Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2017 | Nov. 10, 2017 | |
Document And Entity Information | ||
Entity Registrant Name | Surna Inc. | |
Entity Central Index Key | 1,482,541 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 191,265,919 | |
Trading Symbol | SRNA | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2,017 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Current Assets | ||
Cash and cash equivalents | $ 1,300,706 | $ 319,546 |
Accounts receivable (net of allowance for doubtful accounts of $93,000 and $91,000 respectively) | 274,762 | 47,166 |
Notes receivable | 157,218 | |
Inventory, net | 554,170 | 747,905 |
Prepaid expenses | 182,623 | 84,976 |
Total Current Assets | 2,312,261 | 1,356,811 |
Noncurrent Assets | ||
Property and equipment, net | 77,676 | 93,565 |
Intangible assets, net | 680,267 | 667,445 |
Deposits | 51,000 | |
Total Noncurrent Assets | 808,943 | 761,010 |
TOTAL ASSETS | 3,121,204 | 2,117,821 |
Current Liabilities | ||
Accounts payable and accrued liabilities | 1,450,363 | 1,337,853 |
Deferred revenue | 1,241,819 | 1,421,344 |
Amounts due shareholders | 21,676 | 57,398 |
Convertible promissory notes, net | 761,440 | |
Convertible accrued interest | 161,031 | |
Derivative liability on warrants | 265,760 | 477,814 |
Total Current Liabilities | 2,979,618 | 4,216,880 |
Noncurrent Liabilities | ||
Amounts due shareholders-long term | 11,985 | |
Total Noncurrent Liabilities | 11,985 | |
TOTAL LIABILITIES | 2,979,618 | 4,228,865 |
SHAREHOLDERS' EQUITY (DEFICIT) | ||
Preferred stock, $0.00001 par value; 150,000,000 shares authorized; 77,220,000 shares issued and outstanding | 772 | 772 |
Common stock, $0.00001 par value; 350,000,000 shares authorized; 189,865,919 and 160,744,916 shares issued and outstanding, respectively | 1,898 | 1,607 |
Additional paid in capital | 18,027,715 | 12,222,789 |
Accumulated deficit | (17,888,799) | (14,336,212) |
Total Shareholders' Equity (Deficit) | 141,586 | (2,111,044) |
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY(DEFICIT) | $ 3,121,204 | $ 2,117,821 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 93,000 | $ 91,000 |
Preferred stock, par value | $ 0.00001 | $ 0.00001 |
Preferred stock, shares authorized | 150,000,000 | 150,000,000 |
Preferred stock, shares issued | 77,220,000 | 77,220,000 |
Preferred stock, shares outstanding | 77,220,000 | 77,220,000 |
Common stock, par value | $ 0.00001 | $ 0.00001 |
Common stock, shares authorized | 350,000,000 | 350,000,000 |
Common stock, shares issued | 189,865,919 | 160,744,916 |
Common stock, shares outstanding | 189,865,919 | 160,744,916 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Income Statement [Abstract] | ||||
Revenue | $ 1,566,256 | $ 1,170,760 | $ 4,901,241 | $ 5,560,837 |
Cost of revenue | 1,175,047 | 753,624 | 3,668,698 | 3,742,321 |
Gross profit | 391,209 | 417,136 | 1,232,543 | 1,818,516 |
Operating expenses: | ||||
Advertising and marketing expenses | 168,476 | 45,177 | 484,418 | 155,172 |
Product development costs | 60,145 | 75,144 | 250,228 | 275,370 |
Selling, general and administrative expenses | 1,396,957 | 533,694 | 3,518,528 | 1,559,070 |
Total operating expenses | 1,625,578 | 654,015 | 4,253,174 | 1,989,612 |
Operating income (loss) | (1,234,369) | (236,879) | (3,020,631) | (171,096) |
Other income (expense): | ||||
Interest and other income, net | 1,016 | 10,576 | 3,808 | 19,060 |
Interest expense | (89,203) | (41,233) | (282,657) | |
Amortization of debt discount on convertible promissory notes | (10,037) | (291,000) | (63,157) | (1,335,429) |
Loss on extinguishment of debt | (228,428) | (643,428) | ||
(Loss) gain on change in derivative liabilities | (6,660) | (62,000) | 212,054 | (348,297) |
Total other income (expense) | (244,109) | (431,627) | (531,956) | (1,947,323) |
Loss before provision for income taxes | (1,478,478) | (668,506) | (3,552,587) | (2,118,419) |
Provision for income taxes | ||||
Net loss | (1,478,478) | (668,506) | (3,552,587) | (2,118,419) |
Other comprehensive income (expense) | ||||
Comprehensive loss | $ (1,478,478) | $ (668,506) | $ (3,552,587) | $ (2,118,419) |
Loss per common share - basic and dilutive | $ (0.01) | $ 0 | $ (0.02) | $ (0.02) |
Weighted average number of shares outstanding, both basic and dilutive | 184,912,253 | 145,268,135 | 179,470,179 | 139,684,359 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Changes in Shareholders' Equity (Deficit) (Unaudited) - 9 months ended Sep. 30, 2017 - USD ($) | Preferred Stock [Member] | Common Stock [Member] | Additional Paid In Capital [Member] | Accumulated Deficit [Member] | Total |
Balance at Dec. 31, 2016 | $ 772 | $ 1,607 | $ 12,222,789 | $ (14,336,212) | $ (2,111,044) |
Balance, shares to be issued at Dec. 31, 2016 | |||||
Balance, shares outstanding at Dec. 31, 2016 | 77,220,000 | 160,744,916 | |||
Common shares issued for conversion of debt and interest, net of unamortized debt discount | $ 106 | 1,751,049 | $ 1,751,155 | ||
Common shares issued for conversion of debt and interest, net of unamortized debt discount, shares outstanding | 10,601,554 | 5,001,554 | |||
Value attributed to modification of warrants | 59,000 | $ 59,000 | |||
Common shares issued with convertible notes payable | $ 3 | 39,127 | 39,129 | ||
Common shares issued with convertible notes payable, shares | 250,000 | ||||
Common shares issued for cash, net | $ 168 | 2,684,832 | 2,685,000 | ||
Common shares issued for cash, net, shares | 16,781,250 | ||||
Fair value of warrants issued and options granted for compensation | 415,570 | 415,570 | |||
Common shares issued as compensation for services | $ 17 | 398,758 | 398,775 | ||
Common shares issued as compensation for services, shares to be Issued | 1,200,000 | ||||
Common shares issued as compensation for services, shares outstanding | 1,711,891 | ||||
Common shares to be issued in settlement of restricted stock units awarded as compensation for consulting services | 20,500 | 20,500 | |||
Common shares to be issued in settlement of restricted stock units awarded as compensation for consulting services, shares to be issued | 200,000 | ||||
Fair value of vested restricted stock units awarded to employees and directors | $ 218,677 | $ 218,677 | |||
Fair value of vested stock options granted to employees | 217,411 | ||||
Other common shares | $ (2) | $ 2 | |||
Other common shares, shares outstanding | (223,692) | ||||
Net loss | (3,552,587) | (3,552,587) | |||
Balance at Sep. 30, 2017 | $ 772 | $ 1,898 | $ 18,027,715 | $ (17,888,799) | $ 141,586 |
Balance, shares to be issued at Sep. 30, 2017 | 1,400,000 | ||||
Balance, shares outstanding at Sep. 30, 2017 | 77,220,000 | 189,865,919 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Cash Flows from Operating Activities: | ||
Net loss | $ (3,552,587) | $ (2,118,419) |
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: | ||
Depreciation and intangible asset amortization expense | 34,087 | 43,870 |
Amortization of debt discounts on convertible notes | 38,433 | 1,335,429 |
Amortization of original issue discount on notes payable | 25,520 | |
(Gain) loss on change in derivative liability | (212,054) | 348,297 |
Compensation paid in equity | 1,270,933 | 4,028 |
Provision for doubtful accounts | 1,715 | 44,127 |
Provision for excess and obsolete inventory | 208,801 | |
Loss on sale of assets other | 1,117 | |
Loss on extinguishment of debt | 643,428 | |
Changes in operating assets and liabilities: | ||
Accounts and note receivable | (207,205) | 186,945 |
Inventory | (15,066) | 345,316 |
Prepaid expenses | (119,753) | 17,211 |
Accounts payable and accrued liabilities | 112,516 | (864,937) |
Deferred revenue | (179,525) | 434,529 |
Accrued interest | (10,574) | 282,657 |
Deferred compensation | (25,600) | |
Cash (used in) provided by operating activities | (1,961,331) | 34,570 |
Cash Flows From Investing Activities: | ||
Cash disbursed for patent fees | (16,454) | (22,380) |
Purchase of property and equipment | (14,566) | (15,126) |
Proceeds from the sale of property and equipment | 32,600 | |
Cash disbursed for lease deposit | (51,000) | |
Cash disbursed for note receivable | (80,000) | |
Cash received from repayment of note receivable | 157,218 | 100,000 |
Cash provided by investing activities | 75,198 | 15,094 |
Cash Flows From Financing Activities: | ||
Proceeds from exercise of stock options | 358 | |
Cash proceeds from sale of common stock and warrants | 2,685,000 | |
Payments on convertible notes payable | (270,000) | |
Proceeds from issuance of notes payable | 500,000 | |
Payments on loans | (34,115) | |
Payments on loans from shareholders | (47,707) | (111,009) |
Cash provided by (used in) financing activities | 2,867,293 | (144,766) |
Net change in cash and cash equivalents | 981,160 | (95,102) |
Cash and cash equivalents, beginning of period | 319,546 | 330,557 |
Cash and cash equivalents, end of period | 1,300,706 | 235,455 |
Supplemental cash flow information: | ||
Interest paid | 44,150 | |
Income tax paid | ||
Non-cash investing and financing activities: | ||
Conversions of promissory notes and accrued interest to common stock | 1,205,856 | 889,084 |
Derivative liability on convertible promissory notes and warrants | 673,050 | |
Equipment issued in settlement of debt | $ 2,500 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Company: Surna Inc. (the “Company”) incorporated in Nevada on October 15, 2009. On March 26, 2014, the Company acquired Safari Resource Group, Inc. (“Safari”), a Nevada corporation, whereby the Company became the sole surviving corporation after the acquisition of Safari. In July 2014, the Company acquired 100% of the membership interests in Hydro Innovations, LLC, a Texas limited liability company (“Hydro”), pursuant to which Hydro became a wholly-owned subsidiary of the Company. The Company engineers and manufactures innovative technology and products that address the energy and resource intensive nature of indoor cultivation. The Company is focused on supplying industrial solutions to commercial indoor cannabis cultivation facilities. The Company’s engineering team is tasked with creating novel energy and resource efficient solutions, including the Company’s proprietary liquid-cooled climate control platform. The Company’s engineers continuously seek to create technologies that allow growers to meet the specific demands of a cannabis cultivation environment through temperature, humidity, light, and process control. The Company’s objective is to provide intelligent solutions that improve the quality, control and overall crop yield and efficiency of indoor cannabis cultivation. The Company is headquartered in Boulder, Colorado. The Company does not cultivate or distribute cannabis. Financial Statement Presentation: The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with generally accepted accounting principles in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Pursuant to these rules and regulations, certain information and note disclosures, normally included in financial statements prepared in accordance with GAAP, have been condensed or omitted. GAAP requires management to make estimates and assumptions that affect reported amounts and related disclosures. In the opinion of management, all adjustments (consisting of normal recurring items) considered necessary for a fair presentation have been included. Operating results for the nine months ended September 30, 2017 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2017. The balance sheet as of December 31, 2016 has been derived from the audited financial statements at that date, but does not include all the information and footnotes required by GAAP for complete financial statements. For further information, refer to the consolidated financial statements and notes thereto contained in the Annual Report on Form 10-K for the year ended December 31, 2016. The notes to the unaudited condensed consolidated financial statements are presented on a going concern basis unless otherwise noted. Basis of Presentation: The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company has experienced recurring losses since its inception. The Company incurred a net loss of approximately $3,553,000 for the nine months ended September 30, 2017, and had an accumulated deficit of approximately $17,889,000 as of September 30, 2017. Since inception, the Company has financed its activities principally through debt and equity financing and customer deposits. Management expects to incur additional losses and cash outflows in the foreseeable future in connection with its operating activities. The Company’s consolidated financial statements have been presented on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company is subject to a number of risks similar to those of other similar stage companies, including dependence on key individuals; successful development, marketing and branding of products; uncertainty of product development and generation of revenues; dependence on outside sources of financing; risks associated with research and development; dependence on third-party suppliers and collaborators; protection of intellectual property; and competition with larger, better-capitalized companies. Ultimately, the attainment of profitable operations is dependent on future events, including obtaining adequate financing to fund its operations and generating a level of revenues adequate to support the Company’s cost structure. In the first quarter of 2017, the Company extinguished convertible promissory notes in the principal amount of $510,000 through the issuance of shares of its common stock (See Note 2) and raised $2,685,000 in a private placement of the Company’s common stock and