Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2015 | Nov. 09, 2015 | |
Document And Entity Information | ||
Entity Registrant Name | Sanomedics, Inc. | |
Entity Central Index Key | 1,501,972 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2015 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Is Entity a Well-known Seasoned Issuer? | No | |
Is Entity a Voluntary Filer? | No | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 8,345,232 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2,015 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 |
Current Assets | ||
Cash | $ 21,166 | $ 210,138 |
Accounts receivable, net | 8,502 | 241,967 |
Inventories | 21,216 | 22,472 |
Prepaid expenses | 3,599 | 338,990 |
Total Current Assets | 54,483 | 813,567 |
Fixed assets, net | 19,726 | 20,040 |
Patents, net | 5,836 | 11,836 |
Deposit | 7,999 | 7,999 |
Total Assets | 88,044 | 853,442 |
Current Liabilities | ||
Accrued salaries payable | 48,957 | 255,075 |
Accounts payable and other liabilities | 626,784 | 477,133 |
Accrued interest payable | 365,902 | 136,989 |
Accrual for contingencies on contract rescission | 123,204 | $ 165,702 |
Current portion of notes payable - related parties, net of debt discount | 582,705 | |
Convertible notes payable, net of debt discount | 1,737,786 | $ 1,633,047 |
Derivative liabilities | 3,393,318 | 2,771,414 |
Due to related parties | 56,132 | 24,882 |
Total Current Liabilities | 6,934,788 | 5,464,242 |
Convertible notes payable - related parties, net of discount, net of current portion | 66,461 | 442,919 |
Total Liabilities | $ 7,001,249 | $ 5,907,161 |
Commitments and Contingencies (Note 7) | ||
Stockholders' Deficit | ||
Preferred stock, $0.001 par value: 1,000 shares authorized, issued and outstanding as of September 30, 2015 and December 31, 2014 , respectively | $ 1 | $ 1 |
Common stock, $0.001 par value: 10,000,000,000 shares authorized, 81,508 and 437 shares issued and outstanding as of September 30, 2015 and December 31, 2014 , respectively | 82 | |
Additional paid in capital | $ 16,995,159 | $ 15,205,915 |
Stock subscription receivable | (20,000) | |
Accumulated deficit | $ (23,908,447) | (20,239,635) |
Total Stockholders' Deficit | (6,913,205) | (5,053,719) |
Total Liabilities and Stockholders' Deficit | $ 88,044 | $ 853,442 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2015 | Dec. 31, 2014 |
Stockholders' Deficit | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 1,000 | 1,000 |
Preferred stock, shares issued | 1,000 | 1,000 |
Preferred stock, shares outstanding | 1,000 | 1,000 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 10,000,000,000 | 10,000,000,000 |
Common stock, shares issued | 81,508 | 437 |
Common stock, shares outstanding | 81,508 | 437 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Condensed Consolidated Statements Of Operations | ||||
Revenues, net | $ 91,543 | $ 83,181 | $ 414,866 | $ 281,002 |
Cost of goods sold | 14,028 | 12,703 | 64,464 | 42,928 |
Gross profit | 77,515 | 70,478 | 350,402 | 238,074 |
Operating expenses | ||||
General and administrative | $ 316,337 | $ 1,056,379 | $ 1,414,445 | 2,667,995 |
Research and development | 43,703 | |||
Depreciation and amortization | $ 10,750 | $ 3,144 | $ 12,118 | 5,697 |
Total operating expenses | 327,087 | 1,059,523 | 1,426,563 | 2,717,395 |
Loss from operations | (249,572) | (989,045) | (1,076,161) | (2,479,321) |
Other income (expense) | ||||
Amortization of debt discount | (195,124) | (579,962) | (828,812) | (1,415,839) |
Change in fair value of derivative liabilities | (1,354,113) | $ (135,210) | (962,663) | $ (928,777) |
Loss on extinguishment of debt | (182,108) | (694,496) | ||
Interest expense | (62,424) | $ (288,690) | (220,057) | $ (460,457) |
Other income | 8,434 | 227,030 | ||
Total other expense | (1,785,335) | $ (1,003,862) | (2,478,997) | $ (2,805,073) |
Net loss from continuing operations before income taxes | $ (2,034,907) | $ (1,992,907) | $ (3,555,158) | $ (5,284,394) |
Income taxes | ||||
Net loss from continuing operations | $ (2,034,907) | $ (1,992,907) | $ (3,555,158) | $ (5,284,394) |
Discontinued operations | ||||
Loss from discontinued operations, net of taxes | (10,768) | (40,797) | ||
Loss on disposal of discontinued operations, net of taxes | (72,857) | (72,857) | ||
Net loss from discontinued operations, net of taxes | (83,625) | (113,654) | ||
Net loss | $ (2,118,532) | $ (1,992,907) | $ (3,668,812) | $ (5,284,394) |
Net loss per share - basic and diluted: | ||||
Net loss from continuing operations | $ (47.45) | $ (939.31) | $ (62.77) | $ (1,562.41) |
Loss from discontinued operations, net of taxes | (2.01) | |||
Net loss per share - basic and diluted | $ (0.01) | $ (939.31) | $ (64.78) | $ (1,562.41) |
Weighted average number of shares outstanding during the period - basic and diluted | 42,883 | 2,122 | 56,639 | 3,382 |
Condensed Consolidated Stateme5
Condensed Consolidated Statement of Changes in Stockholders' Deficit (Unaudited) - 9 months ended Sep. 30, 2015 - USD ($) | Preferred Stock | Common Stock, $.001 Par Value | Additional Paid-In Capital | Stock Subscription Receivable | Accumulated Deficit | Total |
Beginning Balance, Shares at Dec. 31, 2014 | 1,000 | 437 | ||||
Beginning Balance, Amount at Dec. 31, 2014 | $ 1 | $ 15,205,915 | $ (20,000) | $ (20,239,635) | $ (5,053,719) | |
Stock issued to consultants, Shares | 28 | |||||
Stock issued to consultants, Amount | 16,968 | 16,968 | ||||
Conversion of debt to common stock, Shares | 81,042 | |||||
Conversion of debt to common stock, Amount | $ 82 | 1,251,111 | 1,251,193 | |||
Reclassification of fair value of derivative liabilities from debt conversion | 541,165 | $ 541,165 | ||||
Write-off for unpaid stock subsription | $ (20,000) | $ 20,000 | ||||
Share adjustment from round-up of reverse split, Shares | 1 | |||||
Share adjustment from round-up of reverse split, Amount | ||||||
Net loss for the period | $ (3,668,812) | $ (3,668,812) | ||||
Ending Balance, Shares at Sep. 30, 2015 | 1,000 | 81,508 | ||||
Ending Balance, Amount at Sep. 30, 2015 | $ 1 | $ 82 | $ 16,995,159 | $ (23,908,447) | $ (6,913,205) |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net loss | $ (3,668,812) | $ (5,284,394) |
Loss from discontinued operations and disposal, net of taxes | (113,654) | |
Net loss from continuing operations | (3,555,158) | $ (5,284,394) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 12,119 | $ 5,697 |
Provision for sales returns and allowances | (11,000) | |
Stock compensation | 16,968 | $ 726,071 |
Amortization of debt discount on convertible notes | 828,812 | $ 1,415,839 |
Loss on extinguishment of debt | 694,496 | |
Amortization of prepaid expenses | 324,444 | |
Change in fair value of derivative liabilities | $ 962,663 | $ 928,777 |
Refinancing costs for revolving line of credit | 474,131 | |
Changes in operating assets and liabilities | ||
Accounts receivable | $ 244,465 | (11,561) |
Inventories | 1,256 | 29,876 |
Prepaid expenses | 10,947 | $ 157,697 |
Accrued salaries payable | (206,117) | |
Accounts payable and other liabilities | 149,652 | $ 270,168 |
Accrued interest payable | 228,913 | 136,620 |
Accrual for contingencies on contract rescission | (42,498) | (334,331) |
Due to related parties | (13,476) | (134,437) |
Net Cash Used In Operating Activities | (353,515) | (1,619,847) |
