Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Jun. 30, 2016 | |
Document and Entity Information | ||
Entity Registrant Name | Heatwurx, Inc. | |
Document Type | 10-K | |
Document Period End Date | Dec. 31, 2016 | |
Amendment Flag | false | |
Entity Central Index Key | 1,533,743 | |
Current Fiscal Year End Date | --12-31 | |
Entity Common Stock, Shares Outstanding | 11,017,388 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Current Reporting Status | No | |
Entity Voluntary Filers | No | |
Entity Well-known Seasoned Issuer | No | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | FY | |
Entity Public Float | $ 1,447,232 | |
Trading Symbol | hwx |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 3,237 | $ 2,090 |
Prepaid expenses and other current assets | 47,722 | |
Assets held for sale | 42,000 | |
Current assets from discontinued operations | 12,350 | |
Total current assets | 3,237 | 104,162 |
Other assets: | ||
Equipment, net of depreciation | 159 | |
Total other assets | 159 | |
Total assets | 3,237 | 104,321 |
Current liabilities: | ||
Accounts payable | 166,165 | 159,249 |
Accrued liabilities | 134,513 | 95,339 |
Interest payable | 441,174 | 161,608 |
Income taxes payable | 200 | 200 |
Senior secured notes payable | 962,361 | 947,361 |
Unsecured notes payable | 420,000 | 419,033 |
Revolving line of credit | 229,980 | |
Current liabilities from discontinued operations | 300,338 | |
Total current liabilities | 2,354,393 | 2,083,128 |
Long-term liabilities: | ||
Total liabilities | 2,354,393 | 2,083,128 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Preferred stock value | 18 | 18 |
Common stock value | 1,102 | 1,102 |
Additional paid-in capital | 14,329,057 | 14,322,366 |
Accumulated deficit | (15,254,917) | (14,874,680) |
Stockholders' equity from discontinued operations | (1,426,416) | (1,427,613) |
Total stockholders' equity | (2,351,156) | (1,978,807) |
Total liabilities and stockholders' equity | $ 3,237 | $ 104,321 |
BALANCE SHEETS (Parenthetical)
BALANCE SHEETS (Parenthetical) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Debt discount, unsecured notes payable | $ 967 | |
Preferred Stock, Par Value | $ 0.0001 | $ 0.0001 |
Preferred Stock, Shares Authorized | 4,500,000 | 4,500,000 |
Preferred Stock, Issued | 178,924 | 178,924 |
Common Stock, Par Value | $ 0.0001 | $ 0.0001 |
Common Stock, Shares Authorized | 20,000,000 | 20,000,000 |
Common Stock, Issued | 11,017,388 | 11,017,388 |
Common Stock, Outstanding | 11,017,388 | 11,017,388 |
Preferred Series B | ||
Preferred Stock, Par Value | $ 0.0001 | $ 0.0001 |
Preferred Stock, Shares Authorized | 1,500,000 | 1,500,000 |
Preferred Stock, Issued | 0 | 0 |
Liquidation preference | $ 0 | $ 0 |
Preferred Series C | ||
Preferred Stock, Par Value | $ 0.0001 | $ 0.0001 |
Preferred Stock, Shares Authorized | 760,000 | 760,000 |
Preferred Stock, Issued | 0 | 0 |
Liquidation preference | $ 0 | $ 0 |
Preferred Series D | ||
Preferred Stock, Par Value | $ 0.0001 | $ 0.0001 |
Preferred Stock, Shares Authorized | 1,500,000 | 1,500,000 |
Preferred Stock, Issued | 178,924 | 178,924 |
Liquidation preference | $ 864,743 | $ 821,683 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Income Statement | ||
Equipment sales | $ 5,000 | $ 74,599 |
Other revenue | 38,826 | |
Total revenue | 5,000 | 113,425 |
Costs of goods sold | 125,876 | |
Gross profit | 5,000 | (12,451) |
Expenses: | ||
Selling, general and administrative | 69,968 | 945,460 |
Research and development | 6,558 | 29,246 |
Impairment of intangible asset | 1,517,859 | |
Impairment of assets held for sale | 186,068 | |
Total expenses | 76,526 | 2,678,633 |
Loss from continuing operations, before taxes | (71,526) | (2,691,084) |
Other Income and Expense: | ||
Gain (loss) on extinguishment of debt | 4,731 | |
Gain (loss) on disposal of assets | (25,000) | (60,743) |
Interest income | 4,651 | |
Interest expense | 245,384 | 235,644 |
Total other income and expense | (265,653) | (291,736) |
Loss before income taxes | (337,179) | (2,982,820) |
Income taxes | (100) | |
Net income (loss) from continuing operations | (337,179) | (2,982,920) |
Net income (loss) from discontinued operations | 1,197 | (371,307) |
Net loss | (335,982) | (3,354,227) |
Preferred stock cumulative dividend and deemed dividend | (43,058) | (42,942) |
Net loss available to common stockholders | $ (379,040) | $ (3,397,169) |
Net loss per common share basic and diluted from continuing operations | $ (0.03) | $ (0.27) |
Net loss per common share basic and diluted from discontinued operations | 0 | (0.03) |
Net loss per common share basic and diluted | $ (0.03) | $ (0.31) |
Weighted average shares outstanding basic and diluted | 11,017,388 | 11,012,565 |
STATEMENTS OF STOCKHOLDERS' EQU
STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) | Total | Series D Preferred Stock | Common Stock | Additional Paid-in Capital | Accumulated Deficit - Discontinued Operations | Accumulated Deficit | Total Stockholders' Equity |
Beginning Balance, shares at Dec. 31, 2014 | 178,924 | 10,952,356 | |||||
Beginning Balance, amount at Dec. 31, 2014 | $ 18 | $ 1,095 | $ 14,111,944 | $ (1,056,306) | $ (12,905,124) | $ 1,207,933 | |
