Spotlight Innovation 10-Q 18 Nov 16 2016 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2016	Nov. 15, 2016
Document And Entity Information
Entity Registrant Name	SPOTLIGHT INNOVATION, INC.
Entity Central Index Key	1,388,486
Document Type	10-Q
Document Period End Date	Sep. 30, 2016
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Is Entity a Well-known Seasoned Issuer?	No
Is Entity a Voluntary Filer?	No
Is Entity's Reporting Status Current?	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		21,285,514
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2,016

CONSOLIDATED BALANCE SHEETS

CONSOLIDATED BALANCE SHEETS - USD ($)	Sep. 30, 2016	Dec. 31, 2015
Current assets:
Cash	$ 289,264	$ 299,919
Prepaid expenses	117,003	17,500
Total current assets	406,267	317,419
Property, plant and equipment, net of accumulated depreciation of $6,385 and $3,529, respectively	32,019	31,714
In process research and development	6,977,347	6,977,347
Total assets	7,415,633	7,326,480
Current liabilities:
Accounts payable	243,654	140,803
Accrued liabilities	747,596	527,287
Accounts payable - related parties	3,560	3,560
Stock payable	50,000	26,250
Notes payable	170,696	385,373
Lines of credit, net of discounts of $8,626 and $19,717, respectively	994,674	868,583
Short-term debt – related party	1,038,515	168,949
Deferred liabilities	225,000	220,465
Derivative liabilities		278,482
Convertible debentures – related parties, net of debt discounts of $766,010 and $555,753, respectively	2,378,990	2,244,247
Total liabilities	5,852,685	4,863,999
Stockholders' equity:
Preferred stock
Common stock, $0.001 par value, 4,000,000,000 shares authorized, 19,361,800 and 14,627,026 shares issued and outstanding, respectively	19,362	14,627
Additional paid-in capital	22,425,443	18,760,400
Accumulated deficit	(23,171,473)	(18,643,652)
Non-controlling interest	2,289,616	2,331,106
Total stockholders' equity	1,562,948	2,462,481
Total liabilities and stockholders' equity	7,415,633	7,326,480
Series A Preferred Stock [Member]
Stockholders' equity:
Preferred stock
Series C Preferred Stock [Member]
Stockholders' equity:
Preferred stock

CONSOLIDATED BALANCE SHEETS (Pa

CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($)	Sep. 30, 2016	Dec. 31, 2015
Property, plant and equipment, net of accumulated depreciation	$ 6,385	$ 3,529
Lines of credit, net of discounts	8,626	19,717
Convertible debentures, net of debt discounts	$ 766,010	$ 555,753
Preferred Stock Par Value	$ 0.001	$ 0.001
Preferred Stock Shares Authorized	4,000,000	4,000,000
Preferred Stock Shares Issued	0	0
Preferred Stock Shares Outstanding	0	0
Common Stock Par Value	$ 0.001	$ .001
Common Stock Shares Authorized	4,000,000,000	4,000,000,000
Common Stock Shares Issued	19,361,800	14,627,026
Common Stock Shares Outstanding	19,361,800	14,627,026
Series A Preferred Stock [Member]
Preferred Stock Par Value	$ 5	$ 5
Preferred Stock Shares Authorized	500,000	500,000
Preferred Stock Shares Issued	0	0
Preferred Stock Shares Outstanding	0	0
Series C Preferred Stock [Member]
Preferred Stock Par Value	$ 5	$ 5
Preferred Stock Shares Authorized	500,000	500,000
Preferred Stock Shares Issued	0	0
Preferred Stock Shares Outstanding	0	0

CONSOLIDATED STATEMENTS OF OPER

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Consolidated Statements Of Operations
REVENUE
OPERATING EXPENSES:
General and administrative expenses	1,555,931	1,799,468	3,775,578	3,208,479
Research and development expense	68,150	254,844	181,572	258,496
Depreciation expense	1,619		4,856
Settlement of payables			196,656	4,076
Total operating expenses	1,625,700	2,054,312	3,962,006	3,471,051
LOSS FROM OPERATIONS	(1,625,700)	(2,054,312)	(3,962,006)	(3,471,051)
OTHER INCOME (EXPENSE):
Interest expense	(172,268)	(182,003)	(497,908)	(763,195)
Gain on derivative liability	26,068		78,160
Other income	4,955	146	7,988	477
Gain on foreign currency exchange	193	31,180	111	64,422
Loss on settlement of debt	(195,656)		(195,656)
Total other expense	(336,708)	(150,677)	(607,305)	(698,296)
Net loss	(1,962,408)	(2,204,989)	(4,569,311)	(4,169,347)
Net loss attributable to non-controlling interest holder	(12,755)	(21,245)	(41,490)	(22,267)
Net loss attributable to Spotlight Innovation Inc.	$ (1,949,653)	$ (2,183,744)	$ (4,527,821)	$ (4,147,080)
Net loss per common share - basic and diluted	$ (0.12)	$ (0.17)	$ (0.30)	$ (0.31)
Weighted average number of common shares outstanding - basic and diluted	15,920,123	14,277,026	15,447,745	13,828,277