CASH FLOWS USED FROM INVESTING ACTIVITIES | ||
Purchase of fixed assets | (5,804) | (12,768) |
Net Cash Used In Investing Activities | (5,804) | (12,768) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Proceeds from notes payable - related parties | 180,000 | $ 838,240 |
Repayment of notes payable - related parties | $ (45,000) | |
Proceeds from common stock subscription | $ 22,500 | |
Proceeds from revolving line of credit, net | 905,768 | |
Payoffs of convertible notes payable | (252,750) | |
Proceeds from convertible notes payable | $ 149,000 | 149,400 |
Net Cash Provided By Financing Activities | 284,000 | $ 1,663,158 |
CASH FLOWS FROM DISCONTINUED OPERATION: | ||
Cash flows from operating activities | (113,653) | |
Net Cash Used by Discontinued Operations | (113,653) | |
Net (decrease) increase in cash | (188,972) | $ 30,543 |
Cash - beginning of period | 210,138 | 9,560 |
Cash - end of period | $ 21,166 | $ 40,103 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | ||
Cash paid during the period for: Income taxes | ||
Cash paid during the period for: Interest | $ 93,418 | |
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||
Common stock issued for conversion of debt | $ 556,695 | 771,404 |
Accrued salaries payable converted to common stock | 211,365 | |
Borrowings under revolving line of credit to convertible notes | $ 541,165 | $ 1,404,899 |
ORGANIZATION AND BASIS OF PRESE
ORGANIZATION AND BASIS OF PRESENTATION | 9 Months Ended |
Sep. 30, 2015 | |
Notes to Financial Statements | |
NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION | Sanomedics, Inc. (referred to herein as "we", "us", "our" or the "Company") is a medical technology products and services holding company , formed in January 2009, which through its subsidiaries, designs, develops, markets and distributes non-invasive infrared thermometers principally for healthcare providers. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules and regulations of the United States Securities and Exchange Commission for interim financial information. Accordingly, they do not include all the information and footnotes necessary for a comprehensive presentation of financial position, results of operations, or cash flows. It is management's opinion, however, that all material adjustments (consisting of normal recurring adjustments) which are necessary for a fair financial statement presentation have been made. The results for the interim period are not necessarily indicative of the results to be expected for the full year. The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, which include Thermomedics, Inc., Biscayne Medical LLC now known as Zen Medical LLC ("Zen Medical")(commenced May 2015 and discontinued July 31, 2015), and Anovent, Inc. formed as an acquisition corporation with no activity to date. All significant inter-company accounts and transactions have been eliminated in consolidation. The unaudited interim financial statements should be read in conjunction with the Company's Annual Report on Form 10-K, which contains the audited consolidated financial statements and notes thereto, together with the Management's Discussion and Analysis, for the fiscal year ended December 31, 2014. Discontinued Operations: As of July 31, 2015, the Company decided to discontinue business activities related to electronic health records software management for the behavioral health industry under Zen Medical, as a result of cancellation of interest from the software provider and lack of funding. The proposed Letter of Interest for the proposed joint venture was thereby terminated and the remaining assets and liabilities as of July 31, 2015 were transferred to the business of the proposed software provider resulting in a loss on disposal. The business and operations of Zen Medical qualifies as discontinued operations under ASC 205-20 and accordingly, the Company has excluded results for this component from its continuing operations in the consolidated statements of operations for all periods presented. The following table shows the results of Zen Medical component included in the loss from discontinued operations: For the Three Months Ended September 30, For the Nine Months Ended September 30, 2015 2014 2015 2014 Revenues $ 6,500 $ - $ 13,000 $ - Operating Expenses: General and Administrative 17,268 - 53,797 - Loss from discontinued operations, net of income taxes $ (10,768 ) $ - $ (40,797 ) $ - The loss on disposal is reflected as follows: September 30, September 30, 2015 2014 Assets transferred: Cash and cash equivalents $ 62,995 $ - Accounts receivable 11,253 - Net assets from discontinued operations $ 74,248 $ - Less: Liabilities transferred: Accounts payable $ 1,391 $ - Net liabilities from discontinued operations $ 1,391 $ - Loss on disposal of discontinued operations, net of taxes $ 72,857 $ - |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2015 | |
Notes to Financial Statements | |
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Use of estimates includes the following: 1) valuation of intangible assets and derivative and equity instruments, 2) allowance for doubtful accounts, 3) estimated useful lives of property, equipment and intangible assets and, 4) estimates and valuations related to deferred tax assets. Inventories Inventories are stated at the lower of cost (on a first-in, first-out basis) or market value. The stated cost is comprised of finished goods of non-invasive thermometers. Reserves, if necessary, are recorded to reduce inventory to market value based on assumptions about consumer demand, current inventory levels and product life cycles for the various inventory items. These assumptions are evaluated quarterly and are based on the Company's business plan and from feedback from customers and the product development team. As of September 30, 2015 and December 31, 2014, inventory reserves were not material. Basic and Diluted Net Loss Per Share The Company computes net income (loss) per share in accordance with ASC Topic 260, Earning per Share Nine Months Ended September 30, 2015 2014 Options 2 2 Warrants 3 - Shares from convertible notes 4,007,450 1,375 Total (1) 4,007,455 1,377 _______________ (1) Shares issuable upon conversion of preferred stock have been excluded from this computation because of the specific right of conversion as further explained in Note 8. Fair Value FASB ASC 820, Fair Value Measurements and Disclosure Level 1 Level 2 Level 3 The carrying amounts of cash, accounts receivable, accrued salaries payable, accounts payable and other liabilities, and accrued interest payable approximate fair value because of the short-term nature of these items. The fair value of the Company's debt approximated the carrying value of the Company's debt as of September 30, 2015 and December 31, 2014. Factors that the Company considered when estimating the fair value of its debt included market conditions, liquidity levels in the private placement market, variability in pricing from multiple lenders and term of debt. Recent Accounting Pronouncements In June 2014, the FASB issued ASU 2014-12, " Compensation - Stock Compensation On February 18, 2015, the FASB issued ASU No. 2015-02, " Amendments to the Consolidation Analysis" ("ASU 2015-02"). In April 2015, the FASB issued ASU 2015-03, " Simplifying the Presentation of Debt Issuance Costs" ("ASU 2015-03"). On May 8, 2015, the FASB issued ASU 2015-08, " Business Combinations (Topic 805) Pushdown Accounting In July 2015, the FASB issued ASU 2015-11, " Simplifying the Measurement of Inventory |