Stock and warrants issued, shares | 50,285 | ||||||
Stock and warrants issued, value | $ 5 | 87,995 | 88,000 | ||||
Stock issued in private placement, shares | 50,285 | (253) | |||||
Stock issued for services, shares | 15,000 | 15,000 | |||||
Stock issued for services, value | $ 25,500 | $ 2 | 25,498 | 25,500 | |||
Stock-based compensation | 96,929 | 96,929 | 96,929 | ||||
Dividends paid or accrued on preferred stock | (42,942) | (42,942) | |||||
Net income (loss) from continuing operations | (2,982,920) | (2,982,920) | (2,982,920) | ||||
Net income (loss) from discontinued operations | (371,307) | (371,307) | (371,307) | ||||
Ending Balance, shares at Dec. 31, 2015 | 178,924 | 11,017,388 | |||||
Ending Balance, amount at Dec. 31, 2015 | (1,978,807) | $ 18 | $ 1,102 | 14,322,366 | (1,427,613) | (14,874,680) | (1,978,807) |
Stock-based compensation | 6,691 | 6,691 | 6,691 | ||||
Dividends paid or accrued on preferred stock | (43,058) | (43,058) | |||||
Net income (loss) from continuing operations | (337,179) | (337,179) | (337,179) | ||||
Net income (loss) from discontinued operations | 1,197 | 1,197 | 1,197 | ||||
Ending Balance, shares at Dec. 31, 2016 | 178,924 | 11,017,388 | |||||
Ending Balance, amount at Dec. 31, 2016 | $ (2,351,156) | $ 18 | $ 1,102 | $ 14,329,057 | $ (1,426,416) | $ (15,254,917) | $ (2,351,156) |
CONSOLIDATED STATEMENT OF CASH
CONSOLIDATED STATEMENT OF CASH FLOWS - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (335,982) | $ (3,354,227) |
Net income (loss) from discontinued operations | 1,197 | (371,307) |
Net income (loss) from continuing operations | (337,179) | (2,982,920) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation expense | 159 | 60,251 |
Gain (loss) on extinguishment of debt | 4,731 | |
Amortization of intangible asset | 178,571 | |
Amortization of debt discount | 967 | 58,801 |
Impairment of assets held for sale | 186,068 | |
Impairment of intangible asset | 1,517,859 | |
Gain (loss) on disposal of equipment | 25,000 | 60,743 |
Bad debt expense | 5,148 | |
Non-cash expenses exchanged for services | 25,500 | |
Stock-based compensation | 6,691 | 96,929 |
Changes in operating assets and liabilities | ||
(Increase) decrease in receivables | (3,838) | |
(Increase) decrease in prepaid and other current assets | 47,722 | 105,136 |
(Increase) decrease in inventory | (7,065) | |
Increase (decrease) in income taxes payable | 100 | |
Increase (decrease) in accounts payable | (10,343) | 5,318 |
Increase (decrease) in accrued liabilities | 686 | (41,774) |
Increase (decrease) in deferred revenue | (58,165) | |
Increase (decrease) in interest payable | 240,175 | 153,788 |
Cash used in operating activities from continuing operations | (30,853) | (639,550) |
Cash used in operating activities from discontinued operations | (12,350) | (232,356) |
Cash used in operating activities | (43,203) | (871,906) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchases of property and equipment | 1,399 | |
Proceeds from sale of assets held for sale | 17,000 | |
Proceeds from sale of property and equipment | 31,100 | |
Cash provided by (used in) investing activities from continuing operations | 17,000 | 29,701 |
Cash provided by (used in) investing activities from discontinued operations | 10,503 | |
Cash provided by (used in) investing activities | 17,000 | 40,204 |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from issuance of senior secured notes payable | 15,000 | 753,000 |
Proceeds from issuance of common shares, net | 88,000 | |
Repayment of loan payable | 19,902 | |
Cash provided by (used in) financing activities from continuing operations | 15,000 | 821,098 |
Cash provided by (used in) financing activities | 15,000 | 821,098 |
Net change in cash and cash equivalents | (11,203) | (10,604) |
Cash and cash equivalents, beginning of period, including discontinued operations | 14,440 | 25,044 |
Cash and cash equivalents, end of period | $ 3,237 | $ 14,440 |
Principal Business Activities
Principal Business Activities | 12 Months Ended |
Dec. 31, 2016 | |
Notes | |
Principal Business Activities | 1. PRINCIPAL BUSINESS ACTIVITIES Organization and Business |
Basis of Presentation and Summa
Basis of Presentation and Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2016 | |
Notes | |
Basis of Presentation and Summary of Significant Accounting Policies | Basis of Presentation |
Assets Held For Sale, Disclosur
Assets Held For Sale, Disclosure | 12 Months Ended |
Dec. 31, 2016 | |
Notes | |