CONSOLIDATED STATEMENTS OF CASH

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($)	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$ (4,569,311)	$ (4,169,347)
Adjustments to reconcile net loss to cash used in operating activities:
Depreciation and amortization	4,856	1,625
Amortization of debt discount	157,785	462,188
Interest expense from common shares issued for modification of convertible debt		37,500
Loss on settlement of debt and payables	196,656	4,076
Share-based compensation	1,697,117	1,983,764
Gain on fair value of derivative liability	(78,160)
Gain on foreign currency exchange	(111)	(64,422)
Changes in operating assets and liabilities:
Prepaid expense	(99,503)	(26,250)
Accounts payable	265,343	(148,744)
Accounts payable - related party		86,485
Accrued liabilities	229,531	463,293
Deferred Liabilities	4,535
Net cash used in operating activities	(2,192,261)	(1,369,832)
CASH FLOWS FROM INVESTING ACTIVITIES
Change in restricted cash		2,625
Acquisition of Memcine, net of cash received of $27,071		(2,929)
Cash paid for purchase of fixed assets	(5,161)	(5,220)
Net cash used in investing activities	(5,161)	(5,524)
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of notes payable	(98,373)	(2,500)
Proceeds from convertible debenture - net	1,195,000
Proceeds from line-of-credit	115,000
Proceeds from short-term debt – related party	870,000
Proceeds from convertible debentures - related parties		1,719,800
Proceeds from sale of common shares and warrants	105,140	190,000
Net cash provided by financing activities	2,186,767	1,907,300
Increase/(decrease) in cash during the period	(10,655)	531,944
Cash, beginning of the period	299,919	9,068
Cash, end of the period	289,264	541,012
SUPPLEMENTAL CASH FLOWS INFORMATION
Income taxes paid
Interest paid	73,373	28,750
NON-CASH INVESTING AND FINANCING TRANSACTIONS
Deferred financing costs for convertible debentures
Debt discount for relative fair value of warrants attached to convertible debentures	146,003	277,598
Beneficial conversion feature for convertible debentures	412,310	999,310
Stock payable issued in settlement of debt	50,000
Shares issued in settlement of convertible debt	1,186,175
Shares issued in settlement of accounts payable	96,781
Common shares issued for stock payable	21,500	269,705
Warrants issued in satisfaction of warrants payable		385,351
Warrants issued for extinguishment of accounts payable - related party		419,419
Derivative liability	(200,323)
Reclassification of debt and interest to accrued liabilities	$ 102,748

STATEMENTS OF CASH FLOWS (Paren

STATEMENTS OF CASH FLOWS (Parenthetical) - USD ($)	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Consolidated Statements Of Cash Flows
Net of cash received	$ 27,071

DESCRIPTION OF BUSINESS AND BAS

DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION	9 Months Ended
	Sep. 30, 2016
Notes to Financial Statements
NOTE 1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION	Spotlight Innovation Inc. (the “Company”) was organized under the laws of the state of Nevada on March 23, 2012 under the name Spotlight Innovation, LLC. In December 2013, the Company, through a reverse acquisition, merged with American Exploration Corporation (“American Exploration”). The Company is a life science company that identifies and acquires rights of innovative, proprietary technologies designed to address unmet medical needs, with an emphasis on rare, emerging and neglected diseases. To find and evaluate unique opportunities, we leverage our extensive relationships with leading scientists, academic institutions and other sources. We provide value-added development capability to accelerate progress. When scientifically significant benchmarks have been achieved, we will endeavor to partner with proven market leaders via sale, out-license or strategic alliance. As of September 30, 2016, the Company had five subsidiaries: Celtic Biotech Iowa, Inc., Memcine Pharmaceuticals, Inc. (see Note 10 below), CDT Veterinary Therapeutics, Inc., Zika Therapeutics, Inc. and Caretta Therapeutics, Inc. Celtic Biotech Iowa, Inc. On June 4, 2014, Celtic Biotech Iowa, Inc. (hereinafter "Celtic Iowa," a subsidiary of the Company) acquired Celtic Biotech Limited (hereinafter "Celtic Limited"). Celtic Limited was founded in 2003 in Dublin, Ireland and is developing novel and highly specialized compounds derived from snake venom, for the treatment of solid cancers and cancer imaging. Memcine Pharmaceuticals, Inc. The Company acquired approximately 82% of Memcine Pharmaceuticals, Inc. ("Memcine") in June 2015. The Company agreed to provide Memcine with up to $3,000,000 to fund the operations of Memcine via investment, grants or other means over the course of operations, upon the achievement of certain milestones, as determined by the board of directors of Memcine. Memcine, founded in 2010, holds the exclusive worldwide rights to Immunoplex,™, a vaccine platform technology developed at the University of Iowa, with universal application to numerous antigens developed to improve vaccine efficacy by using more efficient targeting and delivery. On October 12, 2016, the Company terminated its interests in Memcine (see Note 10 below). CDT Veterinary Therapeutics, Inc. CDT Veterinary Therapeutics was formed in November 2015 to create reformulated variants of certain compounds, modified to meet the needs of the veterinary market. In September 2016, the Company decided to temporarily suspend its activities in CDT Veterinary Therapeutics, Inc. Caretta Therapeutics, Inc. Caretta Therapeutics, Inc. (“Caretta”) was formed in August 2016 to develop the commercialization of over-the-counter products. Caretta holds a license agreement to develop, manufacture and sell certain products derived from snake venom that may have analgesic properties. Zika Therapeutics, Inc. Zika Therapeutics, Inc. (“ZT”) was formed in August 2016 to pursue the therapeutic treatment for this emerging health threat. On August 19, 2016, the Company entered a Sponsored Research Agreement (the “SRA”) with the Florida State University Research Foundation (“FSURF”) starting September 1, 2016, to perform certain research, over a two-year period, related to the discovery, synthetic modification, and preclinical validation of drug-like compounds intended to treat patients with Zika virus infection to be directed by Dr. Hengli Tang. Basis of Presentation The accompanying consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and the rules of the Securities and Exchange Commission (“SEC”) and should be read in conjunction with the audited financial statements and notes thereto contained in the Company's latest Annual Report filed with the SEC on Form 10-K. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements that would substantially duplicate disclosures contained in the audited financial statements for the most recent fiscal year, as reported in the Form 10-K for the period ended December 31, 2015 filed with the SEC, have been omitted.