LIQUIDITY AND GOING CONCERN
LIQUIDITY AND GOING CONCERN | 9 Months Ended |
Sep. 30, 2015 | |
Notes to Financial Statements | |
NOTE 3 - LIQUIDITY AND GOING CONCERN | The condensed consolidated financial statements have been prepared on a going concern basis, and do not reflect any adjustments related to the uncertainty surrounding the Company's recurring losses or accumulated deficit. The Company currently has a working capital deficiency, limited revenue and is experiencing recurring losses which have caused an accumulated deficit of $23,908,447 and a working capital deficit of $6,880,305 as of September 30, 2015. These factors raise substantial doubt about its ability to continue as a going concern. Management has financed the Company's operations principally through the issuance of convertible debt instruments and loans from an affiliate of an officer of the Company and a principal shareholder. During the quarter ended September 30, 2015, the Company obtained its liquidity principally from accounts receivable collections and $74,000 of new borrowing under convertible debt instruments as described elsewhere herein. On October 13, 2015 our Board of Directors and the holders of a majority of our outstanding voting securities approved the sale of Thermomedics to PositiveID Corporation, an unrelated third party (" Positive ID The ability of the Company to continue as a going concern is dependent upon continued financial commitments from related parties and its ability to secure other sources of financing in addition to those funds provided by its affiliate and or officers and attain profitable operations. The accompanying condensed consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. |
CONVERTIBLE NOTES PAYABLE _ REL
CONVERTIBLE NOTES PAYABLE – RELATED PARTIES | 9 Months Ended |
Sep. 30, 2015 | |
Notes to Financial Statements | |
NOTE 4 - CONVERTIBLE NOTES PAYABLE – RELATED PARTIES | Convertible notes payable to related parties, net of discounts consists of the following: September 30, 2015 December 31, 2014 Two Secured Convertible Promissory Notes CLSS Holdings, LLC, dated June 30, 2014. Notes accrue interest at 8 % per annum, due and payable on June 1, 2016, $ 258,411 $ 131,243 Secured convertible Promissory Note CLSS Holdings, LLC dated December 1, 2014. Note accrues interest at 8% per annum, due and payable November 30, 2017, net of discount of $176,039 and $235,856, at September 30, 2015 and December 31, 2014, respectively. 66,461 6,644 Convertible Promissory Note - Officer dated June 17, 2013. Note accrues interest at 9% per annum, due and payable on March 15, 2016, net of discount of $-0- and $48,306, at September 30, 2015 and December 31, 2014, respectively. 298,339 305,032 Convertible Promissory Note company owned by Officer dated June 25, 2015. 25,955 - Total Notes $ 649,166 $ 442,919 Less current portion (582,705 ) - $ 66,461 $ 442,919 The secured convertible promissory notes above are collateralized by substantially all the assets of the Company, and are convertible at the holder's option, into common shares of the Company at the lesser of (a) a fixed conversion price ranging from $125,000 to $250,000 per share or (b) at a conversion price of 50% discount to defined market prices. CLSS Holdings, LLC is wholly owned by a former officer of the Company and a principal shareholder. For the nine months ended September 30, 2015, in connection with the above notes the Company issued 37,601 shares for the conversion of $166,023 in convertible debt and accrued interest held and recognized a loss of $379,407 on the extinguishment of the aforementioned converted debt with a fair value of the common stock issued of $545,430. |
CONVERTIBLE NOTES PAYABLE
CONVERTIBLE NOTES PAYABLE | 9 Months Ended |
Sep. 30, 2015 | |
Notes to Financial Statements | |
NOTE 5 - CONVERTIBLE NOTES PAYABLE | Third party convertible notes payable consists of the following: September 30, 2015 December 31, 2014 Convertible promissory note with interest at 9% per annum, convertible into common shares at a fixed price of $0.50 per share. Matured on August 24, 2014, net of unamortized discount of $9,503 at September 30, 2015. The conversion feature has not exercised by the note holders as of September 30, 2015. ( C) $ 65,497 $ 65,497 Convertible promissory notes with interest at 8% per annum, convertible into common shares at a conversion price of 50% discount to defined market prices. Matured June 20, 2014.(A)(B)( C) 36,500 36,500 Convertible promissory note with interest at 12% per annum ( zero interest first 90 days) ,plus 10% original interest discount, convertible at a conversion price of 30% discount to defined market price . Matured December 9, 2014. (A) (C) (See Note 7) 57,598 57,598 Three (3) Convertible promissory notes with interest ranging from 5.25% to 12% per annum, convertible into common shares at a conversion price of 50% discount to defined market prices. Maturity ranging from October 22, 2014 through October 11, 2015, net of unamortized discount of $ 906 and $ 52,763, respectively. (A) 71,094 113,548 Two (2) Convertible promissory notes with interest at 8% per annum, convertible into common shares at a conversion price of 15% discount to defined market prices .Matures on August 1, 2015 and October 11, 2015, respectively, net of unamortized discount of $ -0- and $80,599, respectively. (A) 735,000 679,401 Nine (9) Convertible promissory notes with interest ranging from 12% to 13% per annum, convertible into common shares at a conversion prices of 31% and 37.50% discount to defined market prices. Matures on April 15, 2015 through May 27, 2016, respectively, net of unamortized discount of $56,968 and $287,936, respectively. (A)(B) 772,097 680,503 1,737,786 1,633,047 Less current portion (1,737,786 ) (1,633,047 $ -0- $ -0-- (A) The convertible promissory notes are generally convertible at a conversion price equal to the discount to the average of the lowest three closing bid prices of the common stock during the 10 trading days prior to conversion. The embedded conversion features resulted in a derivative liability which has been measured using the Monte Carlo valuation method at September 30, 2015 and December 31, 2014. (B) Two of promissory notes are generally convertible at a conversion price equal to the lowest traded stock price for 20 trading days prior to conversion. The embedded conversion features resulted in a derivative liability which has been measured using the Monte Carlo valuation method at September 30, 2015. (C) The Company is in default with regards to these notes, as the outstanding balances are past their maturity date for repayment. The Company is attempting to utilize on-going dialogue with the lenders to resolve their dispute and cure the default. For the nine months ended September 30, 2015, in connection with the above notes the Company issued 43,441 shares for the conversion of $390,672 in convertible debt and accrued interest held and recognized a loss of $315,088 on the extinguishment of the aforementioned converted debt with a fair value of the common stock issued of $705,761. In accordance with ASC 470-20 " Debt with Conversion and Other Options" |