attached warrants to accredited investors (see Note 6). In the third quarter of 2017, the Company extinguished notes payable in the principal amount of $537,000 through the issuance of shares of its common stock (See Note 3). The Company will likely need to raise debt and equity financing in the future in order to continue its operations and achieve its growth targets, however, there can be no assurance that such financing will be available in sufficient amounts and on acceptable terms, when and if needed, or at all. The precise amount and timing of the funding needs cannot be determined accurately at this time, and will depend on a number of factors, including market demand for the Company’s products and services, the success of product development efforts, the timing of receipts for customer deposits, the management of working capital, and the continuation of normal payment terms and conditions for purchase of goods and services. The Company believes its cash balances and cash flow from operations will not be sufficient to fund its operations and growth for the next twelve months. If the Company is unable to substantially increase revenues, reduce expenditures, or otherwise generate cash flows from operations, then the Company will likely need to raise additional funding to continue as a going concern from investors or through other avenues. Basis of Consolidation and Reclassifications: The condensed consolidated financial statements include the accounts of the Company and its controlled and wholly-owned subsidiary. Intercompany transactions, profits, and balances are eliminated in consolidation. Certain reclassifications have been made to amounts in prior periods to conform to the current period presentation. All reclassifications have been applied consistently to the periods presented. The reclassifications had no impact on net loss or total assets and liabilities. Use of Estimates: The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and that affect the reported amounts of revenues and expenses during the reporting period. The Company bases its estimates on historical experience and on various other assumptions that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates. In addition, any change in these estimates or their related assumptions could have an adverse effect on the Company’s operating results. Key estimates include: valuation of derivative liabilities, valuation of intangible assets, and valuation of deferred tax assets and liabilities. Warrants Issued in Connection with Financings: The Company generally accounts for warrants issued in connection with financings as a component of equity, unless there is a possibility that the Company may have to settle the warrants in cash. For warrants issued with the deemed possibility of a cash settlement, the Company records the fair value of the issued warrants as a liability at each reporting date and records changes in the estimated fair value as a non-cash gain or loss in the condensed consolidated statements of operations. The fair values of have been determined using the Black Scholes Merton Option Pricing valuation model, or the Black-Scholes Model. The Black-Scholes Model provides for assumptions regarding volatility, call and put features and risk-free interest rates within the total period to maturity. These values are subject to a significant degree of judgment on the part of the Company. Fair value measurements The Company evaluates assets and liabilities subject to fair value measurements on a recurring basis to determine the appropriate level to classify them for each reporting period. There have been no transfers between fair value measurements levels during the three months ended September 30, 2017. The carrying amounts for cash, accounts receivable and accounts payable, accrued expenses and other current liabilities approximate fair value due to their short-term nature. The authoritative guidance on fair value measurements establishes a consistent framework for measuring fair value on either a recurring or nonrecurring basis whereby inputs, used in valuation techniques, are assigned a hierarchical level. The following are the hierarchical levels of inputs to measure fair value: ● Level 1: Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. ● Level 2: Observable inputs that reflect quoted prices for identical assets or liabilities in markets that are not active; quoted prices for similar assets or liabilities in active markets; inputs other than quoted prices that are observable for the assets or liabilities; or inputs that are derived principally from or corroborated by observable market data by correlation or other means. ● Level 3: Unobservable inputs reflecting our own assumptions incorporated in valuation techniques used to determine fair value. These assumptions are required to be consistent with market participant assumptions that are reasonably available. The following table sets forth the Company’s assets and liabilities that were measured at fair value as of September 30, 2017 and December 31, 2016 by level within the fair value hierarchy: As of September 30, 2017 As of December 31, 2016 Level I Level II Level III Fair Value Level I Level II Level III Fair Value Financial liabilities: Derivative liabilities - warrants $ – $ – $ 265,760 $ 265,760 $ – $ - $ 477,814 $ 477,814 Total financial assets (liabilities) $ - $ - $ 265,760 $ 265,760 $ - $ - $ 477,814 $ 477,814 The estimated fair value of the derivative liability associated with the Company’s warrants is calculated using the Black-Scholes option pricing model. Net Income (Loss) Per Share In accordance with ASC Topic 280 – “Earnings Per Share”, the basic loss per common share is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding. Diluted loss per common share is computed similar to basic 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. As of September 30, 2017, there are approximately 19,143,050 shares of common stock issuable upon the exercise of certain outstanding options and warrants and vesting of certain restricted stock units that have been excluded from the computation of diluted net loss per share because the effect would have been anti-dilutive. Recent Accounting Pronouncements: In May 2017, the FASB issued Accounting Standards Update (ASU) No. 2017-09, Compensation – Stock Compensation (Topic 718) – Scope of Modification Accounting In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment In May 2014, the FASB issued ASU 2014-09 (Topic 606), Revenue from Contracts with Customers |
Convertible Promissory Notes
Convertible Promissory Notes | 9 Months Ended |
Sep. 30, 2017 | |
Debt Disclosure [Abstract] | |
Convertible Promissory Notes | NOTE 2 – CONVERTIBLE PROMISSORY NOTES In the first quarter of 2017, the Company entered into note conversion and warrant amendment agreements (each an “Agreement” and together, the “Agreements”) to: (i) amend the convertible promissory notes – series 2 (“Original Notes”) to reduce the conversion price of such holder’s Original Note and simultaneously cause the conversion of the outstanding amount under such Original Note into shares of common stock of the Company (“Conversion Shares”); and (ii) reduce the exercise price of the original warrant (“Original Warrants” and together with the amended notes and the amended warrants, the “Amendments”). Each Agreement was privately negotiated so the terms vary. Pursuant to the Agreements, the Original Notes were amended to reflect a reduced conversion price per share between $0.09 and $0.22. Additionally, pursuant to the Agreements , Pursuant to the Agreements, in the first quarter of 2017, the Company (i) converted Original Notes with an aggregate outstanding principal amount of $510,000 and accrued interest of $134,553 in exchange for the issuance of 5,001,554 shares of the Company’s common stock, and (ii) amended Original Warrants to reduce their exercise price. In the first quarter of 2017, the Company also made payments of $314,150 to settle convertible promissory notes in the principal amount of $270,000 and accrued interest of $44,150. As of June 30, 2017, the Company had no convertible notes outstanding. The Company has accounted for the Agreements as debt extinguishment where by the difference between the reacquisition price of the debt and the net carrying amount of the extinguished debt was recognized as a loss during the first quarter of 2017. The following details the calculation of the loss on extinguishment of the notes payable – series 2 in the first quarter of 2017: Carrying amount of debt Principal converted $ 510,000 Accrued interest converted 134,553 Unamortized debt discount (5,398 ) Total carrying amount of debt 639,155 Reacquisition price of debt Fair value of shares of common stock issued 995,155 Warrant modification value 59,000 Total reacquisition price of debt 1,054,155 Loss on extinguishment of debt $ (415,000 ) |
Promissory Notes
Promissory Notes | 9 Months Ended |
Sep. 30, 2017 | |
Debt Disclosure [Abstract] | |
Promissory Notes | NOTE 3 – PROMISSORY NOTES On February 9, 2017, the Company entered into a securities purchase agreement with two accredited investors pursuant to which the Company issued promissory notes in the aggregate original principal amount of $537,500. In addition, each investor received 125,000 shares, an aggregate of 250,000 shares, of the Company’s common stock. The notes were unsecured, had an interest rate of 6%, per annum and were originally due and payable, with all accrued interest, on November 9, 2017. The total proceeds were approximately $500,000 with an original issue discount of approximately $37,500. The Company allocated the cash proceeds amount between the debt and shares issued on a relative fair value basis. Based on relative fair value, the Company allocated approximately $461,000 and $39,000 to the promissory notes and the shares of common stock, respectively. The original issue discount of $37,500 and fair value of the shares issued of $39,000 were amortized and expensed over the life of the loans. For the three and nine months ended September 30, 2017, the amortization expense was approximately $11,000 and approximately $50,000, respectively. In the event of a default under the terms of the promissory notes, the interest rate automatically increases to 18% per annum, until such time as the default event is cured. The events of default included suspension from trading of the Company’s common stock, failure to pay principal or interest when due, commencement of bankruptcy or insolvency proceedings or a change of control. On August 8, 2017, the Company executed an amendment (the “Amendment”) with the holders of the promissory notes, each in the original principal amount of $268,750. The Amendment provides for each of the holder’s notes to convert its principal into 2,800,000 shares, or 5,600,000 shares in the aggregate, of the Company’s common stock, at a price per share of approximately $0.096. The Company’s closing share price on August 7, 2017 was $0.135. In connection with this Amendment, the holders also agreed to surrender to the Company the portion of the promissory notes representing the accrued interest as the consideration for this Amendment, which approximates $16,900 in total. The transactions contemplated by the Amendment closed on August 22, 2017. The Company has accounted for the Amendment as debt extinguishment whereby the difference between the reacquisition price of the debt and the net carrying amount of the extinguished debt was recognized as a loss during the third quarter of 2017. The following details the calculation of the loss on extinguishment of the notes payable in the third quarter of 2017: Carrying amount of debt Principal converted $ 537,500 Accrued interest converted 15,904 Unamortized debt discount (25,832 ) Total carrying amount of debt 527,572 Reacquisition price of debt Fair value of shares of common stock issued 756,000 Loss on extinguishment of debt $ (228,428 ) |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | NOTE 4 – COMMITMENTS AND CONTINGENCIES Litigation From time to time, in the normal course of its operations, the Company is subject to litigation matters and claims. Litigation can be expensive and disruptive to normal business operations. Moreover, the results of complex legal proceedings are difficult to predict and the Company’s view of these matters may change in the future as the litigation and events related thereto unfold. The Company expenses legal fees as incurred. The Company records a liability for contingent losses when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. An unfavorable outcome to any legal matter, if material, could have an adverse effect on the Company’s operations or its financial position, liquidity or results of operations. Internal Revenue Service Penalties The Company has been penalized by the Internal Revenue Service for failure to file its Foreign Form 5471, Information Return of U.S. Persons With Respect To Certain Foreign Corporations, for the years 2009 through 2014 on a timely basis. The penalties approximate $115,000. The Company’s request that the penalties be abated was initially denied by the Internal Revenue Service. The Company is appealing and believes the likelihood of abatement is high based on reasonable cause. However, there can be no assurance of any abatement until the Internal Revenue Service acts upon the appeal. Stock Options of Former CEO In March 2017, a former CEO of the Company requested to exercise an option to purchase 3,000,000 shares of the Company’s common stock at an exercise price of $.00024 per share. The stock option expired in March 2017. The Company’s Board of Directors (the “Board”) has not approved the request for the issuance of the common stock under the stock option. New Building Lease On June 27, 2017, the Company executed a lease, to be effective September 29, 2017, for its manufacturing and office space. The term of the lease commenced September 29, 2017 and continues through August 31, 2022. The Company will occupy its current space at a rate of $12,967 per month until January 1, 2018. On January 2, 2018, the space will be expanded and the monthly rental rate will increase to $18,979 until August 31, 2018. Beginning September 1, 2018, the monthly rent will increase by 3% each year through the end of the lease. Pursuant to the lease, the Company made a security deposit of $51,000 on July 31, 2017 and received a $100,000 allowance for leasehold improvements. No leasehold improvements have been made as of September 30, 2017. The following is a schedule by years of the minimum future lease payments on the building lease as of September 30, 2017. Year ending December 31: 2017 $ 38,901 2018 230,026 2019 236,926 2020 244,034 2021 251,355 Later years 170,888 Total future minimum lease payments $ 1,172,130 |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2017 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | NOTE 5 – RELATED PARTY TRANSACTIONS Keen Consulting Agreement On May 10, 2017, the Board approved a three-year consulting agreement between the Company and Stephen Keen, a principal shareholder of the Company and a former officer and director. Under the consulting agreement, Mr. Keen will provide certain consulting services to the Company including research and development, new product design and innovations, existing product enhancements and improvements, and other technology advancements with respect to the Company’s business and products in exchange for an annual consulting fee of $30,000. The consulting agreement also includes certain activity restrictions which prohibit Mr. Keen from competing with the Company. In connection with the execution of this consulting agreement, Mr. Keen resigned as a director of the Company on May 10, 2017. Mr. Keen’s employment with the Company ceased as of April 28, 2017. Pursuant to the terms of this agreement, the Company paid Mr. Keen $7,500 and $12,500 for the three and nine months ended September 30, 2017, respectively. Sterling Pharms Equipment Agreement On May 10, 2017, the Board approved a three-year equipment, demonstration and product testing agreement between the Company and Sterling Pharms, LLC (“Sterling”), an entity controlled by Mr. Keen, which operates a Colorado-regulated cannabis cultivation facility currently under construction. Under this agreement, the Company has agreed to provide to Sterling certain lighting, environmental control, and air sanitation equipment for use at the Sterling facility in exchange for a quarterly fee of $16,500. Also, under this agreement, Sterling has agreed to allow the Company and its existing and prospective customers to have access to the Sterling facility for demonstration tours in a working environment, which the Company believes will assist it in the sale of its products. Sterling has also agreed to monitor, test and evaluate the Company’s products installed at the Sterling facility and to collect data and provide feedback to the Company on the energy and operational efficiency and efficacy of the installed products, which the Company intends to use to improve, enhance and develop new or additional product features, innovations and technologies. In consideration for access to the Sterling facility to conduct demonstration tours and for the product testing and data to be provided by Sterling, the Company will pay Sterling a quarterly fee of $12,000. As of September 30, 2017, Sterling Pharms had accepted substantially all the equipment under the agreement, but is in the process of completing the installation of the equipment. Pursuant to the terms of this agreement, the respective payments will begin upon the delivery and installation of the equipment. In September 2017, the Company received a deposit from Sterling of $78,310 to purchase equipment unrelated to the lease. The Company purchased on behalf of Sterling additional equipment of $23,520 which is included in Other Receivables. Independent Director Compensation Plan On August 8, 2017, the Board approved a compensation plan for the Company’s independent directors effective for the election or appointment of independent directors on or after May 31, 2017. Under this compensation plan, the Company will pay the independent directors an annual fee of $60,000, payable quarterly in advance on the first business day of each quarter, covering any regular or special meetings of the Board or any committee thereof attended in person, any telephonic meeting of the Board or any committee thereof in which the director participated, any non-meeting consultations with the Company’s management, and any other services provided by them as a director (other than services as the Chairman of the Board and lead independent director and the Chairman of the Company’s Audit Committee). The annual fee is paid 50% in cash and 50% in shares of the Company’s common stock, with the number of shares to be determined based on the closing price of the common stock on the date of issuance. The Company pays the Chairman of the Board and lead independent director an additional annual fee of $15,000, payable quarterly in advance. The Company pays the Audit Committee Chairman an annual fee of $15,000, payable quarterly in advance, for his services as the Audit Committee Chairman. There is no additional compensation paid to members of the Audit Committee. At the time of initial election or appointment, each director also receives an equity retention award in the form of non-qualified stock options to purchase shares of common stock, shares of common stock, or a combination thereof. Employment Agreement with Current Chief Executive Officer On September 6, 2017, the Board approved an employment agreement between the Company and its current Chief Executive Officer (“the CEO”), which included the grant of certain restricted stock units. The initial term of the employment agreement commenced on August 17, 2017, the date of the CEO’s appointment, and will continue until December 31, 2019. However, the Company and the CEO may terminate the employment agreement, at any time, with or without cause, by providing the other party with 30-days’ prior written notice. In the event the CEO’s employment is terminated by the Company during the initial term without cause, the CEO will be entitled to receive his base salary for an additional 30 days. Following the initial term, the Company and the CEO may extend the employment agreement for additional one-year terms by mutual written agreement. The CEO will receive an annualized base salary of $180,000. Beginning December 31, 2017 and for each six-month period through December 31, 2019, the CEO will also be eligible to receive a special bonus of 1,000,000 shares of the Company’s common stock, provided the Board has determined, in its sole discretion, that the CEO’s performance has been average or better for such special bonus period. The Board also granted the CEO a total of 3,000,000 restricted stock units, which vest based on the CEO’s continued service and subject to the following performance thresholds: (i) 1,500,000 restricted stock units will vest on March 31, 2019 if the Company achieves 2018 revenue of $18,000,000, and (iii) 1,500,000 restricted stock units will vest on March 31, 2020 if the Company achieves 2019 revenue of $25,000,000. In consideration of the grant of the restricted stock units and the eligibility for the special bonus, the CEO agreed to terminate and cancel the non-qualified stock options to purchase 900,000 shares of the Company’s common stock, which were granted to him as an equity retention award in connection with his appointment to the Board on August 8, 2017. In the event of a change of control involving the Company, (i) any restricted stock units not already vested will become vested (other than those restricted stock units that were previously forfeited due to failure to meet the performance threshold), and (ii) any remaining special bonuses related to any bonus period ending after the date of the change of control will become due and payable, provided the CEO continues to provide services to the Company on the date immediately preceding the date of the change of control. On August 8, 2017, the CEO was awarded 600,000 shares of the Company’s common stock in consideration of services rendered to the Company prior to his appointment as a director. These shares were fully vested at the time of the award. Resignation of Former Chief Executive Officer On August 17, 2017, the Company’s then current Chief Executive Officer (the “Previous CEO”) notified the Board of his resignation, including his resignation as a director, effective August 17, 2017. On August 17, 2017, the Company and the Previous CEO entered into an employment agreement pursuant to which the Previous CEO will continue his employment as the Company’s Vice President Business Development – West Coast, a non-executive officer position. The Previous CEO will focus his efforts and use his industry knowledge to assist the Company in developing the significant market opportunities resulting from the recent legalization of cannabis for recreational use in the State of California. The initial term of the employment agreement commences on August 17, 2017 and continues until March 31, 2018. The employment agreement may be extended beyond the initial term upon the mutual agreement of the Company and the Previous CEO. On August 17, 2017, the Board also granted the Previous CEO a total of 9,000,000 restricted stock units, which vest in twelve (12) equal installments (750,000 restricted stock units per installment) commencing on the first business day of January 2018 and continuing on the first business day of each of the next eleven (11) calendar months, provided that the Previous CEO is employed by the Company on such vesting date or, if the initial term under the employment agreement has expired, the Previous CEO has not materially breached any non-competition, non-solicitation and other post-termination of employment obligations. |
Shareholders' Equity
Shareholders' Equity | 9 Months Ended |
Sep. 30, 2017 | |
Equity [Abstract] | |
Shareholders' Equity | NOTE 6 – SHAREHOLDERS’ EQUITY Private Placement In March 2017, the Company entered into a Securities Purchase Agreement (the “Agreement”) with certain accredited investors (the “Investors”). The Company issued an aggregate of 16,781,250 investment units (the “Units”), for aggregate gross proceeds of $2,685,000. Each Unit consisted of one share of the Company’s common stock and one warrant for the purchase of one share of the Company’s common stock; however, one investor declined receipt of the warrant to purchase 468,750 shares of the Company’s common stock. Pursuant to each of the warrants, the holder thereof may, subject to the terms of the warrant, at any time on or after six months after the date of the warrant and on or prior to the close of business on the date that is the third anniversary of the date of the warrant, purchase up to the number of shares of the Company’s common stock as set forth in the respective warrant. The exercise price per share of the common stock under each warrant is $0.26, subject to adjustment as provided in the warrant. Each warrant is callable at the Company’s option commencing six months from the date of the warrant, provided the Company’s common stock trades at a volume weighted average price (“VWAP”) of $0.42 or greater (subject to adjustment) for five consecutive trading days (the “Call Condition”). Commencing at any time after the date on which the Call Condition is satisfied, the Company has the right, upon 30 days’ notice to the holder given not later than 30 trading days after the date on which the Call Condition is satisfied, to redeem the number of warrant shares specified in the applicable Call Condition at a price of $0.01 per warrant share, subject to the terms of the warrant. Equity Issued as Compensation for Services Warrants Issued to Former Director On May 31, 2017, in connection with the resignation of a former director, the Company agreed to issue the former director three individual warrants to purchase: (i) 900,000 shares (“Warrant 1”), (ii) 460,525 shares (“Warrant 2”), and (iii) 460,525 shares (“Warrant 3”) (collectively, the “Warrants”) of the Company’s common stock for a period of five years. Warrant 1 was granted on June 20, 2017, is fully vested, and can be exercised beginning December 21, 2017 at an exercise price of $0.114 per share with the option for a cashless exercise. Warrants 2 and 3 were granted on June 20, 2017, are fully vested, and can be exercised beginning December 21, 2017 at an exercise price of $0.0005 per share with the option for a cashless exercise. The Company recorded approximately $207,000 of compensation expense for the fair value the Warrants on the grant date. The fair value of the Warrants at the date of grant was determined using the Black-Scholes Option Pricing Model. The assumptions used in the Black-Scholes Option Pricing Model were term of the Warrants of 5 years, volatility rate of 119.96%, quarterly dividends 0%, and a risk-free interest rate of 1.77%. Warrants Issued to Investment Bank On June 18, 2017, for services rendered in connection with the conversion of the Original Notes, the Company issued to an investment bank or its designees a warrant (“Banker Warrant”) to purchase, at an exercise price $0.35 per share, 500,000 shares of the Company’s common stock for a period of three years. The Banker Warrants were fully vested on the date of issuance and may be exercised beginning December 20, 2017. The Company recorded approximately $55,000 of expense for the fair value the Banker Warrant on the date of issuance. The fair value of the Banker Warrants at date of issuance was determined using the Black-Scholes Option Pricing Model. The assumptions used in the Black-Scholes Option Pricing Model were term of the Banker Warrant of 3 years, volatility rate of 120.02%, rate of quarterly dividends 0% and a risk-free interest rate of 1.52%. Common Shares Issued to Employee During the first quarter of 2017, the Company issued to an employee 40,000 shares of common stock which were valued at approximately $9,000 on the date of issuance. Common Shares Issued to Director On March 14, 2017, the Company issued to its Chairman of the Board (the “Chairman”) 700,000 shares of common stock as an equity retention award. These shares were valued, using the closing price for the Company’s common stock, as of the date of ratification for total value of $122,000, which was expensed as compensation. 