SUMMARY OF SIGNIFICANT ACCOUNTI

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	9 Months Ended
	Sep. 30, 2016
Notes to Financial Statements
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	Use of Estimates The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include those regarding the valuation of option and warrant transactions. Principles of Consolidation The consolidated financial statements include the Company’s accounts, including those of the Company’s subsidiaries Celtic Iowa and Memcine. During the year ended December 31, 2014 the Company acquired 95% of the outstanding shares of Celtic Biotech. During the year ended December 31, 2015, the Company acquired 82.25% of the outstanding shares of Memcine. Accordingly, the Company has consolidated Celtic Limited, Celtic Iowa and Memcine. All significant intercompany accounts and transactions have been eliminated. Non-Controlling Interest The Company is required to report the non-controlling interest in Celtic Limited, a subsidiary of Celtic Iowa, and Memcine, as a separate component of shareholders’ equity. The Company is also required to present the consolidated net income and the portion of the consolidated net income allocable to the non-controlling interest and to the shareholders of the Company separately in its consolidated statements of operations. Losses applicable to the non-controlling interest are allocated to the non-controlling interest even when those losses are in excess of the non-controlling interest’s investment basis. Loss per Common Share Basic net income (loss) per common share is computed by dividing the net income (loss) attributable to common shareholders by the weighted-average number of common shares outstanding during the period. Diluted net income (loss) per share is computed by dividing the net income (loss) attributable to common shareholders by the weighted-average number of common and common equivalent shares outstanding during the period. Common share equivalents included in the diluted computation represent shares issuable upon assumed exercise of stock options and warrants or the assumed conversion of convertible debt instruments, using the treasury stock and “if converted” method. For periods in which net losses are incurred, weighted average shares outstanding is the same for basic and diluted loss per share calculations, as the inclusion of common share equivalents would have an anti-dilutive effect. For the nine months ended September 30, 2016 and 2015, the dilutive effect of the issuance of 448,571 and 5,200 options, 208,500 and 885,000 warrants, and 3,317,971, and 1,774,650 common shares issuable for conversion of convertible debt, respectively, were excluded from the diluted earnings per share calculation because their effect would have been anti-dilutive. Cash and Cash Equivalents The Company considers all highly liquid investments with maturity of three months or less when purchased to be cash equivalents. Concentrations of Credit Risk Financial instruments which potentially subject the Company to concentrations of credit risk include cash deposits placed with financial institutions. The Company maintains its cash in bank accounts which, at times, may exceed federally insured limits as guaranteed by the Federal Deposit Insurance Corporation (“FDIC”). As of September 30, 2016, the Company had $0 of cash balances that were uninsured. The Company has not experienced any losses on such accounts. Foreign exchange and currency translation For the three months ended September 30, 2016 and 2015, the Company maintained cash accounts in U.S. Dollars and European Union euros, and incurred certain expenses denominated in European Union euros. The Company's and its consolidated subsidiaries’ functional and reporting currency is the U.S. Dollar. Transactions denominated in foreign currencies are remeasured into U.S. Dollars at exchange rates in effect on the date of the transactions. Assets and liabilities are remeasured using exchange rates at the end of each period. Exchange gains or losses on re-measurements are included in earnings. In the event that the functional currency of a Company’s consolidated subsidiary was not the U.S. Dollar, then that subsidiary’s foreign currency monetary assets and liabilities are translated into U.S. Dollars at the current exchange rate and non-monetary assets and liabilities are translated using historical exchange rates. Such adjustments resulting from the translation process would be reported in a separate component of other comprehensive income and are not included in the determination of the results of operations. As of September 30, 2016, and 2015, the Company had no subsidiaries with functional currencies that required translation. In-Process Research and Development In-process research and development (“IPR&D”) represents the estimated fair value assigned to research and development projects acquired in a purchased business combination that have not been completed at the date of acquisition and which have no alternative future use. IPR&D assets acquired in a business combination are capitalized as indefinite-lived intangible assets. These assets remain indefinite-lived until the completion or abandonment of the associated research and development efforts. During the periods prior to completion or abandonment, those acquired indefinite-lived assets are not amortized but are tested for impairment annually, or more frequently, if events or changes in circumstances indicate that the asset might be impaired. During periods after completion, those acquired indefinite-lived assets are amortized based on their useful life. Equipment Equipment is stated at cost less accumulated depreciation and amortization. Maintenance and repairs are charged to expense as incurred. Renewals and betterments which extend the life or improve existing equipment are capitalized. Upon disposition or retirement of equipment, the cost and related accumulated depreciation are removed and any resulting gain or loss is reflected in operations. Depreciation is provided using the straight-line method over the estimated useful lives of the assets, which is 3-10 years. Impairment of Long-Lived Assets and Intangibles The Company performs impairment tests on its long-lived assets when circumstances indicate that their carrying amounts may not be recoverable. If required, recoverability is tested by comparing the estimated future undiscounted cash flows of the asset or asset group to its carrying value. If the carrying value is not recoverable, the asset or asset group is written down to fair value. For the nine months ended September 30, 2016 and 2015, the Company recorded $0 in impairment to the Company’s long-lived assets. Stock-Based Compensation The Company measures the cost of employee services received in exchange for stock and stock options based on the grant date fair value of the awards. The Company determines the fair value of stock option grants using the Black-Scholes option pricing model. The Company determines the fair value of shares of non-vested stock (also commonly referred to as restricted stock) based on the last quoted price of our stock on the date of the share grant. The fair value determined represents the cost for the award and is recognized over the vesting period during which an employee is required to provide service in exchange for the award. As share-based compensation expense is recognized based on awards ultimately expected to vest, the Company reduces the expense for estimated forfeitures based on historical forfeiture rates, if such historical forfeiture rates are available. Previously recognized compensation costs may be adjusted to reflect the actual forfeiture rate for the entire award at the end of the vesting period. Excess tax benefits, if any, are recognized as an addition to paid-in capital. Income Taxes The Company utilizes the asset and liability method in accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for operating loss and tax credit carry-forwards and for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the year in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is recorded to reduce the carrying amounts of deferred tax assets unless it is more likely than not that the value of such assets will be realized. Fair Value of Financial Instruments The Company follows FASB ASC 820, Fair Value Measurement As defined in ASC 820, fair value, clarified as an exit price, represents the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As a result, fair value is a market-based approach that should be determined based on assumptions that market participants would use in pricing an asset or a liability. As a basis for considering these assumptions, ASC 820 defines a three-tier value hierarchy that prioritizes the inputs used in the valuation methodologies in measuring fair value. Level 1 – Quoted prices in active markets for identical assets or liabilities. Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Subsequent Events The Company evaluated subsequent events through the date when financial statements are issued for disclosure consideration. Recent Accounting Pronouncements There were various accounting standards and interpretations issued recently, none of which are expected to have a material effect on the Company’s operations, financial position or cash flows.

GOING CONCERN

GOING CONCERN	9 Months Ended
	Sep. 30, 2016
Notes to Financial Statements
NOTE 3. GOING CONCERN	The Company is an early stage company and as such has not generated revenues from operations and there is no assurance of any future revenues. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the normal course of business. As of September 30, 2016, the Company had accumulated net losses of $23,171,473, and had a working capital deficit of $5,446,418. These factors raise substantial doubt as to the Company’s ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent upon the Company’s successful efforts to raise sufficient capital and then attain profitable operations. Management is investigating all options to raise enough funds to meet the Company’s working capital requirements through either the sale of the Company’s common stock or other financings. There can be no assurances, however, that management will be able to obtain sufficient additional funds when needed, or that such funds, if available, will be obtained on terms satisfactory to the Company.