DERIVATIVE LIABILITIES
DERIVATIVE LIABILITIES | 9 Months Ended |
Sep. 30, 2015 | |
Notes to Financial Statements | |
NOTE 6 - DERIVATIVE LIABILITIES | The Company analyzed the convertible notes payable related parties and convertible notes payable referred to in Notes 4 and 5 based on the provisions of ASC 815-15 and determined that the conversion options of the convertible notes qualify as embedded derivatives and required the recognition of derivative liabilities. For the derivative instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then revalued at each reporting date and any resulting gain or loss is recognized as a current period charge to the consolidated statements of operations. The Company estimates the fair value of the embedded derivatives using a Monte Carlo simulation valuation model that combines expected cash outflows with market-based assumptions regarding risk-adjusted yields, stock price volatility, probability of a change of control and the trading information of our common stock into which the notes are convertible, as appropriate to value the derivative instruments at inception and subsequent valuation dates and the value is reassessed at the end of each reporting period, in accordance with FASB ASC Topic 815-15. The aggregate fair value of derivative liabilities as of September 30, 2015 and December 31, 2014 amounted to $3,393,318 and $2,771,414, respectively. The assets or liability's fair value measurement within the fair value hierarchy is based upon the lowest level of any input that is significant to the fair value measurement. The following table provides a summary of the liabilities that are measured at fair value on a recurring basis. Consolidated Balance Sheet Quoted Prices in Active Markets for Identical Assets or Liabilities (Level 1) Quoted Prices for Similar Assets or Liabilities in Active Markets (Level 2) Significant Unobservable Inputs (Level 3) Derivative Liabilities: September 30, 2015 $ 3,393,318 $ - $ - $ 3,393,318 December 31, 2014 $ 2,771,414 $ - $ - $ 2,771,414 The following table sets forth a summary of the changes in the fair value of the Company's Level 3 financial liabilities that are measured at fair value on a recurring basis: Nine Months Ended Year Ended September 30, 2015 December 31, 2014 Beginning balance $ 2,771,414 $ 1,070,728 Aggregate fair value of conversion features upon issuance 200,406 5,665,527 Fair value of derivatives reclassified to equity (541,165 ) (4,689,838 ) Net transfer into level 3 - 425,010 (1) Fair value of warrants netted against common stock issued for stock - 111,166 Change in fair value of conversion features 962,663 723,137 Change in fair value of warrant and stock option derivative liabilities - (534,316 ) Ending balance $ 3,393,318 $ 2,771,414 _________________ (1) Represents transfers out of equity in connection with the respective warrant and stock option derivative liabilities as a result of insufficient authorized shares available at December 31, 2014 for settlement of warrants and stock options. The fair value of the embedded conversion feature of the Convertible Debt at September 30, 2015 was calculated using the Monte Carlo simulation with the following factors, assumptions and methodologies: (1) conversion prices per share ranging from $4,800 to $52,800, (2) risk free rates ranging from .01% to .64%, (3) remaining life of conversion features (in years) ranging from .05 to 2.17, and (4) volatility ranging from 39.18% to 65.75%. The fair value of the embedded conversion feature of the Convertible Debt at December 31, 2014 was calculated using the Monte Carlo simulation with the following factors, assumptions and methodologies: (1) conversion prices per share ranging from $360 to $170,000, (2) risk free rates ranging from .03% to .25%, (3) remaining life of conversion features (in years) ranging from .12 to 3.0, and (4) volatility ranging from 21.51% to 75.48%. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2015 | |
Notes to Financial Statements | |
NOTE 7 - COMMITMENTS AND CONTINGENCIES | Litigation From time to time, the Company may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm its business. Exergen Litigation On October 10, 2012, the Company received a cease and desist demand letter from Exergen Corporation ("Exergen"), claiming that the Company infringed on certain patents relating to the Company's non-contact thermometers. On May 21, 2013 Exergen filed a complaint in the U.S. District Court of the District of Massachusetts against the Company and Thermomedics, Inc. ( its' wholly owned subsidiary). On September 3, 2013, the Company filed its answer to Exergens' complaint and asserted counterclaims and affirmative defenses for non-infringement and invalidity of certain patents. On March 26, 2015, Exergen and Sanomedics filed a partial dismissal that removes Sanomedics previous product, the Talking Non-Contact Thermometer, from the lawsuit. Exergen's claims against the Caregiver TouchFree Thermometer are ongoing. The Company will continue to vigorously defend its rights to market and sell the thermometers, pending the sale of Thermomedics to POSITIVEID Corporation ( see Note 11), at which point all potential past and future liabilities for the remaining product at issue will be undertaken by POSITIVEID Corporation. Prime Time Medical Litigation After the acquisition of Prime Time Medical, Inc. ("PTM") in August 2013, the Company discovered that the seller Mark R. Miklos ("Seller") failed to disclose that there were on-going audits with respect to PTM's Medicare and Medicaid billings for periods prior to the consummation of the transaction. These audits escalated and, as a result, PTM can no longer invoiceMedicare and Medicaid for any products or services and be paid for such products and services until the outcome of the audits which could last several years. Also, as a result of other Medicare and Medicaid audits for periods prior to the consummation of the transaction, Medicare and Medicaid are demanding payments for products that PTM was paid prior to the closing of the transaction that were improper. It is estimated that PTM may owe Medicare and Medicaid up to $500,000 in improper payments and at least another $500,000 in accounts receivable that will not be paid to PTM pending the outcome of the audits. On March 13, 2014, after discovering numerous material differences between financial statements reproduced by the Company and the financial statements provided by the Seller in connection with the Stock Purchase Agreement, coupled with the foregoing events and Medicare and Medicaid's constraint on PTM's business and payment stream, the Board of Directors of the Company determined that the business could no longer survive and thus opted to pursue a rescission of the completed transaction with PTM and, the operations of PTM were subsequently deconsolidated from presentation in financial statements. The Company recorded an accrual for contingencies as a result of the contract recession and is reflected in the accompanying consolidated financial statement at $123,204 and $165,702 at September 30, 2015 and December 31, 2014, respectively. As a result of discoveries of fraud and misrepresentations