2014 Stock Ownership Plan As of December 31, 2016, the Company had non-qualified stock options to purchase 6,177,600 shares of the Company’s common stock, with an exercise price of $0.00024, outstanding under the 2014 Stock Ownership Plan of Safari Resource Group, Inc. (the “2014 Stock Plan”). Upon the adoption of the Company’s 2017 Equity Incentive Plan (the “2017 Equity Plan”), there will be no further awards under the 2014 Stock Plan. In March 2017, in a private transaction, certain principal shareholders of the Company, assigned to the Previous CEO, non-qualified stock options to purchase 3,088,800 shares of the Company’s common stock outstanding under the 2014 Stock Plan. The principal shareholders informed the Company that they agreed to assign these options as an incentive (i) for the Previous CEO to complete the negotiations with the Company’s convertible noteholders to convert their notes into shares of the Company’s common stock, and (ii) for the Previous CEO to complete a private placement of the Company’s common stock. The Previous CEO thereupon delivered a purported notice of exercise of the options to the Company just prior to the expiration of the options. The Company erroneously reported in its Form 10-K for the year ended December 31, 2016 that the common stock underlying these options had been issued during the three months ended March 31, 2017. Prior to the Company’s acceptance of the notice of exercise and issuances of these shares in response thereto, in May 2017, the Previous CEO and the principal shareholders entered into a rescission agreement to nullify the March 2017 assignment transaction. Pursuant to their terms, the options have expired. In March 2017, a former CEO of the Company, holding non-qualified options to 3,088,800 shares of the Company’s common stock outstanding under the 2014 Stock Plan, requested to exercise options with respect to 3,000,000 shares at an exercise price of $.00024 per share. The Board has not approved the request for the issuance of the common stock underlying these exercised options. All of these options expired in March 2017. As of September 30, 2017, there are no options outstanding under the 2014 Stock Plan. 2017 Equity Incentive Plan On August 1, 2017, the Board adopted and approved the 2017 Equity Plan in order to attract, motivate, retain, and reward high-quality executives and other employees, officers, directors, consultants, and other persons who provide services to the Company by enabling such persons to acquire an equity interest in the Company. Under the 2017 Equity Plan, the Board (or the compensation committee of the Board, if one is established) may award stock options, stock appreciation rights (“SARs”), restricted stock awards (“RSAs”), restricted stock unit awards (“RSUs”), shares granted as a bonus or in lieu of another award, and other stock-based performance awards. The 2017 Equity Plan allocates 50,000,000 shares of the Company’s common stock (“Plan Shares”) for issuance of equity awards under the 2017 Equity Plan. As of September 30, 2017, the Company has granted, under the 2017 Equity Plan, awards in the form restricted shares for services rendered by independent directors and consultants, non-qualified stock options and RSUs. Equity-based compensation costs are classified in the Company’s consolidated financial statements in the same manner as if such compensation was paid in cash. The following is a summary of equity-based compensation costs under the 2017 Equity Plan included in the Company’s consolidated statements of operations for the three and nine months ended September 30, 2017: Three months Nine months Equity-based compensation expense included in: Cost of revenue $ 38,104 $ 38,104 Advertising and marketing expenses 7,259 7,259 Product development costs 2,640 2,640 Selling, general and administrative expenses 578,151 877,856 Total equity-based compensation expense included in consolidated statement of operations $ 626,154 $ 925,859 Equity-based compensation expense is reduced for forfeitures as the forfeitures occur since the Company does not have historical data or other factors to appropriately estimate the expected employee terminations and to evaluate whether particular groups of employees have significantly different forfeiture expectations. The total unrecognized compensation expense for unvested equity-based compensation awards at September 30, 2017, was $1,304,660, which will be recognized over approximately 2.25 years. This unrecognized compensation expense does not include the potential future compensation expense related to equity awards which are subject to vesting based on certain revenue and bookings thresholds for 2017, 2018 and 2019 being satisfied (the “Performance-based Awards”). As of September 30, 2017 and the grant date, the Company has determined that the likelihood of performance levels being obtained is remote. Restricted Stock Awards On August 8, 2017, the CEO was awarded 600,000 shares of restricted stock under the 2017 Equity Plan in consideration of services rendered to the Company prior to his appointment as a director. These restricted shares were fully vested at the time of the award and the value attributable to these shares, which were issued in August 2017, was $84,000 as calculated using the fair value of the Company’s common stock on August 7, 2017. See Note 5 – Related Party Transactions – Employment Agreement with Current Chief Executive Officer. On August 8, 2017, the Company awarded 111,113 restricted shares under the 2017 Equity Plan to independent directors in lieu of the payment of cash fees earned during the second quarter of 2017. These restricted shares were fully vested at the time of the award. The value attributable to these shares, which were issued in August 2017, was $15,000 as calculated using the fair value of the Company’s common stock on August 7, 2017. As of September 30, 2017, the independent directors are owed cash fees of $15,000 which will be paid in the form of fully vested restricted shares in November 2017. On August 8, 2017, the Company awarded 260,778 restricted shares under the 2017 Equity Plan to a consultant who provided corporate and financial services to the Company. These restricted shares were awarded in lieu of cash fees earned for the April, May, June and July 2017 and were fully vested at the time of the award. The value attributable to these shares, which were issued in August 2017, was $35,000 as calculated using the fair value of the Company’s common stock on August 7, 2017. As of September 30, 2017, the consultant is owed cash fees of $15,000 which will be paid in the form of fully vested restricted shares in November 2017. On September 6, 2017, the Company awarded 1,200,000 restricted shares under the 2017 Equity Plan to an employee as compensation. These restricted shares were fully vested at the time of the award. The value attributable to these shares, which were issued in October 2017, was $134,280 as calculated using the fair value of the Company’s common stock on September 6, 2017. These shares are reflected as shares to be issued in the Company’s Statement of Changes in Shareholders’ Equity (Deficit). Non-Qualified Stock Options On August 8, 2017, the Board granted to certain independent directors non-qualified stock options, under the 2017 Equity Plan, to purchase a total of 1,800,000 shares of the Company’s common stock at an exercise price of $0.135 per share for a period of ten years. These options vest 50% on date of grant and the remaining 50% on March 1, 2018, provided they are still serving as a director on such date. On August 17, 2017, one of these independent directors was appointed the CEO and, in consideration of the grant of the restricted stock units and the eligibility for the special bonus, the CEO agreed to terminate and cancel the non-qualified stock options to purchase 900,000 shares of the Company’s common stock previously granted to him. During the third quarter of 2017, the Board granted to certain employees non-qualified stock options, under the 2017 Equity Plan, to purchase a total of 12,355,000 shares of the Company’s common stock at an exercise price equal to the closing market price of the Company’s common stock on the day before the grant. The terms of the options are summarized as follows: (a) Non-qualified stock options to purchase 1,805,000 shares at an exercise price of $0.135 per share granted to certain employees on August 8, 2017, which vest based on the employee’s continued service over 2.75 years, as follows: (i) 661,672 options will vest if the employee remains employed at various dates during 2017, (ii) 571,665 options will vest if the employee remains employed at various dates during 2018, and (iii) 571,663 options will vest if the employee remains employed at various dates during 2019, and have a term of 10 years. As of September 30, 2017, non-qualified stock options to purchase 60,000 shares have expired. (b) Non-qualified stock options to purchase 1,300,000 shares at an exercise price of $0.121 per share granted to a former employee on August 17, 2017, which were fully vested on the grant date and have a term of three years. (c) Non-qualified stock options to purchase 1,200,000 shares at an exercise price of $0.135 per share granted to certain employees on August 8, 2017, which vest based on the employee’s continued service and subject to the following performance thresholds: (i) 400,000 options will vest if the Company achieves $8,000,000 and $10,000,000 of revenue and new bookings, respectively, for the year end December 31, 2017, (ii) 400,000 options will vest if the Company achieves 2018 revenue of $18,000,000, and (iii) 400,000 options will vest if the Company achieves 2019 revenue of $25,000,000. (d) Non-qualified stock options to purchase 4,050,000 shares at an exercise price of $0.121 per share granted to certain employees on August 17, 2017, which vest based on the employee’s continued service and subject to the following performance thresholds: (i) 800,000 options will vest if the Company achieves $8,000,000 and $10,000,000 of revenue and new bookings, respectively, for the year end December 31, 2017, (ii) 1,300,000 options will vest if the Company achieves 2018 revenue of $18,000,000, and (iii) 1,950,000 options will vest if the Company achieves 2019 revenue of $25,000,000. (e) Non-qualified stock options to purchase 4,000,000 shares at an exercise price of $0.112 per share granted to an employee on September 9, 2017, which vest based on the employee’s continued service and subject to the following performance thresholds: (i) 750,000 options will vest if the Company achieves $8,000,000 and $10,000,000 of revenue and new bookings, respectively, for the year end December 31, 2017, (ii) 1,250,000 options will vest if the Company achieves 2018 revenue of $18,000,000, and (iii) 2,000,000 options will vest if the Company achieves 2019 revenue of $25,000,000. The Company uses the Black-Scholes The Company determines the assumptions used in the valuation of option awards as of the date of grant. Differences in the expected stock price volatility, expected term or risk-free interest rate may necessitate distinct valuation assumptions at those grant dates. As such, the Company may use different assumptions for options granted throughout the year. The valuation assumptions used to determine the fair value of each option award on the date of grant were: expected stock price volatility 117.13% - 120.6%; expected term in years 5.0 - 7.5 and risk free interest rate 1.71% - 2.07% A summary of the non-qualified stock options granted to employees under the as of September 30, 2017, and changes during the nine months then ended, are presented in the table below: Number of Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term Aggregate Intrinsic Value ($000) Outstanding as of December 31, 2016 - $ - - - Granted 12,355,000 0.121 9.9 - Exercised - - - - Forfeited - - - - Expired (60,000 ) 0.135 9.9 - Outstanding as of September 30, 2017 12,295,000 0.121 9.9 - Expected to vest as of September 30, 2017 3,045,000 0.129 9.9 - As of September 30, 2017, of the options to purchase 12,295,000 shares outstanding, options to purchase 9,250,000 shares are performance-based and the Company has determined that the likelihood of performance levels being obtained is remote as of the date of grant and September 30, 2017. Based on the low level of obtaining the performance level, the fair value of