NOTES PAYABLE

NOTES PAYABLE	9 Months Ended
	Sep. 30, 2016
Notes to Financial Statements
NOTE 4. NOTES PAYABLE	On December 16, 2013, the Company assumed the liabilities of American Exploration which included the following notes payable too unrelated third parties: Date Stated Original of Interest Principal Due Promissory Note Note Rate Amount Date #1 05/29/09 10 % $ 30,000 On Demand #2 06/05/09 10 % $ 7,698 On Demand #3 08/16/09 10 % $ 50,000 On Demand #4 09/27/10 10 % $ 60,000 On Demand #5 06/02/10 5 % $ 50,000 On Demand #6 02/04/11 5 % $ 30,000 On Demand #7 05/04/11 5 % $ 35,000 On Demand #8 08/11/11 10 % $ 20,000 On Demand #9 12/05/11 10 % $ 20,000 On Demand #10 04/28/12 10 % $ 30,000 On Demand Total $ 593,698 The Company also assumed $92,923 in accrued interest related to these notes. The Company recorded $21,861 and $21,540 in interest expense for the nine months ended September 30, 2016 and 2015, respectively, on the above notes payable. On September 1, 2016, the Company agreed to a settlement and release agreement with Pierco Management as set forth in the table below: Promissory Note Issue Date Original Principal Interest Rate #5 6/2/2010 $ 50,000 5% #6 2/4/2011 $ 30,000 5% #7 4/5/2011 $ 35,000 5% #8 8/11/2011 $ 20,000 10% #9 12/5//2011 $ 20,000 10% Total $ 155,000 The Company and Pierco Management agreed to the following: · Immediate cash payment of $25,000 from the Company. · A deferred cash payment of $25,000 due in 90 days from the effective date. · Issuance to Pierco Management of $50,000 worth of Company common stock using the average closing price for the 20 consecutive trading days preceding the effective date of the agreement. The Company also assumed a liability for previous advances made by American Exploration’s former CEO in the amount of $23,433 of which the Company repaid $3,500 in calendar year 2015 bringing the balance to the current $19,933 at September 30, 2016. These advances are due on demand and do not bear interest. On December 31, 2015 recorded a guarantee for one of the lenders in the amount of $34,529. On September 6, 2016, the Company agreed to assume the unpaid interest for the portion of the April and July Letters-of-Credit with Denver Savings Bank that was to be paid from the debt service reserve as set forth in the Termination and Release Agreements in December 2015. The assumption of the interest resulted in the Company recording an additional $83,441 of interest expense for the nine months ended September 30, 2016.

CONVERTIBLE INSTRUMENTS

CONVERTIBLE INSTRUMENTS	9 Months Ended
	Sep. 30, 2016
Notes to Financial Statements
NOTE 5. CONVERTIBLE INSTRUMENTS	Discussion concerning convertible instruments can be found in Note 7 below.

INCOME TAXES

INCOME TAXES	9 Months Ended
	Sep. 30, 2016
Notes to Financial Statements
NOTE 6. INCOME TAXES	Realization of deferred tax assets is dependent upon sufficient future taxable income during the period that deductible temporary differences and carry-forwards are expected to be available to reduce taxable income. At September 30, 2016, the Company’s deferred tax assets consisted primarily of net operating loss carry forwards acquired in connection with the merger. For the nine months ended September 30, 2016 and 2015, the material reconciling items between the tax benefit computed at the statutory rate and the actual benefit recognized in the financial statements consisted of expenses related to share-based compensation and the change in the valuation allowance during the applicable period. At September 30, 2016 and 2015, the Company has recorded a 100% valuation allowance as management believes it is likely that any deferred tax assets will not be realized. As of September 30, 2016, the Company has a net operating loss carry forward of approximately $21 million, which will expire between years 2028 and 2035. Due to the change in ownership provisions of the Tax Reform Act of 1986, our net operating loss carry forwards are expected to be subject to significant annual limitations for the change in ownership that resulted in the Merger.