in the acquisition of PTM, on March 18, 2014, the Company filed a lawsuit against Mark R. Miklos in Miami-Dade County, Florida Case No.14007055CA01, alleging breach of contract, fraud in the inducement, fraudulent misrepresentation, unjust enrichment, conversion, breach of fiduciary duty and damages. The Company is seeking judgment against the Seller, restitution, rescission of the Purchase Agreement and Employment Agreement and return of all moneys paid to the Seller. On March 19, 2014 the Company was served with a lawsuit filed by Mark Miklos against the Company and Anovent, Inc. in Hillsborough County, Florida Case No. 14-CA-2520 DIV K, alleging the following: breach of the Employment Agreement entered into with the Company; improper notice of termination; breach of the Short Term Acquisition Note for $850,000; breach of Acquisition Promissory Notes A and B for $500,000 each, and further includes an action to foreclose a security interest in personal property and intangibles as a result of the alleged defaults of the Notes and rights under the Security Agreement. The Company will defend itself aggressively in this lawsuit. JMJ Litigation On May 29, 2014, Justin Keener d/b/a JMJ Financial ("JMJ") filed a Complaint against the Company in the Circuit Court of the 11th Judicial Circuit in and for Miami-Dade County, Florida. In the Complaint, JMJ alleges that the Company breached a convertible promissory note dated June 17, 2013, pursuant to which JMJ provided $150,000 to the Company on or about June 19, 2013, and an additional $50,000 to the Company on or about December 12, 2013. JMJ alleges that on February 4, 2014, it agreed to accept $280,000 in satisfaction of the note. JMJ alleges that the Company paid $186,667 to JMJ on February 19, 2014. On July 21, 2014, the Company filed its Answer, Affirmative Defenses, and Counterclaim against JMJ. As affirmative defenses, the Company asserts, among others, that JMJ is not entitled to the relief requested because the promissory note at issue charges usurious interest rates in violation of Florida's usury laws, and because JMJ's claims for lost profits are speculative. The Company also asserts counter-claims for Declaratory Relief (seeking an order that the promissory note is usurious under Florida law and the entire debt and conversion rights thus are unenforceable, and all moneys paid on the Note by the Company to JMJ must be returned to the Company) and for usury (seeking damages for all moneys paid pursuant to the promissory note, reasonable attorneys' fees, and costs). The Company intends to defend against JMJ's claims, and pursue its claims, vigorously. Other: In June 2015 the Company recorded a gain of $209,944 as Other Income in the accompanying consolidated financial statements from the reversal of unpaid salaries for former management as no claims were made within the period allowed by the state statute of limitations. |
COMMON STOCK
COMMON STOCK | 9 Months Ended |
Sep. 30, 2015 | |
Notes to Financial Statements | |
NOTE 8 - COMMON STOCK | Common stock: From January 1, 2015 to March 31, 2015, the Company issued a total of 680 shares to three (3) parties in connection with the conversion of $69,846 in convertible debt held. On January 5, 2015, and March 19, 2015, the Company issued a total of 28 shares of restricted common stock to two (2) consultants as payment for financial consulting & investor relations services with a total value of $16,968. From January 1, 2015 to March 31, 2015, the Company issued 388 shares to a Company owned by a former officer and shareholder in connection with the conversion of $39,865 in convertible debt held. On March 9, 2015 and March 23, 2015, the Company issued a total of 356 shares of restricted common stock to an officer of the Company in connection with the conversion of $50,000 in convertible stock held. From January 1, 2015 to March 31, 2015 the Company issued a lender a total of 417 shares in connection with the conversion of $171,724 in convertible debt held. From April 1, 2015 to June 30, 2015, the Company issued a total of 1,463 shares to two (2) parties in connection with the conversion of $32,453 in convertible debt held plus interest. From April 1, 2015 to June 30, 2015, the Company issued 6,338 shares to a Company owned by a former officer and shareholder in connection with the conversion of $36,974 in convertible debt held. On June 10, 2015, the Company issued a total of 500 shares of restricted common stock to an officer of the Company in connection with the conversion of $5,000 in convertible stock held. From April 1, 2015 to June 30, 2015 the Company issued a lender a total of 2,553 shares in connection with the conversion of $37,091 in convertible debt held. On June 26, 2015 the Company issued a shareholder 1 share of restricted common stock for exercise of his warrants at zero consideration plus an additional 2 shares and recorded $35 in total stock compensation expense for the total shares issued. On June 30, 2015 the Company issued a lender 595 shares in connection with the conversion of $5,000 in convertible debt held. From July 2, 2015 to August 24, 2015 the Company issued a lender a total of 28,470 shares in connection with the conversion of $49,558 in convertible debt held. From July 15, 2015 to August 7, 2015 the Company issued a lender a total of 9,263 shares in connection with the conversion of $25,000 in convertible debt held. From July 7, 2015 to August 7, 2015, the Company issued 30,019 shares to a Company owned by a former officer and shareholder in connection with the conversion of $34,184 in convertible debt held. Reverse splits: On January 20, 2015, the Company's stockholders approved a reverse stock split of its common stock at a ratio of 1-for-125. The reverse stock split became effective on February 9, 2015 upon securing regulatory approval. All applicable share and per share amounts in the accompanying consolidated financial statements and footnotes have been retroactively adjusted to reflect the reverse stock split. Additionally in the same corporate action the Company's shareholders approved a change of its corporate name to Sanomedics, Inc., and an increase of the number of authorized shares of its common stock from 250,000,000 to 650,000,000. On September 16, 2015, the Company's stockholders approved a reverse stock split of its common stock at a ratio of 1-for-4,000. The reverse stock split became effective on October 14, 2015. All applicable share and per share amounts have been retroactively adjusted to reflect the reverse stock split. Additionally in the same corporate action the Company's shareholders approved an increase of the number of authorized shares of its common stock from 650,000,000 to 10,000,000,000. Preferred stock: On April 30, 2015, the Company's Board of Directors and Series A preferred shareholders approved a resolution to amend the conversion rights of the preferred shareholders to apply solely for purposes of the computation of voting interest. |
SEGMENT REPORTING AND CONCENTRA
SEGMENT REPORTING AND CONCENTRATION OF CREDIT RISK | 9 Months Ended |
Sep. 30, 2015 | |
Notes to Financial Statements | |