Assets Held For Sale, Disclosure | 3. ASSETS HELD FOR SALE The Company measures its financial assets and liabilities at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The authoritative guidance for fair value measurements establishes a three-level hierarchy, which encourages an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The three levels of the hierarchy are defined as follows: · · · The Company reviews the carrying amounts of long-lived assets whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable. An impairment loss is recognized when the carrying amount of the long-lived asset is not recoverable and exceeds its fair value. The Company estimated the fair values of long-lived assets based on the Company’s own judgments about the assumptions that market participants would use in pricing the asset and on observable market data, when available. The Company classified these fair value measurements as Level 3. Assets held for sale Fair Value Measurements Using Significant Unobservable Inputs (Level 3) Equipment Inventory Total Beginning balance $ 25,875 $ 16,125 $ 42,000 Disposals (25,875) (16,125) (42,000) Ending balance $ -- $ -- $ -- During the year ended December 31, 2016 the Company recognized a loss on disposal of assets consisting of equipment and inventory in the amount of $25,000. |
Property and Equipment, Disclos
Property and Equipment, Disclosure | 12 Months Ended |
Dec. 31, 2016 | |
Notes | |
Property and Equipment, Disclosure | 4. PROPERTY AND EQUIPMENT A summary of the cost of property and equipment, by component, and the related accumulated depreciation is as follows: December 31, 2016 December 31, 2015 Computer equipment & software $ 19,150 $ 19,150 Accumulated depreciation (19,150) (18,991) $ -- $ 159 Depreciation expense was $159 and $60,251 for the years ended December 31, 2016 and 2015, respectively. The Company recognized a loss on disposal of fixed assets of $60,743 during the year ended December 31, 2015. The Company reclassified fixed assets with a net book value of $186,549 to assets held for sale, at fair market value and recognized a loss on impairment of assets held for sale during the year ended December 31, 2015 of $62,554. |
Asset Purchase Agreement Disclo
Asset Purchase Agreement Disclosure | 12 Months Ended |
Dec. 31, 2016 | |
Notes | |
Asset Purchase Agreement Disclosure | 5. ASSET PURCHASE AGREEMENT On April 15, 2011, the Company entered into an Asset Purchase Agreement with an individual who is a founder and a current stockholder. Pursuant to the agreement, the Company purchased the related business and activities of the design, manufacture and distribution of asphalt repair machinery under the Heatwurx brand. The total purchase price was $2,500,000. The business essentially consisted of the investment in research and development of the technology, the patents applied for as a result of the research and development activities and certain distribution relationships that were in process, but not finalized as of the acquisition date. Collectively, these investments constitute the in-process research and development the Company refers to as the “asphalt preservation and repair solution.” The Company capitalized $2,500,000 of in-process research and development related to this asphalt preservation and repair solution. As of October 1, 2012, in-process research and development was classified as developed technology and amortized over its estimated useful life of seven years. The initial estimated fair value of the in-process research and development was determined using the income approach. Under the income approach, the expected future cash flows from the asset are estimated and discounted to its net present value at an appropriate risk-adjusted rate of return. Based on the Company’s financial position and substantial doubt about the Company’s ability to continue as a going concern, the Company has chosen to estimate future cash flows at zero. The Company recognized an impairment of $1,517,859 during the second quarter of 2015. As of December 31, 2015, the Company’s developed technology intangible asset had no value. Amortization expense prior to the impairment for 2015 was $178,571. In conjunction with the Asset Purchase Agreement, the Company granted 200,000 performance stock options to a founder of the Company with an exercise price of $0.40 per share and a term of seven years. Following the effectiveness of the seven for one stock split that was completed in October 2011, the 200,000 performance stock options were exchanged for 1,400,000 performance stock options with an exercise price of $0.057 per share. On February 10, 2015, the founder of the Company elected to cancel the 1,400,000 performance stock options. |
Discontinued Operations, Disclo
Discontinued Operations, Disclosure | 12 Months Ended |
Dec. 31, 2016 | |
Notes | |
Discontinued Operations, Disclosure | 6. DISCONTINUED OPERATIONS In efforts to streamline operations and expenses the Company elected to discontinue the Dr. Pave and Dr. Pave Worldwide entities during 2015. The financial results of these events are represented in the discontinued operations included in the December 31, 2016 and 2015 financial statements. The operating results of the discontinued operations of Dr. Pave and Dr. Pave Worldwide for the years ended December 31, 2016 and 2015 are summarized below: 2016 2015 Revenue $ -- $ 28,870 Expense (1,733) 400,177 Net Income (loss), before Other income and expense and taxes 1,733 (371,307) Other income (expense) (536) Income tax benefit -- -- Net Loss, net of tax $ 1,197 $ (371,307) The balance sheet items for discontinued operations as of December 31, 2015 and 2014 are summarized below: 2016 2015 Cash and cash equivalents $ -- $ 12,350 Total assets $ -- $ 12,350 Payables and accrued liabilities -- 70,358 Short-term debt -- 229,980 Total liabilities $ -- $ 300,338 The CompanyÂ’s borrowings included in discontinued operations as of December 31, 2016 and 2015 are as follows: Revolving line of credit Secured Notes Payable |