these performance-based options was negligible as of the grant date and September 30, 2017. A summary of the non-qualified stock options granted to the directors under the as of September 30, 2017, and changes during the nine months then ended, are presented in the table below: Number of Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term Aggregate Intrinsic Value ($000) Outstanding as of December 31, 2016 - $ - - - Granted 1,800,000 0.135 9.9 - Exercised - - - - Forfeited/Cancelled (900,000 ) 0.135 9.9 - Expired - - - - Outstanding and expected to vest as of September 30, 2017 900,000 0.135 9.9 - The total fair value of vested options issued to employees and directors and recorded as compensation expense was $303,000 and $371,000 for the three and nine months ended September 30, 2017, respectively. Compensation expense for the nine months ended September 30, 2017 includes $68,000 for cancelled options. Restricted Stock Units On June 12, 2017, the Company entered into a consulting agreement for a sales and business development services. The consulting term ended on September 1, 2017. The consultant was compensated with an award of 200,000 restricted stock units, which vested on the following dates: 66,667 units on July 7, 2017, 66,667 units on August 4, 2017 and 66,666 units on September 1, 2017. Each vested restricted stock unit will be settled by the issuance of one share of common stock. The Company will account for these restricted stock units using the graded vesting method with the total value of the restricted stock units calculated on the date the shares of common stock are issued to the consultant. For accounting purposes, the restricted stock units will be revalued at each reporting date with the final value being the date the shares of common stock are issued to the consultant. The Company recorded an expense of $17,000 and $21,000 for the three and nine months ended September 30, 2017, respectively. The Company issued 200,000 shares of common stock to settle the vested restricted stock units on October 3, 2017 which are reflected as shares to be issued in the Company’s Statement of Changes in Shareholders’ Equity (Deficit). During the third quarter of 2017, the Company also issued 12,700,000 restricted stock units to employees as follows: (a) On August 17, 2017, the Company granted 700,000 restricted stock units to certain employees which vest at various times during the first quarter of 2018, provided the employee remains employed as of the vesting date. (b) On August 17, 2017, the Company granted to the Previous CEO 9,000,000 restricted stock units, which vest in 12 equal installments (750,000 restricted stock units per installment) commencing on the first business day of January 2018 and continuing on the first business day of each of the next 11 calendar months, provided that the Previous CEO is employed by the Company on such vesting date or, if the initial term under the employment agreement has expired, the Previous CEO has not materially breached any non-competition, non-solicitation and other post-termination of his employment obligations. (c) On September 6, 2017, the Company granted 3,000,000 restricted stock units to the CEO, which vest based on the CEO’s continued service and subject to the following performance thresholds: (i) 1,500,000 restricted stock units will vest if the Company achieves 2018 revenue of $18,000,000, and (ii) 1,500,000 restricted stock units will vest if the Company achieves 2019 revenue of $25,000,000. All of the foregoing restricted stock unit awards will be settled by the issuance of one share of common stock for each vested restricted stock unit. A summary of the restricted stock units awarded to employees, directors and consultants under the 2017 Equity Plan as September 30, 2017 and changes during the period then ended, are presented in the table below: Number of Units Weighted Average Grant-Date Fair Value Unvested as of December 31, 2016 - $ - Granted 13,600,000 0.122 Vested (1,828,000 ) 0.132 Forfeited - - Unvested as of September 30, 2017 11,772,000 0.121 Expected to vest as of September 30, 2017 8,772,000 $ 0.123 As of September 30, 2017, of the unvested 11,772,000 restricted stock units, 3,000,000 restricted stock units are performance-based and the Company has determined that the likelihood of performance levels being obtained is remote as of the date of grant and September 30, 2017. Based on the low level of obtaining the performance level, the fair value of these performance-based restricted stock units was negligible as of the grant date and September 30, 2017. . The total fair value of the vested restricted stock units issued to employees, directors and consultants and recorded as compensation expense was $214,000 and $239,000 for the three and nine months ended September 30, 2017, respectively. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | NOTE 7 – SUBSEQUENT EVENTS Unless disclosed elsewhere within the Notes to Unaudited Condensed Consolidated Financial Statements, the following significant subsequent events occurring after September 30, 2017 are discussed below. Equity In October 2017, the Company issued 1,400,000 shares of the Company’s common stock, which were classified as shares to be issued as of September 30, 2017, consisting of 1,200,000 restricted shares issued as compensation to an employee and 200,000 restricted units issued to a consultant as compensation which were settled by the issuance of 200,000 shares. On October 10, 2017, the Board granted non-qualified stock options, under the 2017 Equity Plan, to certain employees to purchase 175,000 shares at an exercise price of $0.105 per share, which vest over the next 2.75 years. On October 10, 2017, the Board awarded an employee 200,000 restricted stock units, under the 2017 Equity Plan, which vest in the second quarter of 2018. On November 7, 2017, the Board awarded an employee 200,000 restricted stock units, under the 2017 Equity Plan, which vest in the second quarter of 2018. On November 7, 2017, the Board awarded a total of 104,896 restricted shares, which were immediately vested, to the independent directors in lieu of cash fees of $15,000 earned during the third quarter of 2017. On November 7, 2017, the Board awarded a total of 143,707 restricted shares, which were immediately vested, to a consultant in lieu of cash fees of $20,500 earned in August, September and October of 2017. Employment Agreement with Principal Shareholder On October 10, 2017, the Board approved an employment agreement between the Company and a principal shareholder, the Company’s Vice President, Secretary and Senior Technical Advisor. The employment agreement superseded and replaced an employment agreement between the Company and such principal shareholder dated July 25, 2014, which expired by its terms on July 25, 2017. The initial term of the employment agreement commenced on October 1, 2017 and continues until December 31, 2019. However, the Company and such principal shareholder may terminate the employment agreement, at any time, with or without cause, by providing the other party with 30-days’ prior written notice. In the event such principal shareholder’s employment is terminated by the Company during the initial term without cause, such principal shareholder will be entitled to receive her base salary for an additional 30 days. Following the initial term, the Company and such principal shareholder may extend the employment agreement for additional one-year terms by mutual written agreement. Such principal shareholder will receive an annualized base salary of $150,000. During the initial term, such principal shareholder will be eligible to participate in the Company’s sales incentive program for sales personnel, as in effect and as amended from time to time by the Company (the “Sales Program”). In connection with the Sales Program, such principal shareholder will be entitled to a sales incentive equal to one-quarter of one percent (0.25%) of the revenue collected and earned from the Company’s sales, payable quarterly in arrears. Subject to the approval of the independent members of the Board, such principal shareholder may be eligible to participate in the 2017 Equity Plan. The independent members of the Board have not approved such principal shareholder’s participation in the 2017 Equity Plan, and such principal shareholder has not been granted, nor does such principal shareholder hold, any equity awards under thereunder. Designation of Principal Financial and Accounting Officer On October 16, 2017, Dean S. Skupen notified the Board of his resignation as the Company’s Director of External Reporting and designated Principal Financial and Accounting Officer. The Company’s Chief Financial Officer will serve as the Company’s new designated Principal Financial and Accounting Officer. |
Summary of Significant Accoun14
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Company | Company: Surna Inc. (the “Company”) incorporated in Nevada on October 15, 2009. On March 26, 2014, the Company acquired Safari Resource Group, Inc. (“Safari”), a Nevada corporation, whereby the Company became the sole surviving corporation after the acquisition of Safari. In July 2014, the Company acquired 100% of the membership interests in Hydro Innovations, LLC, a Texas limited liability company (“Hydro”), pursuant to which Hydro became a wholly-owned subsidiary of the Company. The Company engineers and manufactures innovative technology and products that address the energy and resource intensive nature of indoor cultivation. The Company is focused on supplying industrial solutions to commercial indoor cannabis cultivation facilities. The Company’s engineering team is tasked with creating novel energy and resource efficient solutions, including the Company’s proprietary liquid-cooled climate control platform. The Company’s engineers continuously seek to create technologies that allow growers to meet the specific demands of a cannabis cultivation environment through temperature, humidity, light, and process control. The Company’s objective is to provide intelligent solutions that improve the quality, control and overall crop yield and efficiency of indoor cannabis cultivation. The Company is headquartered in Boulder, Colorado. The Company does not cultivate or distribute cannabis. |
Financial Statement Presentation | Financial Statement Presentation: The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with generally accepted accounting principles in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Pursuant to these rules and regulations, certain information and note disclosures, normally included in financial statements prepared in accordance with GAAP, have been condensed or omitted. GAAP requires management to make estimates and assumptions that affect reported amounts and related disclosures. In the opinion of management, all adjustments (consisting of normal recurring items) considered necessary for a fair presentation have been included. Operating results for the nine months ended September 30, 2017 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2017. The balance sheet as of December 31, 2016 has been derived from the audited financial statements at that date, but does not include all the information and footnotes required by GAAP for complete financial statements. For further information, refer to the consolidated financial statements and notes thereto contained in the Annual Report on Form 10-K for the year ended December 31, 2016. The notes to the unaudited condensed consolidated financial statements are presented on a going concern basis unless otherwise noted. |
Basis of Presentation | Basis of Presentation: The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company has experienced recurring losses since its inception. The Company incurred a net loss of approximately $3,553,000 for the nine months ended September 30, 2017, and had an accumulated deficit of approximately $17,889,000 as of September 30, 2017. Since inception, the Company has financed its activities principally through debt and equity financing and customer deposits. Management expects to incur additional losses and cash outflows in the foreseeable future in connection with its operating activities. The Company’s consolidated financial statements have been presented on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company is subject to a number of risks similar to those of other similar stage companies, including dependence on key individuals; successful development, marketing and branding of products; uncertainty of product development and generation of revenues; dependence on outside sources of financing; risks associated with research and development; dependence on third-party suppliers and collaborators; protection of intellectual property; and competition with larger, better-capitalized companies. Ultimately, the attainment of profitable operations is dependent on future events, including obtaining adequate financing to fund its operations and generating a level of revenues adequate to support the Company’s cost structure. In the first quarter of 2017, the Company extinguished convertible promissory notes in the principal amount of $510,000 through the issuance of shares of its common stock (See Note 2) and raised $2,685,000 in a private placement of the Company’s common stock and attached warrants to accredited investors (see Note 6). In the third quarter of 2017, the Company extinguished notes payable in the principal amount of $537,000 through the issuance of shares of its common stock (See Note 3). The Company will likely need to raise debt and equity financing in the future in order to continue its operations and achieve its growth targets, however, there can be no assurance that such financing will be available in sufficient amounts and on acceptable terms, when and if needed, or at all. The precise amount and timing of the funding needs cannot be determined accurately at this time, and will depend on a number of factors, including market demand for the Company’s products and services, the success of product development efforts, the timing of receipts for customer deposits, the management of working capital, and the continuation of normal payment terms and conditions for purchase of goods and services. The Company believes its cash balances and cash flow from operations will not be sufficient to fund its operations and growth for the next twelve months. If the Company is unable to substantially increase revenues, reduce expenditures, or otherwise generate cash flows from operations, then the Company will likely need to raise additional funding to continue as a going concern from investors or through other avenues. |