NOTE 9 - SEGMENT REPORTING AND CONCENTRATION OF CREDIT RISK | After consideration of the discontinued operations disclosed in Note 1, the Company currently operates as one reporting segment. The Company's top two customers accounted for approximately 99% and 94% of total revenue for the three and nine months ended September 30, 2015. These same customers accounted for 72% and 79% of total revenue for the three and nine months ended September 30, 2014. Two customers accounted for approximately 55% and 24% of accounts receivable as of September 30, 2015. Two other customers accounted for approximately 54% and 43% of accounts receivable as of December 31, 2014. |
RELATED PARTY DISCLOSURE
RELATED PARTY DISCLOSURE | 9 Months Ended |
Sep. 30, 2015 | |
Notes to Financial Statements | |
NOTE 10 - RELATED PARTY DISCLOSURE | The accompanying consolidated financial statements reflect the following related party debt: September 30, 2015 December 31, 2014 Convertible note payable due to an affiliate of a former officer of the Company (see Note 4) $ 324,872 $ 137,887 Convertible note payable due Officer of the Company and an affiliate of Officer of the Company (see Note 4) 324,294 305,032 Total Convertible Notes $ 649,166 $ 442,919 Demand promissory note due to an affiliate of an Officer of the Company, secured by sales proceeds, interest at 12% $ 35,000 $ - Demand loan payable due former officer of the Company 21,132 24,882 Total Due to Related Parties $ 56,132 $ 24,882 The accompanying consolidated financial statements also reflect accrued interest on the aforementioned debt to related parties of $155,115 (September 30, 2015) and $85,915 (December 31, 2014), respectively, and interest expense of $25,547 and $40,718 for the three months and $83,595 and $85,671 for the nine months ended September 30, 2015 and 2014, respectively. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2015 | |
Notes to Financial Statements | |
NOTE 11 - SUBSEQUENT EVENTS | Share Issuances: On October 13, 2015, the Company issued 4,250 shares to a lender in connection with the conversion of $1,700 in convertible debt held. During October and through November 2, 2015, the Company issued a total of 140,950 shares to four (4) lenders in connection with the conversion of $12,348 in convertible debt held. During October and through November 6, 2015, the Company issued a total of 722,323 shares to a Company owned by a former officer and shareholder in connection with the conversion of $12,287 in convertible debt held. On October 22, 2015, the Company issued to its management and Board of Directors a total stock award of 1,043,750 restricted shares valued at fair market value of $0.31per share. On November 4, 2015, the Company issued a total of 6,347,638 shares to an officer and shareholder in connection with the conversion of $298,339 in convertible debt held. Preferred Stock: On October 16, 2015, the Company's stockholders approved the authorization for ten million (10,000,000) shares of blank check preferred stock, par value $0.001 per share, the voting powers, designations, preferences and other special rights, and qualifications, limitations and restrictions of which may be established from time to time by the Board of Directors of the Company without approval of the holders of our Common Stock and which may be issued in one or more series. This corporate action is pending filing of a definitive information statement and filing of the amendment with the state of Delaware Corporate Office. Other: On October 21, 2015, the Company and its wholly owned subsidiary, Thermomedics, Inc. ("Thermomedics"), entered into a Stock Purchase Agreement ("Purchase Agreement") for the sale and purchase of Thermomedics, Inc., pursuant to which the Company has agreed to sell 100% of the stock ownership of Thermomedics to PositiveID Corporation, a Delaware corporation (the "Buyer"), (collectively the "Acquisition"). As consideration, at time of closing, the Buyer will pay the Company Seven Hundred Fifty Thousand Dollars ($750,000) (the "Aggregate Purchase Price ") in the form of Two Hundred Fifty Thousand Dollars ($250,000) in cash and Five Hundred Thousand Dollars ($500,000) in the form of 500 shares of Series J Convertible Preferred Stock (the "Preferred Stock") of the Buyer, subject to the adjustment of $29,000 for Thermomedics' working capital deficit and $25,000 for legal fees of the Buyer, as detailed in the Purchase Agreement. In connection with the Acquisition, additional earn-out payments of up to Seven Hundred Fifty Thousand Dollars ($750,000) for each of the fiscal years ending December 31, 2016 and 2017 may be earned by the Company if certain revenue thresholds are met as described in the Purchase Agreement. Such earn-out payments, if any, will consist of twenty five percent (25%) in cash (up to One Hundred Eighty Seven Thousand Dollars ($187,000) and seventy five percent (75%) in shares of preferred stock of the Buyer (up to 563 shares of Preferred Stock) for each of the fiscal years ending December 31, 2016 and 2017, respectively. The parties have made customary representations and warranties in the Purchase Agreement and agreed to certain covenants, including the authority to enter into the Purchase Agreement, the organization of each of the parties and the lack of conflict with any organizational documents, agreements or rules. These representations and warranties were made as of specific dates and may be subject to important qualifications, limitations and supplemental information agreed to in negotiating the terms of the Purchase Agreements.21 |
SUMMARY OF SIGNIFICANT ACCOUN18
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2015 | |
Summary Of Significant Accounting Policies Policies | |
Use of Estimates | The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Use of estimates includes the following: 1) valuation of intangible assets and derivative and equity instruments, 2) allowance for doubtful accounts, 3) estimated useful lives of property, equipment and intangible assets and, 4) estimates and valuations related to deferred tax assets. |
Inventories | Inventories are stated at the lower of cost (on a first-in, first-out basis) or market value. The stated cost is comprised of finished goods of non-invasive thermometers. Reserves, if necessary, are recorded to reduce inventory to market value based on assumptions about consumer demand, current inventory levels and product life cycles for the various inventory items. These assumptions are evaluated quarterly and are based on the Company's business plan and from feedback from customers and the product development team. As of September 30, 2015 and December 31, 2014, inventory reserves were not material. |
Basic and Diluted Net Loss Per Share | The Company computes net income (loss) per share in accordance with ASC Topic 260, Earning per Share Nine Months Ended September 30, 2015 2014 Options 2 2 Warrants 3 - Shares from convertible notes 4,007,450 1,375 Total (1) 4,007,455 1,377 _______________ (1) Shares issuable upon conversion of preferred stock have been excluded from this computation because of the specific right of conversion as further explained in Note 8. |