EQUITY

EQUITY	9 Months Ended
	Sep. 30, 2016
Notes to Financial Statements
NOTE 7. EQUITY	The Company has authorized the issuance of 500,000 shares of Series A preferred stock, 500,000 shares of Series C preferred stock, 4,000,000 shares of preferred stock and 4,000,000,000 shares of common stock. Common Stock On January 11, 2016, a holder exercised warrants to purchase 100,000 shares of common stock. The exercise price was 60% of the average closing market price for the 20 consecutive trading days preceding the exercise date. Total proceeds received from the exercise was $55,140. On September 8, 2016, the Company sold 108,695 shares for $50,000 in proceeds. Common Stock Issued for Services The Company issued common stock for services in April, August, and September, 2016. The table below details the issuances: Month Shares issued Fair Value at issue date April 780,000 $ 377,500 August 25,000 19,750 September 100,000 73,500 Through the nine months ending September 30, 2016, the Company issued 905,000 shares of common stock for services to the Company. The fair value of the common stock at issue dates totaled $470,750 and has been recorded as stock compensation expense. On September 25, 2016, the Company issued 278,108 shares of common stock for vendor services in accordance with the vendor agreement. The shares had a fair value as issue date of $96,782 and was charged to marketing expense. Convertible Notes During the quarter ended September 30, 2016, the Company issued $695,000 in principal amount of convertible notes. The material terms of the notes are as follows: · The notes have a term of 24 months. In the event the note has not been converted at the maturity date, the convertible note will automatically convert into shares of common stock of the Company at a per share price equal to 80% of the closing bid price of the common stock of the Company during the 20 consecutive trading days immediately preceding the maturity date. · Interest accrues at 7.5% computed on a 365-day basis. Interest is payable upon conversion of the convertible note at the applicable conversion price. · At any time prior to the maturity date, the note is convertible into shares of common stock of the Company at a price per share equal to 90% of the closing bid price of the common stock during the 20 consecutive trading days immediately preceding such conversion. The Company also issued warrants to purchase 208,500 shares of common stock of the Company (the number of shares is equal to thirty percent of the amount invested in the notes based on the exercise price of the warrants (the exercise price is defined as 110% of the closing bid price of the common stock of the Company on the six month anniversary of the issuance date of the note)). In connection with the issuance of the notes, Caretta entered into a Royalty Agreement with the investors thereof, whereby the investors will share, pro rata, during years two, three and four of Caretta as follows: · Aggregate of 5% of net revenue. · Net revenues is defined as gross revenues, minus all license/royalty fees and cost of goods sold. · Royalties will cease once the investor has received two times the amount invested. On September 19, 2016, the nine holders of an aggregate of $850,000 principal amount of convertible notes (originally issued in December, 2015 and January, 2016, collectively referred to as the “Notes”) agreed to convert the Notes into an aggregate of 3,317,971 shares of common stock. The shares of common stock of the Company were issued pursuant to the terms of the Notes, at a conversion price equal to the average of the closing price of the common stock of the Company for the twenty days preceding August 24, 2016, plus one share of common stock per one dollar principal amount of Notes converted. The foregoing securities were issued pursuant to Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder. Options 2009 Plan In 2009, the Company adopted the 2009 Stock Option Plan (the “2009 Plan”). The 2009 Plan allows the Company to issue options to officers, directors and employees, as well as consultants, to purchase up to 7,000,000 shares of common stock. As of September 30, 2016, there are 5,200 stock options outstanding under the 2009 Plan which were issued prior to the merger. These stock options were valued at $6,934 using the Black-Scholes model which was included in the purchase price of American Exploration. 2015 Equity Incentive Plan On November 25, 2015, the Company authorized the Spotlight Innovation Inc. 2015 Equity Incentive Plan (the “Plan”) to: · Encourage selected employees, directors and consultants to improve operations and increase profits of the Company · Encourage selected employees, directors and consultants to accept or continue employment or association with the Company or its Subsidiaries · Increase the interest of selected employees, directors and consultants in the Company’s welfare through participation in the growth in value of the common stock of the Company (the “ Shares · Align the interests of the Company with selected employees, directors and consultants. The total number of shares of common stock which may be issued under the options granted pursuant to the Plan is 3,600,000. The shares covered by the portion of any grant under the plan which expires unexercised shall become available again for grant under the plan. During the quarter ended September 30, 2016, the Company issued options to purchase 448,571 shares of common stock to a former member of the Board of Directors and current Board of Director members. A summary of the stock option activity for the nine months ended September 30, 2016 is presented below. Options Weighted-Average Exercise Price Outstanding December 31, 2015 2,605,200 $ 1.82 Granted 448,571 0.54 Exercised - - Expired - - Outstanding September 30, 2016 3,053,771 $ 1.63 Exercisable September 30, 2016 903,771 $ 2.99 Warrants During the nine months ended September 30, 2016, a holder exercised warrants to purchase 100,000 shares of common stock at a price of $0.5514 per share for total proceeds of $55,140. A summary of the warrant activity for the nine months ended September 30, 2016 is presented below: Warrants Weighted-Average Exercise Price Outstanding December 31, 2015 2,011,671 $ 1.29 Granted 208,500 0.65 Exercised (100,000 ) 0.55 Expired - - Outstanding at September 30, 2016 2,120,171 1.26 Exercisable September 30, 2016 2,120,171 1.26 The weighted average remaining contractual term of the outstanding warrants and exercisable warrants as of September 30, 2016 is 1.26 years. During the quarter ended September 30, 2016, the Company issued warrants to purchase 208,500 shares of common stock in connection with the convertible notes described above. The warrants are exercisable in whole or in part during a term of three years commencing on the issuance date.

RELATED PARTY TRANSACTIONS

RELATED PARTY TRANSACTIONS	9 Months Ended
	Sep. 30, 2016
Notes to Financial Statements
Note 8. RELATED PARTY TRANSACTIONS	As a result of the acquisition of Celtic Limited, Celtic Iowa assumed two short-term notes payable due to a related party (the mother of the founder of Celtic). The debt is denominated in Euros and on June 4, 2014, the date of the acquisition, the carrying amount of the debts were $204,186 after foreign currency remeasurement. The notes accrue compounded interest at 5% per annum and were due in November and December 2014. As of September 30, 2016, these notes are still outstanding and the carrying amount of these notes is $168,515. In March 2016, the Company negotiated an extension for both notes to December 31, 2017.