Notes Payable, Disclosure
Notes Payable, Disclosure | 12 Months Ended |
Dec. 31, 2016 | |
Notes | |
Notes Payable, Disclosure | 7. NOTES PAYABLE Unsecured Notes Payable Secured Notes Payable Revolving line of credit Principal Balance Interest Rate Accrued Interest Warrants issued Warrant Fair Value - Discount Unamortized Discount Unsecured notes payable $ 420,000 12% $ 88,287 139,997 $ 115,159 $ -- Secured notes payable $ 962,361 12% - 18% $ 292,703 -- -- -- Revolving line of credit $ 229,980 12% $ 60,184 -- -- -- $ 1,612,341 $ 441,174 139,997 $ 115,159 $ -- As of December 31, 2016, the loans are subject to mandatory principal payments as follows: Year Payments 2016 $ 1,612,341 2017 -- 2018 -- 2019 -- 2020 -- Total principal payments $ 1,612,341 Less: unamortized debt discount -- Total current portion $ 1,612,341 Based upon the CompanyÂ’s financial position, the Company does not believe it will be able to satisfy the mandatory principal payments in 2017. The Company will work with the lenders to explore extension or conversion options. There is no guarantee the lenders will accommodate our requests. The Company is in default in regard to interest payments on the notes, the CompanyÂ’s assets may be foreclosed upon. |
Income Taxes, Disclosure
Income Taxes, Disclosure | 12 Months Ended |
Dec. 31, 2016 | |
Notes | |
Income Taxes, Disclosure | 8. INCOME TAXES The Company and its predecessor file income tax returns in the U.S. federal jurisdiction and in the states of Colorado, Utah, North Dakota and California. There are currently no income tax examinations underway for these jurisdictions. The Company filed its initial tax returns for the nine months ended December 31, 2011 with federal and Utah and December 31, 2012 is the initial tax filing period for Colorado, and December 31, 2013 is the initial tax filing period for North Dakota and California. The Company provides deferred income taxes for differences between the tax reporting bases and the financial reporting bases of assets and liabilities. The Company had no unrecognized income tax benefits. Should the Company incur interest and penalties relating to tax uncertainties, such amounts would be classified as a component of interest expense and operating expense, respectively. Unrecognized tax benefits are not expected to increase or decrease within the next twelve months. As of December 31, 2016, the CompanyÂ’s tax year for 2013, 2014 and 2015 are subject to examination by the tax authorities. Deferred Income Taxes December 31, 2016 December 31, 2015 Deferred Tax Assets: Current Net operating loss carry forward - Federal $ 4,452,146 $ 4,338,979 Net operating loss carry forward - State 617,509 598,096 Contribution carry forward 199 199 Accrued liabilities and deferred rent 723 1,519 Total current deferred tax assets 5,070,577 4,938,793 Noncurrent Depreciation (135) (16,533) Amortization -- -- Total noncurrent deferred tax (liabilities)/assets (135) (16,533) Total net deferred tax assets 5,070,442 4,992,260 Valuation allowance for deferred tax asset (5,070,442) (4,922,260) Total deferred tax assets $ -- $ -- The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, the projected future taxable income and tax planning strategies in making this assessment. Based on management's analysis, a full reserve has been established against this asset. The change in the valuation allowance in 2016 and 2015 was $148,182 and 1,359,848, respectively. A reconciliation between the statutory federal income tax rate of 34% and our effective tax rate for the years ended December 31, 2016 and 2015, are as follows: Year ended December 31, 2016 Year ended December 31, 2015 Federal statutory income tax rate 34.0% 34.0% State tax rate (net) 5.7% 7.1% Permanent differences (0.9)% 7.5% Deferred tax asset valuation allowance (38.8)% (48.6)% Effective income tax rate -- -- |
Stockholders' Equity, Disclosur
Stockholders' Equity, Disclosure | 12 Months Ended |
Dec. 31, 2016 | |
Notes | |
Stockholders' Equity, Disclosure | 9. STOCKHOLDERS’ EQUITY Common Stock On October 1, 2014, the Company commenced a non-public equity offering of up to 3,650,807 units at $1.75 per unit (the “Units”). Each Unit consists of one common share and one-half warrant, with each whole warrant exercisable at $2.00 per share. The purchase price for the Units is payable in either cash, conversion of outstanding Series D preferred shares or certain outstanding promissory notes. During the first half of 2015, the Company issued 50,285 shares of common stock and warrants to purchase 25,141 shares of common stock for cash proceeds of $88,000. On March 13, 2015 the Company issued 15,000 common shares in exchange for consulting services valued at $25,500. Preferred Stock Series D Preferred Stock Holders of Series D preferred stock accrue dividends at the rate per annum of $0.24 per share, payable on a quarterly basis. As dividends