Basis of Consolidation and Reclassifications | Basis of Consolidation and Reclassifications: The condensed consolidated financial statements include the accounts of the Company and its controlled and wholly-owned subsidiary. Intercompany transactions, profits, and balances are eliminated in consolidation. Certain reclassifications have been made to amounts in prior periods to conform to the current period presentation. All reclassifications have been applied consistently to the periods presented. The reclassifications had no impact on net loss or total assets and liabilities. |
Use of Estimates | Use of Estimates: The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and that affect the reported amounts of revenues and expenses during the reporting period. The Company bases its estimates on historical experience and on various other assumptions that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates. In addition, any change in these estimates or their related assumptions could have an adverse effect on the Company’s operating results. Key estimates include: valuation of derivative liabilities, valuation of intangible assets, and valuation of deferred tax assets and liabilities. |
Warrants Issued in Connection with Financings | Warrants Issued in Connection with Financings: The Company generally accounts for warrants issued in connection with financings as a component of equity, unless there is a possibility that the Company may have to settle the warrants in cash. For warrants issued with the deemed possibility of a cash settlement, the Company records the fair value of the issued warrants as a liability at each reporting date and records changes in the estimated fair value as a non-cash gain or loss in the condensed consolidated statements of operations. The fair values of have been determined using the Black Scholes Merton Option Pricing valuation model, or the Black-Scholes Model. The Black-Scholes Model provides for assumptions regarding volatility, call and put features and risk-free interest rates within the total period to maturity. These values are subject to a significant degree of judgment on the part of the Company. |
Fair Value Measurements | Fair value measurements The Company evaluates assets and liabilities subject to fair value measurements on a recurring basis to determine the appropriate level to classify them for each reporting period. There have been no transfers between fair value measurements levels during the three months ended September 30, 2017. The carrying amounts for cash, accounts receivable and accounts payable, accrued expenses and other current liabilities approximate fair value due to their short-term nature. The authoritative guidance on fair value measurements establishes a consistent framework for measuring fair value on either a recurring or nonrecurring basis whereby inputs, used in valuation techniques, are assigned a hierarchical level. The following are the hierarchical levels of inputs to measure fair value: ● Level 1: Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. ● Level 2: Observable inputs that reflect quoted prices for identical assets or liabilities in markets that are not active; quoted prices for similar assets or liabilities in active markets; inputs other than quoted prices that are observable for the assets or liabilities; or inputs that are derived principally from or corroborated by observable market data by correlation or other means. ● Level 3: Unobservable inputs reflecting our own assumptions incorporated in valuation techniques used to determine fair value. These assumptions are required to be consistent with market participant assumptions that are reasonably available. The following table sets forth the Company’s assets and liabilities that were measured at fair value as of September 30, 2017 and December 31, 2016 by level within the fair value hierarchy: As of September 30, 2017 As of December 31, 2016 Level I Level II Level III Fair Value Level I Level II Level III Fair Value Financial liabilities: Derivative liabilities - warrants $ – $ – $ 265,760 $ 265,760 $ – $ - $ 477,814 $ 477,814 Total financial assets (liabilities) $ - $ - $ 265,760 $ 265,760 $ - $ - $ 477,814 $ 477,814 The estimated fair value of the derivative liability associated with the Company’s warrants is calculated using the Black-Scholes option pricing model. |
Net Income (loss) Per Share | Net Income (Loss) Per Share In accordance with ASC Topic 280 – “Earnings Per Share”, the basic loss per common share is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding. Diluted loss per common share is computed similar to basic 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. As of September 30, 2017, there are approximately 19,143,050 shares of common stock issuable upon the exercise of certain outstanding options and warrants and vesting of certain restricted stock units that have been excluded from the computation of diluted net loss per share because the effect would have been anti-dilutive. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements: In May 2017, the FASB issued Accounting Standards Update (ASU) No. 2017-09, Compensation – Stock Compensation (Topic 718) – Scope of Modification Accounting In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment In May 2014, the FASB issued ASU 2014-09 (Topic 606), Revenue from Contracts with Customers |
Summary of Significant Accoun15
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Schedule of Financial Assets and Liabilities at Fair Value Measured | The following table sets forth the Company’s assets and liabilities that were measured at fair value as of September 30, 2017 and December 31, 2016 by level within the fair value hierarchy: As of September 30, 2017 As of December 31, 2016 Level I Level II Level III Fair Value Level I Level II Level III Fair Value Financial liabilities: Derivative liabilities - warrants $ – $ – $ 265,760 $ 265,760 $ – $ - $ 477,814 $ 477,814 Total financial assets (liabilities) $ - $ - $ 265,760 $ 265,760 $ - $ - $ 477,814 $ 477,814 |
Convertible Promissory Notes (T
Convertible Promissory Notes (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Debt Disclosure [Abstract] | |
Schedule of Loss on Extinguishment of Notes Payable - Series 2 | The following details the calculation of the loss on extinguishment of the notes payable – series 2 in the first quarter of 2017: Carrying amount of debt Principal converted $ 510,000 Accrued interest converted 134,553 Unamortized debt discount (5,398 ) Total carrying amount of debt 639,155 Reacquisition price of debt Fair value of shares of common stock issued 995,155 Warrant modification value 59,000 Total reacquisition price of debt 1,054,155 Loss on extinguishment of debt $ (415,000 ) |
Promissory Notes (Tables)
Promissory Notes (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Debt Disclosure [Abstract] | |
Schedule of Loss On Extinguishment of Promissory Notes Payable | The following details the calculation of the loss on extinguishment of the notes payable in the third quarter of 2017: Carrying amount of debt Principal converted $ 537,500 Accrued interest converted 15,904 Unamortized debt discount (25,832 ) Total carrying amount of debt 527,572 Reacquisition price of debt Fair value of shares of common stock issued 756,000 Loss on extinguishment of debt $ (228,428 ) |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Future Minimum Lease Payments | The following is a schedule by years of the minimum future lease payments on the building lease as of September 30, 2017. Year ending December 31: 2017 $ 38,901 2018 230,026 2019 236,926 2020 244,034 2021 251,355 Later years 170,888 Total future minimum lease payments $ 1,172,130 |
Shareholders' Equity (Tables)
Shareholders' Equity (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Equity [Abstract] | |
Schedule of Equity Based Compensation Expense | The following is a summary of equity-based compensation costs under the 2017 Equity Plan included in the Company’s consolidated statements of operations for the three and nine months ended September 30, 2017: Three months Nine months Equity-based compensation expense included in: Cost of revenue $ 38,104 $ 38,104 Advertising and marketing expenses 7,259 7,259 Product development costs 2,640 2,640 Selling, general and administrative expenses 578,151 877,856 Total equity-based compensation expense included in consolidated statement of operations $ 626,154 $ 925,859 |
Schedule of Stock Option Activity | A summary of the non-qualified stock options granted to employees under the as of September 30, 2017, and changes during the nine months then ended, are presented in the table below: Number of Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term Aggregate Intrinsic Value ($000) Outstanding as of December 31, 2016 - $ - - - Granted 12,355,000 0.121 9.9 - Exercised - - - - Forfeited - - - - Expired (60,000 ) 0.135 9.9 - Outstanding as of September 30, 2017 12,295,000 0.121 9.9 - Expected to vest as of September 30, 2017 3,045,000 0.129 9.9 - A summary of the non-qualified stock options granted to the directors under the as of September 30, 2017, and changes during the nine months then ended, are presented in the table below: Number of Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term Aggregate Intrinsic Value ($000) Outstanding as of December 31, 2016 - $ - - - Granted 1,800,000 0.135 9.9 - Exercised - - - - Forfeited/Cancelled (900,000 ) 0.135 9.9 - Expired - - - - Outstanding and expected to vest as of September 30, 2017 900,000 0.135 9.9 - |
Schedule of Restricted Stock Units Award Activity | A summary of the restricted stock units awarded to employees, directors and consultants under the 2017 Equity Plan as September 30, 2017 and changes during the period then ended, are presented in the table below: Number of Units Weighted Average Grant-Date Fair Value Unvested as of December 31, 2016 - $ - Granted 13,600,000 0.122 Vested (1,828,000 ) 0.132 Forfeited - - Unvested as of September 30, 2017 11,772,000 0.121 Expected to vest as of September 30, 2017 8,772,000 $ 0.123 |
Summary of Significant Accoun20
Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | |||||
Sep. 30, 2017 | Mar. 31, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | Jul. 31, 2014 | |
Net loss incurred | $ 1,478,478 | $ 668,506 | $ 3,552,587 | $ 2,118,419 | |||
Accumulated deficit | 17,888,799 | 17,888,799 | $ 14,336,212 | ||||
Convertible promissory notes principal amount | $ 537,000 | $ 510,000 | 537,000 | ||||
Cash proceeds from sale of stock and warrants | $ 2,685,000 | $ 2,685,000 | |||||
Antidilutive securities excluded from computation of earnings per share, amount | 19,143,050 | ||||||
Hydro Innovations, LLC [Member] | |||||||
Percentage of interest acquired | 100.00% |
Summary of Significant Accoun21
Summary of Significant Accounting Policies - Schedule of Financial Assets and Liabilities at Fair Value Measured (Details) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Derivative liability on warrants | $ 265,760 | $ 477,814 |
Financial Assets and Liabilities | 265,760 | 477,814 |
Fair Value, Inputs, Level 1 [Member] | ||
Derivative liability on warrants | ||
Financial Assets and Liabilities | ||
Fair Value, Inputs, Level 2 [Member] | ||
Derivative liability on warrants | ||
Financial Assets and Liabilities | ||
Fair Value, Inputs, Level 3 [Member] | ||
Derivative liability on warrants | 265,760 | 477,814 |
Financial Assets and Liabilities | $ 265,760 | $ 477,814 |
Convertible Promissory Notes (D
Convertible Promissory Notes (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended |
Mar. 31, 2017 | Sep. 30, 2017 | |
Convertible promissory notes principal amount | $ 510,000 | |
Accrued interest | $ 134,553 | |
Common shares issued pursuant to conversion of debt and accrued interest, net, shares | 5,001,554 | |
Convertible Notes Payable [Member] | ||
Convertible promissory notes principal amount | $ 270,000 | |
Accrued interest | 44,150 | |
Convertible promissory notes | $ 314,150 | |
Note Conversion Agreements [Member] | Minimum [Member] | ||
Conversion price per share | $ 0.09 | |
Note Conversion Agreements [Member] | Maximum [Member] | ||
Conversion price per share | 0.22 | |
Warrant Amendment Agreements [Member] | Minimum [Member] | ||
Exercise price of warrants | 0.30 | |
Warrant Amendment Agreements [Member] | Minimum [Member] | One Original Warrants [Member] | ||
Exercise price of warrants | 0.15 | |
Warrant Amendment Agreements [Member] | Maximum [Member] | ||
Exercise price of warrants | $ 0.35 |
Convertible Promissory Notes -