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS	9 Months Ended
	Sep. 30, 2016
Notes to Financial Statements
Note 9. SUBSEQUENT EVENTS	On October 12, 2016, the Company entered into a Termination Agreement with Memcine, the University of Iowa Research Foundation, and Dr. Tony Vanden Bush. Pursuant to the termination agreement, the Company terminated and cancelled all of its interest in Memcine, terminated the shareholder agreement of Memcine, and John Krohn and Cristopher Grunewald resigned as officers and directors of Memcine. On October 18, 2016, the Company entered into a Forbearance and Refinancing Agreement (the “Refinancing Agreement”) with K4 to refinance certain financial instruments. Pursuant to the Refinancing Agreement, the Company and K4 agreed as follows: · The December 31, 2015 Convertible Note in the principal amount of $2.5 million was cancelled and replaced with a new Amended and Restated Convertible Note in the principal amount of $2.5 million (the “Amended Note”). The warrants previously issued pursuant to the December 31, 2015 Convertible Note remain in effect. The material terms of the Amended Note include: interest at the rate of 8% per annum, which shall begin to accrue on January 1, 2017; Company may prepay the Amended Note (a) on or before December 31, 2017, with consent, which consent cannot be unreasonably withheld, for such purposes, including but not limited to a Nasdaq listing of the Company’s securities, or as a condition to an equity financing, and (b) at any time after December 31, 2017 upon 30 days written notice by the Company; principal amount and interest may be converted into shares of common stock of the Company at a discount of 15% of the average price of the common stock of the Company during the 20 consecutive trading days immediately prior to such conversion, but not less than $0.75; and the maturity date is December 31, 2021. · Repayment of a $700,000 loan (termination of all related loan documents) was waived. · The Company agreed to issue 4,000,000 shares of common stock, with standard restrictive legend. · The following warrants to purchase shares of common stock of the Company were terminated: Issuance Date Expiration Date Exercise Price # Warrants / Shares 10/05/2013 10/05/2016 $1.46 / share 120,000 10/05/2013 10/05/2017 $1.46 / share 120,000 10/05/2013 10/05/2018 $1.46 / share 120,000 12/31/2015 12/31/2018 $1.00 / share 300,000 12/31/2015 12/31/2018 $1.25 / share 200,000 · The Company issued warrants to purchase shares of common stock of the Company as follows: Expiration Date Exercise Price / Share # Warrants / Shares 12/31/2019 $1.46 360,000 12/31/2019 $1.00 300,000 12/31/2019 $1.25 200,000 12/31/2019 $1.00 500,000 On October 26, 2016, the Company invested $200,000 with the potential to invest an additional $1.3 million dollars, in Solx, Inc. (“Solx”), a privately-held medical device company. Solx is dedicated to developing and commercializing innovative surgical technologies that threat refectory and moderate glaucoma and preserve vision. On October 26, 2016, the Company entered into a restructuring term sheet with K4, whereby K4 agreed to attempt to (i) re-negotiate and assume certain payments owed to two third parties (the “Debt Service”), and (ii) re-negotiate and assume the $752,325 and $250,975 outstanding Letters of Credit with Denver Savings Bank (collectively the “LOCs”), prior to January 31, 2017. If K4 renegotiates and assumes the Debt Service and the LOCs, the Company will, on the closing date, issue to K4 a Convertible Promissory Note with the principal balance equal to the sum of (i) the principal balance outstanding on the LOCs as of the closing date, and (ii) the Debt Service as of the closing date. The Convertible Promissory Note will be converted into shares of common stock of the Company as follows: if converted within 120 days following issuance, at a rate of 65% of the average trading price of the Company’s for the period beginning on and including September 1, 2016 and ending the day before the issuance date, or (ii) $0.55 per share; and if converted after the 120th day following the issuance date thereof, at a rate of 65% of the average price of the common stock of the Company during the 20 consecutive trading days immediately prior to such conversion, but not less than $0.55 per share. The Company will, as additional consideration for the refinancing, issue K4 a warrant to purchase 1,875,000 shares of common stock of the Company at an exercise price of $1.20 per share, expiring December 31, 2018. In November 2016, the Company converted Caretta Therapeutics, Inc. from a corporation to a limited liability company.

SUMMARY OF SIGNIFICANT ACCOUN16

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)	9 Months Ended
	Sep. 30, 2016
Summary Of Significant Accounting Policies Policies
Use of Estimates	The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include those regarding the valuation of option and warrant transactions.
Principles of Consolidation	The consolidated financial statements include the Company’s accounts, including those of the Company’s subsidiaries Celtic Iowa and Memcine. During the year ended December 31, 2014 the Company acquired 95% of the outstanding shares of Celtic Biotech. During the year ended December 31, 2015, the Company acquired 82.25% of the outstanding shares of Memcine. Accordingly, the Company has consolidated Celtic Limited, Celtic Iowa and Memcine. All significant intercompany accounts and transactions have been eliminated.
Non-Controlling Interest	The Company is required to report the non-controlling interest in Celtic Limited, a subsidiary of Celtic Iowa, and Memcine, as a separate component of shareholders’ equity. The Company is also required to present the consolidated net income and the portion of the consolidated net income allocable to the non-controlling interest and to the shareholders of the Company separately in its consolidated statements of operations. Losses applicable to the non-controlling interest are allocated to the non-controlling interest even when those losses are in excess of the non-controlling interest’s investment basis.
Loss per Common Share	Basic net income (loss) per common share is computed by dividing the net income (loss) attributable to common shareholders by the weighted-average number of common shares outstanding during the period. Diluted net income (loss) per share is computed by dividing the net income (loss) attributable to common shareholders by the weighted-average number of common and common equivalent shares outstanding during the period. Common share equivalents included in the diluted computation represent shares issuable upon assumed exercise of stock options and warrants or the assumed conversion of convertible debt instruments, using the treasury stock and “if converted” method. For periods in which net losses are incurred, weighted average shares outstanding is the same for basic and diluted loss per share calculations, as the inclusion of common share equivalents would have an anti-dilutive effect. For the nine months ended September 30, 2016 and 2015, the dilutive effect of the issuance of 448,571 and 5,200 options, 208,500 and 885,000 warrants, and 3,317,971, and 1,774,650 common shares issuable for conversion of convertible debt, respectively, were excluded from the diluted earnings per share calculation because their effect would have been anti-dilutive.
Cash and Cash Equivalents	The Company considers all highly liquid investments with maturity of three months or less when purchased to be cash equivalents.
Concentrations of Credit Risk	Financial instruments which potentially subject the Company to concentrations of credit risk include cash deposits placed with financial institutions. The Company maintains its cash in bank accounts which, at times, may exceed federally insured limits as guaranteed by the Federal Deposit Insurance Corporation (“FDIC”). As of September 30, 2016, the Company had $0 of cash balances that were uninsured. The Company has not experienced any losses on such accounts.
Foreign exchange and currency translation	For the three months ended September 30, 2016 and 2015, the Company maintained cash accounts in U.S. Dollars and European Union euros, and incurred certain expenses denominated in European Union euros. The Company's and its consolidated subsidiaries’ functional and reporting currency is the U.S. Dollar. Transactions denominated in foreign currencies are remeasured into U.S. Dollars at exchange rates in effect on the date of the transactions. Assets and liabilities are remeasured using exchange rates at the end of each period. Exchange gains or losses on re-measurements are included in earnings. In the event that the functional currency of a Company’s consolidated subsidiary was not the U.S. Dollar, then that subsidiary’s foreign currency monetary assets and liabilities are translated into U.S. Dollars at the current exchange rate and non-monetary assets and liabilities are translated using historical exchange rates. Such adjustments resulting from the translation process would be reported in a separate component of other comprehensive income and are not included in the determination of the results of operations. As of September 30, 2016, and 2015, the Company had no subsidiaries with functional currencies that required translation.
In-Process Research and Development	In-process research and development (“IPR&D”) represents the estimated fair value assigned to research and development projects acquired in a purchased business combination that have not been completed at the date of acquisition and which have no alternative future use. IPR&D assets acquired in a business combination are capitalized as indefinite-lived intangible assets. These assets remain indefinite-lived until the completion or abandonment of the associated research and development efforts. During the periods prior to completion or abandonment, those acquired indefinite-lived assets are not amortized but are tested for impairment annually, or more frequently, if events or changes in circumstances indicate that the asset might be impaired. During periods after completion, those acquired indefinite-lived assets are amortized based on their useful life.
Equipment	Equipment is stated at cost less accumulated depreciation and amortization. Maintenance and repairs are charged to expense as incurred. Renewals and betterments which extend the life or improve existing equipment are capitalized. Upon disposition or retirement of equipment, the cost and related accumulated depreciation are removed and any resulting gain or loss is reflected in operations. Depreciation is provided using the straight-line method over the estimated useful lives of the assets, which is 3-10 years.
Impairment of Long-Lived Assets and Intangibles	The Company performs impairment tests on its long-lived assets when circumstances indicate that their carrying amounts may not be recoverable. If required, recoverability is tested by comparing the estimated future undiscounted cash flows of the asset or asset group to its carrying value. If the carrying value is not recoverable, the asset or asset group is written down to fair value. For the nine months ended September 30, 2016 and 2015, the Company recorded $0 in impairment to the Company’s long-lived assets.
Stock-Based Compensation	The Company measures the cost of employee services received in exchange for stock and stock options based on the grant date fair value of the awards. The Company determines the fair value of stock option grants using the Black-Scholes option pricing model. The Company determines the fair value of shares of non-vested stock (also commonly referred to as restricted stock) based on the last quoted price of our stock on the date of the share grant. The fair value determined represents the cost for the award and is recognized over the vesting period during which an employee is required to provide service in exchange for the award. As share-based compensation expense is recognized based on awards ultimately expected to vest, the Company reduces the expense for estimated forfeitures based on historical forfeiture rates, if such historical forfeiture rates are available. Previously recognized compensation costs may be adjusted to reflect the actual forfeiture rate for the entire award at the end of the vesting period. Excess tax benefits, if any, are recognized as an addition to paid-in capital.
Income Taxes	The Company utilizes the asset and liability method in accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for operating loss and tax credit carry-forwards and for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the year in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is recorded to reduce the carrying amounts of deferred tax assets unless it is more likely than not that the value of such assets will be realized.
Fair Value of Financial Instruments	The Company follows FASB ASC 820, Fair Value Measurement As defined in ASC 820, fair value, clarified as an exit price, represents the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As a result, fair value is a market-based approach that should be determined based on assumptions that market participants would use in pricing an asset or a liability. As a basis for considering these assumptions, ASC 820 defines a three-tier value hierarchy that prioritizes the inputs used in the valuation methodologies in measuring fair value. Level 1 – Quoted prices in active markets for identical assets or liabilities. Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.
Subsequent Events	The Company evaluated subsequent events through the date when financial statements are issued for disclosure consideration.
Recent Accounting Pronouncements	There were various accounting standards and interpretations issued recently, none of which are expected to have a material effect on the Company’s operations, financial position or cash flows.