are accrued and payable quarterly on the Series D preferred stock, the Company paid no dividends during the year ended December 31, 2016 and $31,475 during the year ended December 31, 2015. As of December 31, 2016 the Company has dividends payable in accrued expenses of $89,000. The holders of the Series D preferred stock have conversion rights equivalent to such number of fully paid and non-assessable shares of common stock as is determined by dividing the Series D original issue price of $3.00 by the then applicable conversion price. Each Series D Share will convert into one share of our common stock at any time at the option of the holder of the Series D Shares or will be converted at the option of the Company at any time the trading price of our common stock is at least $4.50 per share for ten consecutive trading days. The conversion ratio is subject to anti-dilution adjustments, including in the event that the Company issues equity securities at a price equivalent to or less than the conversion price in effect immediately prior to such issue. The holders of Series D preferred stock have a liquidation preference over the holders of the Company’s common stock equivalent to the purchase price per share of the Series D preferred stock plus any accrued and unpaid dividends, whether or not declared, on the Series D preferred stock. A liquidation would be deemed to occur upon the happening of customary events, including transfer of all or substantially all of the Company’s common stock or assets or a merger, or consolidation. The Company believes that such liquidation events are within its control and therefore the Company has classified the Series D preferred stock in stockholders’ equity. The holders of Series D preferred stock vote together as a single class with the holders of the Company’s common stock on all action to be taken by the Company’s stockholders. Each share of Series D preferred stock entitles the holder to the number of votes equal to the number of shares of common stock into which the shares of the Series D preferred stock are convertible as of the record date for determining stockholders entitled to vote on such matter. Stock Options Number of Options Weighted Average Exercise Price Weighted Average Remaining Life (Years) Balance, December 31, 2014 1,246,500 $ 2.35 2.83 Granted 425,000 $ 1.50 Exercised -- -- Cancelled (1,080,333) $ 2.33 Balance, December 31, 2015 591,167 $ 1.78 3.75 Exercisable, December 31, 2015 463,000 $ 1.76 3.68 Granted -- -- Exercised -- -- Cancelled (321,667) $ 1.69 Balance, December 31, 2016 269,500 $ 1.88 2.04 Exercisable, December 31, 2016 269,500 $ 1.88 2.04 On April 30, 2015, the Board of Directors approved the grant of 125,000 options to the former CEO of the Company, David Dworsky, in accordance with the terms of the 2011 Equity Incentive Plan, as amended. The options vested immediately and had an exercise price of $1.50 per share. Mr. Dworsky’s options were cancelled 90 days after his resignation from the Board on August 31, 2015, per the terms of the 2011 Equity Incentive Plan. At the grant of the April 30, 2015 option, Mr. Dworsky forfeited his vested options of 93,750 and unvested options of 206,250 with an exercise price of $3.00 per share. On April 30, 2015, the Board of Directors approved the grant of 100,000 options to an employee for continued consulting services, in accordance with the terms of the 2011 Equity Incentive Plan, as amended. The options vested immediately and had an exercise price of $1.50 per share. The options cancelled 90 days after the end of the consulting agreement at December 31, 2015. At the grant of the new April 30, 2015 options, the former employee forfeited his vested options of 100,000 and unvested options of 100,000 with an exercise price of $2.00 per share. On April 30, 2015, the Board of Directors approved the grant of 200,000 options to employees of the Company, in accordance with the terms of the 2011 Equity Incentive Plan, as amended. One-half of the options vest immediately, with the remaining vesting on the one year anniversary of the grant date. The options have an exercise price of $1.50 per share, with an expiration date of five years from the grant date. 75,000 options cancelled during 2016 per the terms of the 2011 Equity Incentive Plan. There were no options granted during the year ended December 31, 2016. The fair value of each stock option granted during the year end December 31, 2015 was estimated on the date of grant using the Black Scholes option pricing model with the following assumptions: December 31, 2015 Risk-free interest rate range 1.43% Expected life 5.0 Years Vesting period 0 - 1 Year Expected volatility 42% Expected dividend -- Forfeiture rate 25% Fair value range of options at grant date $0.259 Significant assumptions utilized in determining the fair value of our stock options included the volatility rate, estimated term of the options, risk-free interest rate and forfeiture rate. In order to estimate the volatility rate at each issuance date, given that the Company has not established a historical volatility rate as it has minimal trading volume since