Fair Value | FASB ASC 820, Fair Value Measurements and Disclosure Level 1 Level 2 Level 3 The carrying amounts of cash, accounts receivable, accrued salaries payable, accounts payable and other liabilities, and accrued interest payable approximate fair value because of the short-term nature of these items. The fair value of the Company's debt approximated the carrying value of the Company's debt as of September 30, 2015 and December 31, 2014. Factors that the Company considered when estimating the fair value of its debt included market conditions, liquidity levels in the private placement market, variability in pricing from multiple lenders and term of debt. |
Recent Accounting Pronouncements | In June 2014, the FASB issued ASU 2014-12, " Compensation - Stock Compensation On February 18, 2015, the FASB issued ASU No. 2015-02, " Amendments to the Consolidation Analysis" ("ASU 2015-02"). In April 2015, the FASB issued ASU 2015-03, " Simplifying the Presentation of Debt Issuance Costs" ("ASU 2015-03"). On May 8, 2015, the FASB issued ASU 2015-08, " Business Combinations (Topic 805) Pushdown Accounting In July 2015, the FASB issued ASU 2015-11, " Simplifying the Measurement of Inventory |
ORGANIZATION AND BASIS OF PRE19
ORGANIZATION AND BASIS OF PRESENTATION (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Organization And Basis Of Presentation Tables | |
Schedule Of Discontinued Operations | For the Three Months Ended September 30, For the Nine Months Ended September 30, 2015 2014 2015 2014 Revenues $ 6,500 $ - $ 13,000 $ - Operating Expenses: General and Administrative 17,268 - 53,797 - Loss from discontinued operations, net of income taxes $ (10,768 ) $ - $ (40,797 ) $ - |
Schedule Of Loss on disposal | September 30, September 30, 2015 2014 Assets transferred: Cash and cash equivalents $ 62,995 $ - Accounts receivable 11,253 - Net assets from discontinued operations $ 74,248 $ - Less: Liabilities transferred: Accounts payable $ 1,391 $ - Net liabilities from discontinued operations $ 1,391 $ - Loss on disposal of discontinued operations, net of taxes $ 72,857 $ - |
SUMMARY OF SIGNIFICANT ACCOUN20
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Summary Of Significant Accounting Policies Tables | |
Basic and Diluted Net Loss Per Share | Nine Months Ended September 30, 2015 2014 Options 2 2 Warrants 3 - Shares from convertible notes 4,007,450 1,375 Total (1) 4,007,455 1,377 |
CONVERTIBLE NOTES PAYABLE _ R21
CONVERTIBLE NOTES PAYABLE – RELATED PARTIES (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Convertible Notes Payable Related Parties Tables | |
Notes payable to related parties | September 30, 2015 December 31, 2014 Two Secured Convertible Promissory Notes CLSS Holdings, LLC, dated June 30, 2014. Notes accrue interest at 8 % per annum, due and payable on June 1, 2016, net of discount of $156,286 and $369,477, at September 30, 2015 and December 31, 2014, respectively. $ 258,411 $ 131,243 Secured convertible Promissory Note CLSS Holdings, LLC dated December 1, 2014. Note accrues interest at 8% per annum, due and payable November 30, 2017, net of discount of $176,039 and $235,856, at September 30, 2015 and December 31, 2014, respectively. 66,461 6,644 Convertible Promissory Note - Officer dated June 17, 2013. Note accrues interest at 9% per annum, due and payable on March 15, 2016, net of discount of $-0- and $48,306, at September 30, 2015 and December 31, 2014, respectively. 298,339 305,032 Convertible Promissory Note company owned by Officer dated June 25, 2015. Note accrues interest at 12% per annum, due and payable on June 25, 2016, net of discount of $74,044 at September 30, 2015. 25,955 - Total Notes $ 649,166 $ 442,919 Less current portion (582,705 ) - $ 66,461 $ 442,919 |
CONVERTIBLE NOTES PAYABLE (Tabl
CONVERTIBLE NOTES PAYABLE (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Convertible Notes Payable Tables | |
Convertible notes payable | September 30, 2015 December 31, 2014 Convertible promissory note with interest at 9% per annum, convertible into common shares at a fixed price of $0.50 per share. Matured on August 24, 2014, net of unamortized discount of $9,503 at September 30, 2015. The conversion feature has not exercised by the note holders as of September 30, 2015. ( C) $ 65,497 $ 65,497 Convertible promissory notes with interest at 8% per annum, convertible into common shares at a conversion price of 50% discount to defined market prices. Matured June 20, 2014.(A)(B)( C) 36,500 36,500 Convertible promissory note with interest at 12% per annum ( zero interest first 90 days) ,plus 10% original interest discount, convertible at a conversion price of 30% discount to defined market price . Matured December 9, 2014. (A) (C) (See Note 7) 57,598 57,598 Three (3) Convertible promissory notes with interest ranging from 5.25% to 12% per annum, convertible into common shares at a conversion price of 50% discount to defined market prices. Maturity ranging from October 22, 2014 through October 11, 2015, net of unamortized discount of $ 906 and $ 52,763, respectively. (A) 71,094 113,548 Two (2) Convertible promissory notes with interest at 8% per annum, convertible into common shares at a conversion price of 15% discount to defined market prices .Matures on August 1, 2015 and October 11, 2015, respectively, net of unamortized discount of $ -0- and $80,599, respectively. (A) 735,000 679,401 Nine (9) Convertible promissory notes with interest ranging from 12% to 13% per annum, convertible into common shares at a conversion prices of 31% and 37.50% discount to defined market prices. Matures on April 15, 2015 through May 27, 2016, respectively, net of unamortized discount of $56,968 and $287,936, respectively. (A)(B) 772,097 680,503 1,737,786 1,633,047 Less current portion (1,737,786 ) (1,633,047 $ -0- $ -0-- |
DERIVATIVE LIABILITIES (Tables)
DERIVATIVE LIABILITIES (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Derivative Liabilities Tables | |
Summary of assets | Consolidated Balance Sheet Quoted Prices in Active Markets for Identical Assets or Liabilities (Level 1) Quoted Prices for Similar Assets or Liabilities in Active Markets (Level 2) Significant Unobservable (Level 3) Derivative Liabilities: September 30, 2015 $ 3,393,318 $ - $ - $ 3,393,318 December 31, 2014 $ 2,771,414 $ - $ - $ 2,771,414 |
Summary of changes in the fair value | Nine Months Ended Year Ended September 30, 2015 December 31, 2014 Beginning balance $ 2,771,414 $ 1,070,728 Aggregate fair value of conversion features upon issuance 200,406 5,665,527 Fair value of derivatives reclassified to equity (541,165 ) (4,689,838 ) Net transfer into level 3 - 425,010 (1) Fair value of warrants netted against common stock issued for stock - 111,166 Change in fair value of conversion features 962,663 723,137 Change in fair value of warrant and stock option derivative liabilities - (534,316 ) Ending balance $ 3,393,318 $ 2,771,414 |
RELATED PARTY DISCLOSURE (Table
RELATED PARTY DISCLOSURE (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Related Party Disclosure Tables | |
Reflection of financial statements - related party debt | September 30, 2015 December 31, 2014 Convertible note payable due to an affiliate of a former officer of the Company (see Note 4) $ 324,872 $ 137,887 Convertible note payable due Officer of the Company and an affiliate of Officer of the Company (see Note 4) 324,294 305,032 Total Convertible Notes $ 649,166 $ 442,919 Demand promissory note due to an affiliate of an Officer of the Company, secured by sales proceeds, interest at 12% $ 35,000 $ - Demand loan payable due former officer of the Company 21,132 24,882 Total Due to Related Parties $ 56,132 $ 24,882 |