NOTES PAYABLE (Tables)

NOTES PAYABLE (Tables)	9 Months Ended
	Sep. 30, 2016
American Exploration [Member]
Notes payable	On December 16, 2013, the Company assumed the liabilities of American Exploration which included the following notes payable too unrelated third parties: Date Stated Original of Interest Principal Due Promissory Note Note Rate Amount Date #1 05/29/09 10 % $ 30,000 On Demand #2 06/05/09 10 % $ 7,698 On Demand #3 08/16/09 10 % $ 50,000 On Demand #4 09/27/10 10 % $ 60,000 On Demand #5 06/02/10 5 % $ 50,000 On Demand #6 02/04/11 5 % $ 30,000 On Demand #7 05/04/11 5 % $ 35,000 On Demand #8 08/11/11 10 % $ 20,000 On Demand #9 12/05/11 10 % $ 20,000 On Demand #10 04/28/12 10 % $ 30,000 On Demand Total $ 593,698
Pierco Management [Member]
Notes payable	The Company also assumed $92,923 in accrued interest related to these notes. The Company recorded $21,861 and $21,540 in interest expense for the nine months ended September 30, 2016 and 2015, respectively, on the above notes payable. On September 1, 2016, the Company agreed to a settlement and release agreement with Pierco Management as set forth in the table below: Promissory Note Issue Date Original Principal Interest Rate #5 6/2/2010 $ 50,000 5% #6 2/4/2011 $ 30,000 5% #7 4/5/2011 $ 35,000 5% #8 8/11/2011 $ 20,000 10% #9 12/5//2011 $ 20,000 10% Total $ 155,000

EQUITY (Tables)

EQUITY (Tables)	9 Months Ended
	Sep. 30, 2016
Common Stock Issued for Services	The Company issued common stock for services in April, August, and September, 2016. The table below details the issuances: Month Shares issued Fair Value at issue date April 780,000 $ 377,500 August 25,000 19,750 September 100,000 73,500
Stock Option [Member]
Summary of stock option activity	During the quarter ended September 30, 2016, the Company issued options to purchase 448,571 shares of common stock to a former member of the Board of Directors and current Board of Director members. A summary of the stock option activity for the nine months ended September 30, 2016 is presented below. Options Weighted-Average Exercise Price Outstanding December 31, 2015 2,605,200 $ 1.82 Granted 448,571 0.54 Exercised - - Expired - - Outstanding September 30, 2016 3,053,771 $ 1.63 Exercisable September 30, 2016 903,771 $ 2.99
Warrant [Member]
Summary of stock option activity	A summary of the warrant activity for the nine months ended September 30, 2016 is presented below: Warrants Weighted-Average Exercise Price Outstanding December 31, 2015 2,011,671 $ 1.29 Granted 208,500 0.65 Exercised (100,000 ) 0.55 Expired - - Outstanding at September 30, 2016 2,120,171 1.26 Exercisable September 30, 2016 2,120,171 1.26

SUMMARY OF SIGNIFICANT ACCOUN19

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($)	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Summary Of Significant Accounting Policies Details Narrative
Dilutive effect of options to purchase	448,571	5,200
Dilutive effect of warrants to purchase	208,500	885,000
Common shares issuable for conversion of convertible debt	3,317,971	1,774,650
Impairment of intangible assets	$ 0	$ 0
Cash at concentrations of credit risk	$ 0