Convertible Promissory Notes - Schedule of Loss on Extinguishment of Notes Payable (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Mar. 31, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Carrying amount of debt unamortized debt discount | $ 37,500 | $ 37,500 | |||
Reacquisition price of debt fair value of shares of common stock issued | 39,000 | ||||
Reacquisition price of debt warrant modification value | (59,000) | ||||
Loss on extinguishment of debt | $ (228,428) | $ (643,428) | |||
Series 2 Notes [Member] | |||||
Carrying amount of debt principal converted | $ 510,000 | ||||
Carrying amount of debt accrued interest converted | 134,553 | ||||
Carrying amount of debt unamortized debt discount | (5,398) | ||||
Total carrying amount of debt | 639,155 | ||||
Reacquisition price of debt fair value of shares of common stock issued | 995,155 | ||||
Reacquisition price of debt warrant modification value | 59,000 | ||||
Total reacquisition price of debt | 1,054,155 | ||||
Loss on extinguishment of debt | $ (415,000) |
Promissory Notes (Details Narra
Promissory Notes (Details Narrative) - USD ($) | Feb. 09, 2017 | Sep. 30, 2017 | Sep. 30, 2017 | Sep. 30, 2016 | Nov. 09, 2017 | Aug. 08, 2017 | Aug. 07, 2017 |
Number of common stock shares issued for debt | 5,001,554 | ||||||
Interest rate on promissory note | 6.00% | ||||||
Proceeds from issuance of notes payable | $ 500,000 | ||||||
Issued discount | $ 37,500 | 37,500 | |||||
Promissory notes, fair value | 461,000 | 461,000 | |||||
Fair value of shares issued | 39,000 | ||||||
Amortization expenses | 11,000 | 50,000 | |||||
Consideration paid | $ 1,205,856 | $ 889,084 | |||||
Common Stock [Member] | |||||||
Number of common stock shares issued for debt | 10,601,554 | ||||||
Promissory Notes [Member] | |||||||
Issued discount | $ 25,832 | $ 25,832 | |||||
Promissory notes, fair value | $ 268,750 | ||||||
Fair value of shares issued | $ 756,000 | ||||||
Number of shares issued for note conversion | 2,800,000 | ||||||
Debt conversion price per share | $ 0.096 | $ 0.096 | $ .135 | ||||
Consideration paid | $ 16,900 | ||||||
Promissory Notes [Member] | Common Stock [Member] | |||||||
Number of shares issued for note conversion | 5,600,000 | ||||||
Maximum [Member] | |||||||
Interest rate on promissory note | 18.00% | 18.00% | |||||
Two Accredited Investors [Member] | |||||||
Convertible promissory notes | $ 537,500 | ||||||
Number of common stock shares issued for debt | 250,000 | ||||||
Accredited Investors 1 [Member] | |||||||
Number of common stock shares issued for debt | 125,000 | ||||||
Accredited Investors 2 [Member] | |||||||
Number of common stock shares issued for debt | 125,000 |
Promissory Notes - Schedule of
Promissory Notes - Schedule of Loss On Extinguishment of Promissory Notes Payable (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Carrying amount of debt unamortized debt discount | $ (37,500) | $ (37,500) | ||
Reacquisition price of debt fair value of shares of common stock issued | 39,000 | |||
Loss on extinguishment of debt | (228,428) | (643,428) | ||
Promissory Notes [Member] | ||||
Carrying amount of debt principal converted | 537,500 | 537,500 | ||
Carrying amount of debt accrued interest converted | 15,904 | 15,904 | ||
Carrying amount of debt unamortized debt discount | (25,832) | (25,832) | ||
Total carrying amount of debt | $ 527,572 | 527,572 | ||
Reacquisition price of debt fair value of shares of common stock issued | 756,000 | |||
Loss on extinguishment of debt | $ (228,428) |
Commitments and Contingencies26
Commitments and Contingencies (Details Narrative) - USD ($) | Jun. 27, 2017 | Mar. 31, 2017 | Sep. 30, 2017 | Jul. 31, 2017 |
Stock option exercise for payment | 3,000,000 | |||
Common stock, exercise price | $ 0.00024 | |||
Lease expiration date | Mar. 31, 2017 | |||
Lease security deposit | $ 51,000 | |||
Leasehold improvements received | $ 100,000 | |||
Internal Revenue Service Penalties [Member] | ||||
Internal revenue service, penalties | $ 115,000 | |||
New Building Lease [Member] | ||||
Lease expiration date | Aug. 31, 2022 | |||
Lease commenced date | Sep. 29, 2017 | |||
Lease payment | $ 12,967 | |||
New Building Lease [Member] | August 31, 2018 [Member] | ||||
Lease monthly rental value | $ 18,979 | |||
New Building Lease [Member] | September 1, 2018 [Member] | ||||
Rate of monthly rent increase | 3.00% |
Commitments and Contingencies -
Commitments and Contingencies - Schedule of Future Minimum Lease Payments (Details) | Sep. 30, 2017USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2,017 | $ 38,901 |
2,018 | 230,026 |
2,019 | 236,926 |
2,020 | 244,034 |
2,021 | 251,355 |
Later years | 170,888 |
Total future minimum lease payments | $ 1,172,130 |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - USD ($) | Aug. 17, 2017 | Aug. 09, 2017 | Aug. 08, 2017 | May 10, 2017 | Sep. 30, 2017 | Sep. 30, 2017 | Sep. 30, 2016 |
Payments to related party | $ 47,707 | $ 111,009 | |||||
Percentage of annual fee in cash | 50.00% | ||||||
Percentage of annual fee in shares | 50.00% | ||||||
Independent Directors [Member] | |||||||
Annual consulting fees | $ 60,000 | ||||||
Independent Director [Member] | |||||||
Annual consulting fees | 15,000 | ||||||
Audit Committee Chairman [Member] | |||||||
Annual consulting fees | 15,000 | ||||||
Chief Executive Officer [Member] | |||||||
Received annual base salary | $ 180,000 | ||||||
Received bonus shares | 1,000,000 | ||||||
Restricted stock units shares | 3,000,000 | ||||||
Stock option shares purchase | 900,000 | ||||||
Number of common shares issued for services rendered | 600,000 | ||||||
Chief Executive Officer [Member] | Achieves 2018 [Member] | |||||||
Revenue-thresholds-performance based shares | $ 18,000,000 | ||||||
Chief Executive Officer [Member] | Achieves 2019 [Member] | |||||||
Revenue-thresholds-performance based shares | $ 25,000,000 | ||||||
Chief Executive Officer [Member] | March 31, 2019 [Member] | |||||||
Restricted stock units shares | 1,500,000 | ||||||
Chief Executive Officer [Member] | March 31, 2020 [Member] | |||||||
Restricted stock units shares | 1,500,000 | ||||||
Previous Chief Executive Officer [Member] | |||||||
Restricted stock units shares | 9,000,000 | ||||||
Previous Chief Executive Officer [Member] | January 2018 [Member] | |||||||
Restricted stock units shares | 750,000 | ||||||
Sterling Facility [Member] | |||||||
Deposit on additional equipment | $ 78,310 | ||||||
Payments of additional equipment | 23,520 | ||||||
Consulting Agreement [Member] | Stephen Keen [Member] | |||||||
Agreement term | 3 years | ||||||
Annual consulting fees | $ 30,000 | ||||||
Payments to related party | $ 7,500 | $ 12,500 | |||||
Sterling Pharms Equipment Agreement [Member] | Sterling Facility [Member] | |||||||
Quarterly fee | $ 12,000 | ||||||
Sterling Pharms Equipment Agreement [Member] | Sterling Pharms, LLC [Member] | |||||||
Agreement term | 3 years | ||||||
Quarterly fee | $ 16,500 |
Shareholders' Equity (Details N
Shareholders' Equity (Details Narrative) | Sep. 06, 2017USD ($)shares | Sep. 02, 2017shares | Aug. 17, 2017Numbershares | Aug. 09, 2017USD ($)shares | Aug. 08, 2017USD ($)$ / sharesshares | Aug. 04, 2017shares | Aug. 02, 2017shares | Jul. 07, 2017shares | Jun. 18, 2017USD ($)$ / sharesshares | May 31, 2017USD ($)$ / sharesshares | Mar. 14, 2017USD ($)shares | Mar. 31, 2017USD ($)$ / sharesshares | Sep. 30, 2017USD ($)$ / sharesshares | Mar. 31, 2017USD ($)$ / sharesshares | Sep. 30, 2016USD ($) | Sep. 30, 2017USD ($)$ / sharesshares | Sep. 30, 2016USD ($) | Dec. 31, 2016$ / sharesshares |
Share based compensation expense | $ | $ 1,270,933 | $ 4,028 | ||||||||||||||||
Number of common shares issued, value | $ | $ 2,685,000 | |||||||||||||||||
Number of restricted common stock issued | ||||||||||||||||||
Common shares issued for services rendered, value | $ | $ 398,775 | |||||||||||||||||
Revenue | $ | $ 1,566,256 | $ 1,170,760 | 4,901,241 | $ 5,560,837 | ||||||||||||||
Restricted Stock [Member] | ||||||||||||||||||
Share based compensation expense | $ | 1,270,933 | |||||||||||||||||
Number of common shares issued, value | $ | ||||||||||||||||||
Number of restricted common stock issued | ||||||||||||||||||
Common shares issued for services rendered, value | $ | $ 398,775 | |||||||||||||||||
Unvested restricted stock units | 11,772,000 | |||||||||||||||||
Unvested restricted stock units on performance-based | 3,000,000 | |||||||||||||||||
2014 Stock Ownership Plan [Member] | ||||||||||||||||||
Number of warrants issued to purchase shares of common stock | 6,177,600 | |||||||||||||||||
Common stock purchase price per share | $ / shares | $ 0.00024 | |||||||||||||||||
2017 Equity Incentive Plan [Member] | ||||||||||||||||||
Number of common shares issued | 50,000,000 | |||||||||||||||||
Share based compensation expense | $ | $ 1,304,660 | |||||||||||||||||
Number of stock options to purchase shares of common stock | 3,045,000 | |||||||||||||||||
Debt instrument term | 2 years 2 months 30 days | |||||||||||||||||
2017 Plan [Member] | ||||||||||||||||||
Number of stock options to purchase shares of common stock | 12,295,000 | |||||||||||||||||
Stock options to purchase shares on performance-based | 9,250,000 | |||||||||||||||||
2017 Plan [Member] | Minimum [Member] | ||||||||||||||||||
Volatility rate | 117.13% | |||||||||||||||||
Risk-free interest rate | 1.71% | |||||||||||||||||
Expected term | 5 years | |||||||||||||||||
2017 Plan [Member] | Maximum [Member] | ||||||||||||||||||
Volatility rate | 120.60% | |||||||||||||||||
Risk-free interest rate | 2.07% | |||||||||||||||||
Expected term | 7 years 6 months | |||||||||||||||||
2017 Plan [Member] | Restricted Stock [Member] | ||||||||||||||||||
Number of share awards vested in period | 1,200,000 | |||||||||||||||||
Fair value of vesting shares | $ | $ 134,280 | |||||||||||||||||
2017 Plan [Member] | Restricted Stock One [Member] | ||||||||||||||||||
Number of share awards vested in period | 111,113 | |||||||||||||||||
Fair value of vesting shares | $ | $ 15,000 | |||||||||||||||||
Directors consultant fees | $ | $ 15,000 | |||||||||||||||||
2017 Plan [Member] | Restricted Stock Two [Member] | ||||||||||||||||||
Number of share awards vested in period | 260,778 | |||||||||||||||||
Fair value of vesting shares | $ | $ 35,000 | |||||||||||||||||
Directors consultant fees | $ | $ 15,000 | |||||||||||||||||
2017 Plan [Member] | Non-Qualified Stock Options [Member] | ||||||||||||||||||
Number of stock options to purchase shares of common stock | 1,800,000 | 12,355,000 | ||||||||||||||||
Number of restricted stock units granted | 900,000 | |||||||||||||||||
Options exercise period | 10 years | |||||||||||||||||
Options vesting percentage on date of grant | These options vest 50% on date of grant and the remaining 50% on March 1, 2018 | |||||||||||||||||
2017 Plan [Member] | Non-Qualified Stock Options One [Member] | ||||||||||||||||||
Common stock purchase price per share | $ / shares | $ 0.135 | $ 0.135 | ||||||||||||||||
Number of stock options to purchase shares of common stock | 1,805,000 | |||||||||||||||||
Options vesting period | 2 years 9 months | |||||||||||||||||
Stock options to purchase shares have expired | 60,000 | |||||||||||||||||
2017 Plan [Member] | Non-Qualified Stock Options Two [Member] | ||||||||||||||||||
Common stock purchase price per share | $ / shares | 0.121 | $ 0.121 | ||||||||||||||||
Number of stock options to purchase shares of common stock | 1,300,000 | |||||||||||||||||
2017 Plan [Member] | Non-Qualified Stock Options Three [Member] | ||||||||||||||||||
Common stock purchase price per share | $ / shares | 0.135 | $ 0.135 | ||||||||||||||||
Number of stock options to purchase shares of common stock | 1,200,000 | |||||||||||||||||
2017 Plan [Member] | Non-Qualified Stock Options Three [Member] | 2017 [Member] | ||||||||||||||||||
Number of share awards vested in period | 400,000 | |||||||||||||||||
Revenue | $ | $ 8,000,000 | |||||||||||||||||
Amount of new bookings - thresholds - performance based shares | $ | $ 10,000,000 | |||||||||||||||||
2017 Plan [Member] | Non-Qualified Stock Options Three [Member] | 2018 [Member] | ||||||||||||||||||
Number of share awards vested in period | 400,000 | |||||||||||||||||
Revenue | $ | $ 18,000,000 | |||||||||||||||||
2017 Plan [Member] | Non-Qualified Stock Options Three [Member] | 2019 [Member] | ||||||||||||||||||
Number of share awards vested in period | 400,000 | |||||||||||||||||
Revenue | $ | $ 25,000,000 | |||||||||||||||||
2017 Plan [Member] | Non-Qualified Stock Options Four [Member] | ||||||||||||||||||
Common stock purchase price per share | $ / shares | 0.121 | $ 0.121 | ||||||||||||||||
Number of stock options to purchase shares of common stock | 4,050,000 | |||||||||||||||||
2017 Plan [Member] | Non-Qualified Stock Options Four [Member] | 2017 [Member] | ||||||||||||||||||
Number of share awards vested in period | 800,000 | |||||||||||||||||
Revenue | $ | $ 8,000,000 | |||||||||||||||||
Amount of new bookings - thresholds - performance based shares | $ | $ 10,000,000 | |||||||||||||||||
2017 Plan [Member] | Non-Qualified Stock Options Four [Member] | 2018 [Member] | ||||||||||||||||||
Number of share awards vested in period | 1,300,000 | |||||||||||||||||
Revenue | $ | $ 18,000,000 | |||||||||||||||||
2017 Plan [Member] | Non-Qualified Stock Options Four [Member] | 2019 [Member] | ||||||||||||||||||
Number of share awards vested in period | 1,950,000 | |||||||||||||||||
Revenue | $ | $ 25,000,000 | |||||||||||||||||
2017 Plan [Member] | Non-Qualified Stock Options Five [Member] | ||||||||||||||||||
Common stock purchase price per share | $ / shares | 0.112 | $ 0.112 | ||||||||||||||||
Number of stock options to purchase shares of common stock | 4,000,000 | |||||||||||||||||