we began trading in October 2013, management reviewed volatility rates for a number of companies with similar manufacturing operations to arrive at an estimated volatility rate for each option grant. The term of the options was assumed to be five years, which is the contractual term of the options. The risk-free interest rate was determined utilizing the treasury rate with a maturity equal to the estimated term of the option grant. Finally, management assumed a 25% forfeiture rate in 2015 due to Company changes and significant reduction in operations and personnel. For the years ended December 31, 2016 and 2015, the Company recorded stock-based compensation expense of $6,691 and $96,929, respectively. As of December 31, 2016 there was no unrecognized compensation expense and as of December 31, 2015 there was $6,691 of unrecognized compensation expense related to the issuance of the stock options. Performance Stock Options There were no performance stock options granted during the years ended December 31, 2016 and 2015. Number of Options Weighted Average Exercise Price Balance, December 31, 2014 1,440,000 $ 0.11 Granted -- -- Exercised -- -- Cancelled (1,400,000) $ 0.06 Balance, December 31, 2015 40,000 $ 2.00 Granted -- -- Exercised -- -- Cancelled -- -- Balance, December 31, 2016 40,000 $2.00 Exercisable, December 31, 2015 and 2016 40,000 $ 2.00 See Note 5 for further discussion of the performance options. Warrants There were no warrants issued during the year ended December 31, 2016. During 2015 the Company issued 25,141 warrants in connection with the private equity offering dated October 1, 2014. Each unit consisted of one share of Common stock and one-half warrant, with each whole warrant exercisable at $2.00 per share and grants the right to purchase a share of the Company’s common stock. The warrants expire three years from the date of issuance and are exercisable immediately. Number of Warrants Weighted Average Exercise Price Weighted Average Remaining Life (Years) Balance, December 31, 2014 2,424,980 $ 2.48 2.28 Granted 25,141 $ 2.00 Exercised -- -- Cancelled (449,817) $ 3.00 Balance, December 31, 2015 2,000,304 $ 2.36 1.64 Granted -- -- Exercised -- -- Cancelled -- -- Balance, December 31, 2016 2,000,304 $ 2.36 0.63 |
Net Loss Per Common Share, Disc
Net Loss Per Common Share, Disclosure | 12 Months Ended |
Dec. 31, 2016 | |
Notes | |
Net Loss Per Common Share, Disclosure | 10. NET LOSS PER COMMON SHARE The Company computes loss per share of common stock using the two-class method required for participating securities. The CompanyÂ’s participating securities include all series of its convertible preferred stock. Undistributed earnings allocated to these participating securities are added to net loss in determining net loss applicable to common stockholders. Basic and Diluted loss per share are computed by dividing net loss applicable to common stockholder by the weighted-average number of shares of common stock outstanding. Outstanding options and warrants underlying 2,309,804 shares do not assume conversion, exercise or contingent exercise in the computation of diluted loss per share because the effect would be anti-dilutive. The calculation of the numerator and denominator for basic and diluted net loss per common share is as follows: For the year ended December 31, 2016 2015 Net loss from continuing operations $ (337,179) $ (2,982,920) Net income (loss) from discontinued operations 1,197 (371,307) Net loss (335,982) (3,354,227) Basic and diluted: Preferred stock cumulative dividend - Series D (43,058) (42,942) Income applicable to preferred stockholders (43,058) (42,942) Net loss applicable to common stockholders $ (379,040) $ (3,397,169) |
Commitments and Contingencies,
Commitments and Contingencies, Disclosure | 12 Months Ended |
Dec. 31, 2016 | |
Notes | |
Commitments and Contingencies, Disclosure | 11. COMMITMENTS AND CONTINGENCIES Lease Commitments Total rent expense for the year ended December 31, 2016 and 2015 was $2,250 and $50,035, respectively. Vendors and Debt |
Related Party Transactions, Dis
Related Party Transactions, Disclosure | 12 Months Ended |
Dec. 31, 2016 | |
Notes | |
Related Party Transactions, Disclosure | 12. RELATED PARTY TRANSACTIONS Justin Yorke is the manager of the JMW Fund, LLC, the San Gabriel Fund, LLC, and the Richland Fund, LLC; and is a director of the Company. Mr. McGrain, our Interim Chief executive officer and Interim Chief financial officer is also a member of the JMW Fund, LLC, the San Gabriel Fund, LLC, and the Richland Fund, LLC. These funds own 4,725,721 shares of common stock and holds warrants to purchase 1,278,186 common shares in the aggregate. During the year ended December 31, 2015 Mr. Yorke, converted $20,000 and $160,000 unsecured notes payable into senior secured notes payable. In addition, Mr. Yorke was issued warrants to purchase 2,857 common shares as part of the Private equity offering dated October 1, 2014, during 2015. As of December 31, 2016 and 2015, the Company has secured notes payable with Mr. Yorke in the aggregate amount of $962,361 and $947,361, respectively. An outstanding balance of $138,000 