ORGANIZATION AND BASIS OF PRE25
ORGANIZATION AND BASIS OF PRESENTATION (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Organization And Basis Of Presentation Details | ||||
Revenues | $ 6,500 | $ 13,000 | ||
Operating Expenses: | ||||
General and Administrative | 17,268 | 53,797 | ||
Loss from discontinued operations, net of income taxes | $ (10,768) | $ (40,797) |
ORGANIZATION AND BASIS OF PRE26
ORGANIZATION AND BASIS OF PRESENTATION (Details 1) - USD ($) | Sep. 30, 2015 | Sep. 30, 2014 |
Assets transferred: | ||
Cash and cash equivalents | $ 62,995 | |
Accounts receivable | 11,253 | |
Net assets from discontinued operations | 74,248 | |
Accounts payable | 1,391 | |
Net liabilities from discontinued operations | 1,391 | |
Loss on disposal of discontinued operations, net of taxes | $ 72,857 |
SUMMARY OF SIGNIFICANT ACCOUN27
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - shares | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Total | 4,007,455 | 1,377 |
Options | ||
Total | 2 | 2 |
Warrant | ||
Total | 3 | |
Shares from convertible stock | ||
Total | 4,007,450 | 1,375 |
LIQUIDITY AND GOING CONCERN (De
LIQUIDITY AND GOING CONCERN (Details Narrative) - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 |
Liquidity And Going Concern Details Narrative | ||
Accumulated deficit | $ 23,908,447 | $ 20,239,635 |
Working capital deficit | 6,880,305 | |
Convertible debt instruments | $ 74,000 |
NOTES PAYABLE - RELATED PARTIES
NOTES PAYABLE - RELATED PARTIES (Details) - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 |
Total Notes | $ 649,166 | $ 442,919 |
Less: Current portion | (582,705) | |
Notes Payable-related parties, net | 66,461 | $ 442,919 |
Secured Convertible Promissory Note June 30, 2014 [Member] | ||
Total Notes | 258,411 | 131,243 |
Secured Convertible Promissory Note December 1, 2014 [Member] | ||
Total Notes | 66,461 | 6,644 |
Convertible Promissory Note June 17, 2013 [Member] | ||
Total Notes | 298,339 | $ 305,032 |
Convertible Promissory Note June 25 2015 [Member] | ||
Total Notes | $ 25,955 |
NOTES PAYABLE - RELATED PARTI30
NOTES PAYABLE - RELATED PARTIES (Details Narrative) | 9 Months Ended |
Sep. 30, 2015USD ($)shares | |
Notes Payable - Related Parties Details Narrative | |
Common stock convertible shares | shares | 37,601 |
Common stock convertible shares, value | $ 166,023 |
Accrued interest | 379,407 |
Extinguishment of converted debt | $ 545,430 |
CONVERTIBLE NOTES PAYABLE (Deta
CONVERTIBLE NOTES PAYABLE (Details) - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 |
Convertible Note Payable | $ 1,737,786 | $ 1,633,047 |
Less current portion | (1,737,786) | (1,633,047) |
Long-term portion of convertible debt | 0 | 0 |
Convertible Promissory Note [Member] | ||
Convertible Note Payable | 65,497 | 65,497 |
Convertible promissory note One [Member] | ||
Convertible Note Payable | 36,500 | 36,500 |
Convertible promissory note Two [Member] | ||
Convertible Note Payable | 57,598 | 57,598 |
Convertible promissory note Three [Member] | ||
Convertible Note Payable | 71,094 | 113,548 |
Convertible promissory note four [Member] | ||
Convertible Note Payable | 735,000 | 679,401 |
Convertible promissory note five [Member] | ||
Convertible Note Payable | $ 772,097 | $ 680,503 |
CONVERTIBLE NOTES PAYABLE (De32
CONVERTIBLE NOTES PAYABLE (Details Narrative) - USD ($) | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | |
Debt Instrument [Line Items] | |||
Common stock convertible shares | 37,601 | ||
Common stock convertible shares, value | $ 166,023 | ||
Derivative liability as discounts | 202,294 | $ 3,525,257 | |
Interest expense pursuant to the amortization | $ 828,812 | $ 835,877 | |
Convertible Notes Payable [Member] | |||
Debt Instrument [Line Items] | |||
Common stock convertible shares | 43,441 | ||
Common stock convertible shares, value | $ 390,672 | ||
Accrued interest | 315,088 | ||
Extinguishment of converted debt | $ 705,761 |
DERIVATIVE LIABILITIES (Details
DERIVATIVE LIABILITIES (Details) - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
Derivative Liabilities | $ 3,393,318 | $ 2,771,414 | $ 1,070,728 |
Quoted Prices in Active Markets for Identical Assets or Liabilities (Level 1) [Member] | |||
Derivative Liabilities | |||
Quoted Prices for Similar Assets or Liabilities in Active Markets (Level 2) [Member] | |||
Derivative Liabilities | |||
Significant Unobservable Inputs (Level 3) [Member] | |||
Derivative Liabilities | $ 3,393,318 | $ 2,771,414 |
DERIVATIVE LIABILITIES (Detai34
DERIVATIVE LIABILITIES (Details 1) - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2015 | Dec. 31, 2014 | |
Derivative Liabilities Details 1 | ||
Beginning balance | $ 2,771,414 | $ 1,070,728 |
Aggregate fair value of conversion features upon issuance | 200,406 | 5,665,527 |
Fair value of derivatives reclassified to equity | $ (541,165) | (4,689,838) |
Net transfer into level 3 | 425,010 | |
Fair value of warrants netted against common stock issued for stock | 111,166 | |
Change in fair value of conversion features | $ 962,663 | 723,137 |
Change in fair value of warrant and stock option derivative liabilities | (534,316) | |
Ending balance | $ 3,393,318 | $ 2,771,414 |
DERIVATIVE LIABILITIES (Detai35
DERIVATIVE LIABILITIES (Details Narrative) - USD ($) | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Fair value of derivative liabilities | $ 3,393,318 | $ 2,771,414 | $ 1,070,728 |
Minimum [Member] | |||
Conversion prices per share | $ 4,800 | $ 360 | |
Risk free interest rate | 0.01% | 0.03% | |
Remaining life of conversion features | 18 days | 1 month 13 days | |
Volatility ranging | 39.18% | 21.51% | |
Maximum [Member] | |||
Conversion prices per share | $ 52,800 | $ 170,000 | |
Risk free interest rate | 0.64% | 0.25% | |
Remaining life of conversion features | 2 years 2 months 1 day | 3 years | |
Volatility ranging | 65.75% | 75.48% |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 |
Commitments And Contingencies Details Narrative | ||
Accrual contingencies | $ 123,204 | $ 165,702 |
SEGMENT REPORTING AND CONCENT37
SEGMENT REPORTING AND CONCENTRATION OF CREDIT RISK (Details Narrative) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | |
Customer Two [Member] | |||||
Significant Concentrations revenue percentage | 99.00% | 72.00% | 94.00% | 79.00% | |
Significant Concentrations accounts receivable percentage | 24.00% | 24.00% | 43.00% | ||
Customer One [Member] | |||||
Significant Concentrations accounts receivable percentage | 55.00% | 55.00% | 54.00% |
RELATED PARTY DISCLOSURE (Detai
RELATED PARTY DISCLOSURE (Details) - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 |
Convertible note payable | $ 649,166 | $ 442,919 |
Due to Related Parties | 56,132 | 24,882 |
Former Officer [Member] | ||
Convertible note payable | 324,872 | $ 137,887 |
Due to Related Parties | 35,000 | |
Officer [Member] | ||
Convertible note payable | 324,294 | $ 305,032 |
Due to Related Parties | $ 21,132 | $ 24,882 |
RELATED PARTY DISCLOSURE (Det39
RELATED PARTY DISCLOSURE (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | |
Interest expense | $ 25,547 | $ 40,718 | $ 83,595 | $ 85,671 | |
Former Chief Executive Officer [Member] | |||||
Accrued interest on notes payable | $ 155,115 | $ 155,115 | $ 85,915 |