2017 Plan [Member] | Non-Qualified Stock Options Five [Member] | 2017 [Member] | ||||||||||||||||||
Number of share awards vested in period | 750,000 | |||||||||||||||||
Revenue | $ | $ 8,000,000 | |||||||||||||||||
Amount of new bookings - thresholds - performance based shares | $ | $ 10,000,000 | |||||||||||||||||
2017 Plan [Member] | Non-Qualified Stock Options Five [Member] | 2018 [Member] | ||||||||||||||||||
Number of share awards vested in period | 1,250,000 | |||||||||||||||||
Revenue | $ | $ 18,000,000 | |||||||||||||||||
2017 Plan [Member] | Non-Qualified Stock Options Five [Member] | 2019 [Member] | ||||||||||||||||||
Number of share awards vested in period | 2,000,000 | |||||||||||||||||
Revenue | $ | $ 25,000,000 | |||||||||||||||||
Chairman of Board [Member] | ||||||||||||||||||
Share based compensation expense | $ | $ 122,000 | |||||||||||||||||
Chairman of Board [Member] | Retention Shares [Member] | ||||||||||||||||||
Number of restricted common stock issued | 700,000 | |||||||||||||||||
Chief Executive Officer [Member] | ||||||||||||||||||
Number of restricted common stock issued | ||||||||||||||||||
Number of stock options to purchase shares of common stock | 900,000 | |||||||||||||||||
Number of common shares issued for services rendered | 600,000 | |||||||||||||||||
Chief Executive Officer [Member] | 2018 [Member] | ||||||||||||||||||
Number of restricted common stock issued | 1,500,000 | |||||||||||||||||
Revenue - thresholds - performance based shares | $ | $ 18,000,000 | |||||||||||||||||
Chief Executive Officer [Member] | 2019 [Member] | ||||||||||||||||||
Number of restricted common stock issued | 1,500,000 | |||||||||||||||||
Revenue - thresholds - performance based shares | $ | $ 25,000,000 | |||||||||||||||||
Chief Executive Officer [Member] | 2017 Plan [Member] | Restricted Stock [Member] | ||||||||||||||||||
Number of common shares issued for services rendered | 600,000 | |||||||||||||||||
Common shares issued for services rendered, value | $ | $ 84,000 | |||||||||||||||||
Director [Member] | 2017 Plan [Member] | Non-Qualified Stock Options [Member] | ||||||||||||||||||
Stock option weighted average exercise price | $ / shares | $ 0.135 | |||||||||||||||||
Employee [Member] | ||||||||||||||||||
Stock option weighted average exercise price | $ / shares | $ 0.121 | $ 0.121 | ||||||||||||||||
Number of restricted common stock issued | 700,000 | 12,700,000 | ||||||||||||||||
Number of restricted stock units granted | 12,355,000 | |||||||||||||||||
Employee [Member] | 2017 Plan [Member] | Non-Qualified Stock Options One [Member] | 2017 [Member] | ||||||||||||||||||
Number of share awards vested in period | 661,672 | |||||||||||||||||
Options exercise period | 10 years | |||||||||||||||||
Employee [Member] | 2017 Plan [Member] | Non-Qualified Stock Options One [Member] | 2018 [Member] | ||||||||||||||||||
Number of share awards vested in period | 571,665 | |||||||||||||||||
Options exercise period | 10 years | |||||||||||||||||
Employee [Member] | 2017 Plan [Member] | Non-Qualified Stock Options One [Member] | 2019 [Member] | ||||||||||||||||||
Number of share awards vested in period | 571,663 | |||||||||||||||||
Options exercise period | 10 years | |||||||||||||||||
Employees and Directors [Member] | ||||||||||||||||||
Share based compensation expense | $ | $ 303,000 | $ 371,000 | ||||||||||||||||
Previous CEO [Member] | ||||||||||||||||||
Number of restricted common stock issued | 9,000,000 | |||||||||||||||||
Number of installments | Number | 12 | |||||||||||||||||
Per unit installment of restricted stock | 750,000 | |||||||||||||||||
Employees, Directors and Consultants [Member] | ||||||||||||||||||
Share based compensation expense | $ | $ 214,000 | $ 239,000 | ||||||||||||||||
Number of restricted stock units granted | 13,600,000 | |||||||||||||||||
Number of share awards vested in period | (1,828,000) | |||||||||||||||||
Warrant One [Member] | ||||||||||||||||||
Number of warrants issued to purchase shares of common stock | 900,000 | |||||||||||||||||
Warrant exercise price | $ / shares | $ 0.114 | |||||||||||||||||
Warrant Two [Member] | ||||||||||||||||||
Number of warrants issued to purchase shares of common stock | 460,525 | |||||||||||||||||
Warrant exercise price | $ / shares | $ 0.0005 | |||||||||||||||||
Warrant Three [Member] | ||||||||||||||||||
Number of warrants issued to purchase shares of common stock | 460,525 | |||||||||||||||||
Warrant exercise price | $ / shares | $ 0.0005 | |||||||||||||||||
Warrant [Member] | ||||||||||||||||||
Share based compensation expense | $ | $ 207,000 | |||||||||||||||||
Warrant term | 5 years | |||||||||||||||||
Volatility rate | 119.96% | |||||||||||||||||
Dividend rate | 0.00% | |||||||||||||||||
Risk-free interest rate | 1.77% | |||||||||||||||||
Banker Warrant [Member] | ||||||||||||||||||
Number of warrants issued to purchase shares of common stock | 500,000 | |||||||||||||||||
Warrant exercise price | $ / shares | $ 0.35 | |||||||||||||||||
Share based compensation expense | $ | $ 55,000 | |||||||||||||||||
Warrant term | 3 years | |||||||||||||||||
Volatility rate | 120.02% | |||||||||||||||||
Dividend rate | 0.00% | |||||||||||||||||
Risk-free interest rate | 1.52% | |||||||||||||||||
Stock Options [Member] | Chief Executive Officer [Member] | 2014 Stock Ownership Plan [Member] | ||||||||||||||||||
Common stock purchase price per share | $ / shares | $ 0.00024 | $ 0.00024 | ||||||||||||||||
Number of stock options to purchase shares of common stock | 3,088,800 | |||||||||||||||||
Number of restricted stock units granted | 3,000,000 | |||||||||||||||||
Cancelled Options [Member] | ||||||||||||||||||
Share based compensation expense | $ | $ 68,000 | |||||||||||||||||
Employee [Member] | ||||||||||||||||||
Number of common shares issued | 40,000 | |||||||||||||||||
Number of common shares issued, value | $ | $ 9,000 | |||||||||||||||||
Securities Purchase Agreement [Member] | Investors [Member] | ||||||||||||||||||
Number of common shares issued | 16,781,250 | |||||||||||||||||
Cash proceeds from sale of stock and warrants | $ | $ 2,685,000 | |||||||||||||||||
Number of warrants declined | 468,750 | |||||||||||||||||
Warrant exercise price | $ / shares | $ 0.26 | $ 0.26 | ||||||||||||||||
Stock option weighted average exercise price | $ / shares | 0.42 | 0.42 | ||||||||||||||||
Warrant redemption price | $ / shares | $ 0.01 | $ 0.01 | ||||||||||||||||
Consulting Agreement [Member] | ||||||||||||||||||
Share based compensation expense | $ | $ 17,000 | $ 21,000 | ||||||||||||||||
Number of restricted common stock issued | 66,666 | 700,000 | 66,667 | 66,667 | ||||||||||||||
Consulting Agreement [Member] | October 3, 2017 [Member] | ||||||||||||||||||
Number of restricted common stock issued | 200,000 |
Shareholders' Equity - Schedule
Shareholders' Equity - Schedule of Equity Based Compensation Expense (Details) - USD ($) | 3 Months Ended | 9 Months Ended |
Sep. 30, 2017 | Sep. 30, 2017 | |
Total equity-based compensation expense included in consolidated statement of operations | $ 626,154 | $ 925,859 |
Cost of Revenue [Member] | ||
Total equity-based compensation expense included in consolidated statement of operations | 38,104 | 38,104 |
Advertising and Marketing Expenses [Member] | ||
Total equity-based compensation expense included in consolidated statement of operations | 7,259 | 7,259 |
Product Development Costs [Member] | ||
Total equity-based compensation expense included in consolidated statement of operations | 2,640 | 2,640 |
Selling, General and Administrative Expenses [Member] | ||
Total equity-based compensation expense included in consolidated statement of operations | $ 578,151 | $ 877,856 |
Shareholders' Equity - Schedu31
Shareholders' Equity - Schedule of Stock Option Activity (Details) - USD ($) | 3 Months Ended | 9 Months Ended |
Mar. 31, 2017 | Sep. 30, 2017 | |
Number of Options, Exercised | 3,000,000 | |
Weighted Average Exercise Price, Granted | $ 0.00024 | |
Employee [Member] | ||
Number of Options, Outstanding Beginning | ||
Number of Options, Granted | 12,355,000 | |
Number of Options, Exercised | ||
Number of Options, Forfeited/Canceled | ||
Number of Options, Expired | (60,000) | |
Number of Options, Outstanding Ending | 12,295,000 | |
Number of Options, Exercisable | 3,045,000 | |
Weighted Average Exercise Price, Beginning | ||
Weighted Average Exercise Price, Granted | 0.121 | |
Weighted Average Exercise Price, Exercised | ||
Weighted Average Exercise Price, Forfeited/Canceled | ||
Weighted Average Exercise Price, Expired | 0.135 | |
Weighted Average Exercise Price, Ending | 0.121 | |
Weighted Average Exercise Price, Exercisable | $ 0.129 | |
Weighted Average Remaining Contractual Term, Beginning | 0 years | |
Weighted Average Remaining Contractual Term, Granted | 9 years 10 months 25 days | |
Weighted Average Remaining Contractual Term, Forfeited/Canceled | 0 years | |
Weighted Average Remaining Contractual Term, Expired | 9 years 10 months 25 days | |
Weighted Average Remaining Contractual Term, Ending | 9 years 10 months 25 days | |
Weighted Average Remaining Contractual Term, Exercisable | 9 years 10 months 25 days | |
Aggregate Intrinsic Value, Beginning | ||
Aggregate Intrinsic Value, Ending | ||
Aggregate Intrinsic Value, Exercisable | ||
Directors [Member] | ||
Number of Options, Outstanding Beginning | ||
Number of Options, Granted | 1,800,000 | |
Number of Options, Exercised | ||
Number of Options, Forfeited/Canceled | (900,000) | |
Number of Options, Expired | ||
Number of Options, Outstanding Ending | 900,000 | |
Number of Options, Exercisable | 900,000 | |
Weighted Average Exercise Price, Beginning | ||
Weighted Average Exercise Price, Granted | 0.135 | |
Weighted Average Exercise Price, Exercised | ||
Weighted Average Exercise Price, Forfeited/Canceled | 0.135 | |
Weighted Average Exercise Price, Expired | ||
Weighted Average Exercise Price, Ending | 0.135 | |
Weighted Average Exercise Price, Exercisable | $ 0.135 | |
Weighted Average Remaining Contractual Term, Beginning | 0 years | |
Weighted Average Remaining Contractual Term, Granted | 9 years 10 months 25 days | |
Weighted Average Remaining Contractual Term, Forfeited/Canceled | 9 years 10 months 25 days | |
Weighted Average Remaining Contractual Term, Expired | 0 years | |
Weighted Average Remaining Contractual Term, Ending | 9 years 10 months 25 days | |
Weighted Average Remaining Contractual Term, Exercisable | 9 years 10 months 25 days | |
Aggregate Intrinsic Value, Beginning | ||
Aggregate Intrinsic Value, Ending | ||
Aggregate Intrinsic Value, Exercisable |
Shareholders' Equity - Schedu32
Shareholders' Equity - Schedule of Restricted Stock Units Award Activity (Details) - Employees, Directors and Consultants [Member] | 9 Months Ended |
Sep. 30, 2017$ / sharesshares | |
Number of Units Unvested, beginning | shares | |
Number of Units, Granted | shares | 13,600,000 |
Number of Units, Vested | shares | (1,828,000) |
Number of Units, Forfeited | shares | |
Number of Units, Unvested, ending | shares | 11,772,000 |
Number of Units, Expected to Vest | shares | 8,772,000 |
Weighted Average Grant Date Fair Value, beginning | $ / shares | |
Weighted Average Grant Date Fair Value, Granted | $ / shares | 0.122 |
Weighted Average Grant Date Fair Value, Vested | $ / shares | 0.132 |
Weighted Average Grant Date Fair Value, Forfeited | $ / shares | |
Weighted Average Grant Date Fair Value, ending | $ / shares | 0.121 |
Weighted Average Grant Date Fair Value, Expected to Vest | $ / shares | $ 0.123 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - USD ($) | Nov. 07, 2017 | Oct. 10, 2017 | Aug. 17, 2017 | Oct. 31, 2017 | Sep. 30, 2017 | Sep. 30, 2017 | Sep. 30, 2017 | Dec. 31, 2016 |
Number of restricted common stock issued for equity retention payment | ||||||||
2017 Plan [Member] | ||||||||
Number of option to purchase shares of common stock | 12,295,000 | |||||||
Employee [Member] | ||||||||
Number of restricted common stock issued for equity retention payment | 700,000 | 12,700,000 | ||||||
Stock options exercise price per share | $ 0.121 | $ 0.121 | $ 0.121 | |||||
Subsequent Event [Member] | ||||||||
Number of common stock shares issued | 1,400,000 | |||||||
Settled by issuance of shares | 200,000 | |||||||
Subsequent Event [Member] | Employment Agreement [Member] | ||||||||
Annualized base salary | $ 150,000 | |||||||
Sales incentive equal, percentage | 0.25% | |||||||
Subsequent Event [Member] | Employee [Member] | ||||||||
Number of restricted common stock issued for equity retention payment | 1,200,000 | |||||||
Subsequent Event [Member] | Employee [Member] | 2017 Plan [Member] | ||||||||
Number of restricted common stock issued for equity retention payment | 200,000 | |||||||
Subsequent Event [Member] | Employee [Member] | Non-Qualified Stock Options [Member] | 2017 Plan [Member] | ||||||||
Number of restricted common stock issued for equity retention payment | 200,000 | |||||||
Number of option to purchase shares of common stock | 175,000 | |||||||
Stock options exercise price per share | $ 0.105 | |||||||
Options vesting period | 2 years 9 months | |||||||
Subsequent Event [Member] | Consultant [Member] | ||||||||
Number of restricted common stock issued for equity retention payment | 200,000 | |||||||
Subsequent Event [Member] | Consultant [Member] | 2017 Plan [Member] | ||||||||
Number of share awards vested in period | 143,707 | |||||||
Lieu of cash fees earned | $ 20,500 | $ 20,500 | ||||||
Subsequent Event [Member] | Independent Director [Member] | 2017 Plan [Member] | ||||||||
Number of share awards vested in period | 104,896 | |||||||
Lieu of cash fees earned | $ 15,000 |