on the revolving line of credit as of December 31, 2016 and 2015. Mr. Yorke, as the manager, earned interest from loans payable for the years ended December 31, 2016 and 2015 of $192,728 and $120,565, respectively. Total accrued interest as of December 31, 2016 and 2015 was $332,566 and $139,838, respectively. During the year ended December 31, 2015, Mr. Gus Blass III, a former member of our board of directors and a stockholder whom resigned September 15, 2015, earned dividends from preferred stock totaling $24,065 and $24,000, for the years ended December 31, 2016 and 2015, respectively. Total accrued dividends as of December 31, 2016 and 2015 was $48,065 and $24,000, respectively. During the year ended December 31, 2015, Reginald Greenslade, a former member of our board of directors and a stockholder, who resigned August 1, 2015; earned interest totaling $5,533 and $5,519 for the years ended December 31, 2016 and 2015, respectively. Total accrued interest as of December 31, 2016 and 2015 was $10,158 and $4,626, respectively. David Dworsky, the former Chief Executive Officer and board member of the Company, whom resigned his Officer position effective April 30, 2015 and his board position effective August 31, 2015. Mr. Dworsky earned dividends on 1,500 shares of Series D preferred totaling $361 and $360 for the years ended December 31, 2016 and 2015, respectively. Total accrued dividends as of December 31, 2016 and 2015 was $721 and $360, respectively. |
Supplemental Cash Flow Informat
Supplemental Cash Flow Information, Disclosure | 12 Months Ended |
Dec. 31, 2016 | |
Notes | |
Supplemental Cash Flow Information, Disclosure | 13. SUPPLEMENTAL CASH FLOW INFORMATION For the year ended December 31, 2016 2015 Cash paid for interest $ -- $ 25,356 Cash paid for income taxes $ -- $ -- Non-Cash investing and financing transactions Assumption of Revolving line of credit $ 229,980 $ -- Returned equipment applied to outstanding loan principal $ -- $ 98,098 Conversion of unsecured notes to senior secured notes $ -- $ 174,361 Shares issued for consulting services $ -- $ 25,500 |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2016 | |
Notes | |
Subsequent Events | 14. SUBSEQUENT EVENTS We have evaluated all events that occurred after the balance sheet date through the date when our financial statements were issued to determine if they must be reported. Management has determined that other than as disclosed below, there were no additional reportable subsequent events to be disclosed. Debt offerings The Company entered into Secured notes under the senior secured loan agreement in the aggregate amount of $75,000 on June 9, 2017; $15,000 on July 26, 2017 and $105,000 on August 7, 2017. Other On July 17, 2017, the Company issued a press release entitled “Heatwurx Announces Letter of Intent with Promet Therapeutics, LLC Relating to a Reverse Merger” in which the Company disclosed that it has entered into a non-binding letter of intent to engage in a reverse merger with Promet Therapeutics, LLC. Board of Directors On August 24, 2017, Mr. Justin Yorke and Mr. Christopher Bragg were appointed to the Board of Directors of the Company. |
Going Concern and Management's
Going Concern and Management's Plan (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
Policies | |
Going Concern and Management's Plan | Going Concern and ManagementÂ’s Plan The Company has previously relied exclusively on private placements with a small group of investors to finance its business and operations. The Company has had little revenue since inception. For the year ended December 31, 2016, the Company incurred a net loss from continuing operations of approximately $337,179 and used approximately $30,853 in net cash from operating activities from continuing operations and approximately $12,350 in net cash from operating activities from discontinued operations. The Company had total cash on hand of approximately $3,237 as of December 31, 2016. The Company is not able to obtain additional financing adequate to fulfill its commercialization activities, nor achieve a level of revenues adequate to support the CompanyÂ’s cost structure. The Company does not currently have any revenue under contract nor does it have any immediate sales prospects. The Company has significantly reduced employees and overhead. The Company discontinued operations of Dr. Pave, LLC and Dr. Pave Worldwide, LLC on December 31, 2015. These business components are captured within discontinued operations as of December 31, 2016 (Note 6). The Company has significantly scaled back operations to maintain only a minimal level of operations necessary to support our licensee, warehouse the equipment held for the licensee and look for potential merger candidates. It is the CompanyÂ’s intention to move forward as a public entity and to seek potential merger candidates. If the Company fails to merge or be acquired by another company, we will be required to terminate all operations. During the year ended December 31, 2016, the Company received cash in the aggregate of $15,000 under the $2,000,000 senior secured debt offering. Based upon the CompanyÂ’s