expected volatility | 200.00% | 200.00% |
Expected Life | 5 years | 5 years |
Minimum | ||
Weighted-average risk-free interest rate | 1.81% | 1.35% |
Maximum | ||
Weighted-average risk-free interest rate | 1.84% | 1.36% |
NOTE 7 - WARRANTS_ Schedule o60
NOTE 7 - WARRANTS: Schedule of Outstanding and Exercisable Warrants (Details) - Warrants | 12 Months Ended | |
Dec. 31, 2017USD ($)$ / sharesshares | Dec. 31, 2016USD ($)$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number, Beginning Balance | shares | 2,647,446 | 845,000 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price, Beginning Balance | $ / shares | $ 0.24 | $ 0.61 |
Contractual Life in Years | 4.24 | 3.77 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Intrinsic Value | $ | $ 930,751 | $ 435,900 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | shares | 115,650 | 1,827,446 |
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price | $ / shares | $ 0.18 | $ 0.06 |
Contractual Life in Years, Grants | 5 | 5 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Forfeitures in Period | shares | 0 | 0 |
Share-based Compensation Arrangements by Share-based Payment Award, Options, Forfeitures in Period, Weighted Average Exercise Price | $ / shares | $ 0 | $ 0 |
Warrants Exercised, Shares | shares | (25,000) | (25,000) |
Share-based Compensation Arrangements by Share-based Payment Award, Options, Exercises in Period, Weighted Average Exercise Price | $ / shares | $ 0.01 | $ 0.01 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number, Ending Balance | shares | 2,738,096 | 2,647,446 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price, Ending Balance | $ / shares | $ 0.24 | $ 0.24 |
Contractual Life in Years | 3.28 | 4.24 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Intrinsic Value | $ | $ 937,567 | $ 930,751 |
NOTE 8 - OPTIONS_ Schedule of61
NOTE 8 - OPTIONS: Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions (Details) - Options | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Expected dividend yield | 0.00% | 0.00% |
Weighted-average expected volatility | 200.00% | 200.00% |
Weighted-average risk-free interest rate | 1.92% | |
Expected Life | 5 years | |
Minimum | ||
Weighted-average risk-free interest rate | 1.24% | |
Expected Life | 4 years 8 months 26 days | |
Maximum | ||
Weighted-average risk-free interest rate | 1.56% | |
Expected Life | 7 years 6 months |
NOTE 8 - OPTIONS_ Schedule of62
NOTE 8 - OPTIONS: Schedule of Stock Options Roll Forward (Details) - Options | 12 Months Ended | |
Dec. 31, 2017USD ($)$ / sharesshares | Dec. 31, 2016USD ($)$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number, Beginning Balance | shares | 1,044,500 | 1,200,000 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price, Beginning Balance | $ / shares | $ 0.92 | $ 1.07 |
Contractual Life in Years | 3.38 | 5.19 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Intrinsic Value | $ | $ 0 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Number | shares | 584,000 | 332,000 |
Weighted Average Exercise Price, Exercisable | $ / shares | $ 1.05 | $ 1.04 |
Contractual Life in Years, Exercisable | 3.02 | 3.34 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Intrinsic Value | $ | $ 0 | $ 28,000 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Forfeitures in Period | shares | (35,000) | (300,750) |
Share-based Compensation Arrangements by Share-based Payment Award, Options, Forfeitures in Period, Weighted Average Exercise Price | $ / shares | $ 1.02 | $ 1.03 |
Contractual Life in Years, Forfeited | 8.25 | 7.87 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | shares | 263,846 | 189,000 |
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price | $ / shares | $ 0.64 | $ 0 |
Contractual Life in Years, Grants | 9.05 | 0 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Expirations in Period | shares | (75,500) | (43,750) |
Share-based Compensation Arrangements by Share-based Payment Award, Options, Expirations in Period, Weighted Average Exercise Price | $ / shares | $ 1.13 | $ 1.16 |
Contractual Life in Years, Expired | 4.54 | 8.08 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number, Ending Balance | shares | 1,197,846 | 1,044,500 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price, Ending Balance | $ / shares | $ 0.97 | $ 0.92 |
Contractual Life in Years | 6.96 | 3.38 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Intrinsic Value | $ | $ 0 | $ 0 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Number | shares | 781,300 | 584,000 |
Weighted Average Exercise Price, Exercisable | $ / shares | $ 1.02 | $ 1.05 |
Contractual Life in Years, Exercisable | 6.3 | 3.02 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Intrinsic Value | $ | $ 0 | $ 0 |
NOTE 9 - INCOME TAXES_ Schedu63
NOTE 9 - INCOME TAXES: Schedule of Effective Income Tax Rate Reconciliation (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Details | ||
Federal loss carry forwards | $ 963,833 | $ 1,840,249 |
Less: valuation allowance | $ (963,833) | $ (1,840,249) |
NOTE 10 - RELATED PARTIES (Deta
NOTE 10 - RELATED PARTIES (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Mr. Prashant Patel | ||
Management Wages owed | $ 62,500 | $ 132,012 |
Mr. Suren Ajjarapu | ||
Management Wages owed | $ 0 | $ 76,971 |
NOTE 11 - COMMITMENTS AND CON65
NOTE 11 - COMMITMENTS AND CONTINGENCIES: Schedule of future minimum rental payments under non-cancelable operating leases (Details) | Dec. 31, 2017USD ($) |
Details | |
Capital Leases, Future Minimum Payments Due, Next Twelve Months | $ 92,400 |
Capital Leases, Future Minimum Payments Due in Two Years | 103,824 |
Capital Leases, Future Minimum Payments Due in Three Years | 106,939 |
Capital Leases, Future Minimum Payments Due in Four Years | 9,179 |
Capital Leases, Future Minimum Payments Due | $ 312,342 |
NOTE 11 - COMMITMENTS AND CON66
NOTE 11 - COMMITMENTS AND CONTINGENCIES (Details) - USD ($) | Mar. 17, 2017 | Dec. 31, 2016 |
Details | ||
Litigation Contingency Accrual | $ 200,000 | |
Litigation, final judgement, approval and payment | $ 200,000 |
NOTE 12 - SUBSEQUENT EVENTS (De
NOTE 12 - SUBSEQUENT EVENTS (Details) | 12 Months Ended |
Dec. 31, 2017 | |
In January 2018 | |
Subsequent Event, Description | Mr. Ajjarapu and Mr. Patel executive salaries were amended from $165,000 and $125,000, to $200,000 and $150,000 respectively |
In February 2018 | |
Subsequent Event, Description | $100,000 of the $150,000 related party note was extended to July 2018 |