GOING CONCERN (Details Narrativ

GOING CONCERN (Details Narrative) - USD ($)	Sep. 30, 2016	Dec. 31, 2015
Going Concern Details Narrative
Accumulated net losses	$ (23,171,473)	$ (18,643,652)
Working capital deficit	$ 5,446,418

NOTES PAYABLE (Details)

NOTES PAYABLE (Details)	9 Months Ended
	Sep. 30, 2016USD ($)
Original Principal Amount	$ 593,698
Promissory Note One [Member]
Date of note	May 29, 2009
Stated Interest rate	10.00%
Original Principal Amount	$ 30,000
Due date	On Demand
Promissory Note Two [Member]
Date of note	Jun. 5, 2009
Stated Interest rate	10.00%
Original Principal Amount	$ 7,698
Due date	On Demand
Promissory Note Three [Member]
Date of note	Aug. 16, 2009
Stated Interest rate	10.00%
Original Principal Amount	$ 50,000
Due date	On Demand
Promissory Note Four [Member]
Date of note	Sep. 27, 2010
Stated Interest rate	10.00%
Original Principal Amount	$ 60,000
Due date	On Demand
Promissory Note Five [Member]
Date of note	Jun. 2, 2010
Stated Interest rate	5.00%
Original Principal Amount	$ 50,000
Due date	On Demand
Promissory Note Six [Member]
Date of note	Feb. 4, 2011
Stated Interest rate	5.00%
Original Principal Amount	$ 30,000
Due date	On Demand
Promissory Note Seven [Member]
Date of note	May 4, 2011
Stated Interest rate	5.00%
Original Principal Amount	$ 35,000
Due date	On Demand
Promissory Note Eight [Member]
Date of note	Aug. 11, 2011
Stated Interest rate	10.00%
Original Principal Amount	$ 20,000
Due date	On Demand
Promissory Note Nine [Member]
Date of note	Dec. 5, 2011
Stated Interest rate	10.00%
Original Principal Amount	$ 20,000
Due date	On Demand
Promissory Note Ten [Member]
Date of note	Apr. 28, 2012
Stated Interest rate	10.00%
Original Principal Amount	$ 30,000
Due date	On Demand

NOTES PAYABLE (Details 1)

NOTES PAYABLE (Details 1)	9 Months Ended
	Sep. 30, 2016USD ($)
Original Principal Amount	$ 593,698
Promissory Note Five [Member]
Issue Date	Jun. 2, 2010
Original Principal Amount	$ 50,000
Interest rate	5.00%
Promissory Note Six [Member]
Issue Date	Feb. 4, 2011
Original Principal Amount	$ 30,000
Interest rate	5.00%
Promissory Note Seven [Member]
Issue Date	May 4, 2011
Original Principal Amount	$ 35,000
Interest rate	5.00%
Promissory Note Eight [Member]
Issue Date	Aug. 11, 2011
Original Principal Amount	$ 20,000
Interest rate	10.00%
Promissory Note Nine [Member]
Issue Date	Dec. 5, 2011
Original Principal Amount	$ 20,000
Interest rate	10.00%
Promissory Note [Member]
Original Principal Amount	$ 155,000

NOTES PAYABLE (Details Narrativ

NOTES PAYABLE (Details Narrative) - USD ($)	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Notes Payable Details Narrative
Interest expense	$ 21,861	$ 21,540
Notes payable remaining amount	19,933
Interest expense to related party	$ 83,441

INCOME TAXES (Details Narrative

INCOME TAXES (Details Narrative) - USD ($)	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Income Taxes Details Narrative
Valuation Allowance	100.00%	100.00%
Net operating loss carry forward	$ 21,000,000
Net operating loss carry forward expire years	2028 and 2035

EQUITY (Details)

EQUITY (Details)	9 Months Ended
	Sep. 30, 2016USD ($)shares
April [Member]
Shares issued in common stock | shares	780,000
Fair value at issue date | $	$ 377,500
August [Member]
Shares issued in common stock | shares	25,000
Fair value at issue date | $	$ 19,750
September [Member]
Shares issued in common stock | shares	100,000
Fair value at issue date | $	$ 73,500

EQUITY (Details 1)

EQUITY (Details 1) - Stock Option [Member]	9 Months Ended
	Sep. 30, 2016$ / sharesshares
Options
Outstanding December 31, 2015 | shares	2,605,200
Granted | shares	448,571
Exercised | shares
Expired | shares
Outstanding September 30, 2016 | shares	3,053,771
Exercisable September 30, 2016 | shares	903,771
Weighted-Average Exercise Price
Weighted-Average Exercise Price Outstanding December 31, 2015 | $ / shares	$ 1.82
Granted | $ / shares	0.54
Exercised | $ / shares
Expired | $ / shares
Weighted-Average Exercise Price Outstanding September 30, 2016 | $ / shares	1.63
Weighted-Average Exercise Price Exercisable September 30, 2016 | $ / shares	$ 2.99

EQUITY (Details 2)

EQUITY (Details 2) - Warrant [Member]	9 Months Ended
	Sep. 30, 2016$ / sharesshares
Options
Outstanding December 31, 2015 | shares	2,011,671
Granted | shares	208,500
Exercised | shares	(100,000)
Expired | shares
Outstanding September 30, 2016 | shares	2,120,171
Exercisable September 30, 2016 | shares	2,120,171
Weighted-Average Exercise Price
Weighted-Average Exercise Price Outstanding December 31, 2015 | $ / shares	$ 1.29
Granted | $ / shares	0.65
Exercised | $ / shares	.55
Expired | $ / shares
Weighted-Average Exercise Price Outstanding September 30, 2016 | $ / shares	1.26
Weighted-Average Exercise Price Exercisable September 30, 2016 | $ / shares	$ 1.26

EQUITY (Details Narrative)

EQUITY (Details Narrative) - USD ($)	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Issuance of common stock	905,000
Stock options outstanding	5,200
Proceeds from sale of common shares and warrants	$ 105,140	$ 190,000
Board of Director [Member]
Number of options issued	448,571
Warrant [Member]
Weighted average remaining contractual term	1 year 3 months 4 days

RELATED PARTY TRANSACTIONS (Det

RELATED PARTY TRANSACTIONS (Details Narrative)	Sep. 30, 2016USD ($)
Related Party Transactions Details Narrative
Long term debt - related party	$ 168,515