current financial position and inability to obtain additional financing, the Company was not able to satisfy the mandatory principal payments in 2016 under the $2,000,000 senior secured debt. The Company will continue to work with the lenders to explore extension or conversion options, but there is no guarantee the lenders will agree to modify the repayment terms of the notes under conditions that will allow the Company to continue to repay the notes, if at all. As these notes are secured by all of the assets of the Company, including intellectual property rights, the Company is in default in regard to interest payments on the notes, and the lenders may call the notes and foreclose on the CompanyÂ’s assets. The issues described above raise substantial doubt about the CompanyÂ’s ability to continue as a going concern. The Company has been solely reliant on raising debt and capital in order to maintain its operations. Previously the Company was able to raise debt and equity financing through the assistance of a small number of investors who have been substantial participants in its debt and equity offerings since the CompanyÂ’s formation. These investors have chosen not to further assist the Company with its capital raising initiatives and, at this time, the Company is not able to obtain any alternative forms of financing and the Company will not be able to continue to satisfy its current or long term obligations. The Company needs to merge with or be acquired by another company. If a candidate is not identified, the Company will be forced to cease operations all together. The accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be different should the Company be unable to continue as a going concern. |
Use of Estimates, Policy (Polic
Use of Estimates, Policy (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
Policies | |
Use of Estimates, Policy | Use of Estimates |
Cash and Cash Equivalents, Poli
Cash and Cash Equivalents, Policy (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
Policies | |
Cash and Cash Equivalents, Policy | Cash and Cash Equivalents |
Accounts Receivable and Bad Deb
Accounts Receivable and Bad Debt Expense (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
Policies | |
Accounts Receivable and Bad Debt Expense | Accounts Receivable and Bad Debt Expense |
Equipment, Policy (Policies)
Equipment, Policy (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
Policies | |
Equipment, Policy | Equipment |
Assets held for sale, Policy (P
Assets held for sale, Policy (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
Policies | |
Assets held for sale, Policy | Assets held for sale |
Impairment of Long-Lived Assets
Impairment of Long-Lived Assets, Policy (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
Policies | |
Impairment of Long-Lived Assets, Policy | Impairment of Long-lived Assets |
Intangible Assets, Policy (Poli
Intangible Assets, Policy (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
Policies | |
Intangible Assets, Policy | Intangible Assets |
Debt Discount Policy (Policies)
Debt Discount Policy (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
Policies | |
Debt Discount Policy | Debt Discount |
Stock-based Compensation, Polic
Stock-based Compensation, Policy (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
Policies | |
Stock-based Compensation, Policy | Stock-Based Compensation |
Advertising Expense, Policy (Po
Advertising Expense, Policy (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
Policies | |
Advertising Expense, Policy | Advertising Expense |
Income Taxes, Policy (Policies)
Income Taxes, Policy (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
Policies | |
Income Taxes, Policy | Income Taxes The provision for income taxes includes federal and state income taxes currently payable and deferred taxes resulting from temporary differences between the financial statement and tax basis of assets and liabilities. Valuation allowances are recorded to reduce deferred tax assets when it is more-likely-than-not that a tax benefit will not be realized. With respect to uncertain tax positions, the Company would recognize the tax benefit from an uncertain tax position only if it is more-likely-than-not that the tax position will be sustained upon examination by the taxing authorities, based on the technical merits of the position. The Company had no unrecognized tax benefits or uncertain tax positions at December 31, 2016 or 2015. |
Compensated Absences, Policy (P
Compensated Absences, Policy (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
Policies | |
Compensated Absences, Policy | Compensated absences |
Research and Development, Polic
Research and Development, Policy (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
Policies | |
Research and Development, Policy | Research and development |
Revenue Recognition, Policy (Po
Revenue Recognition, Policy (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
Policies | |
Revenue Recognition, Policy | Revenue Recognition Other revenue represents consumable revenue and discounts on equipment and consumables sold. |
Concentration of Supplier and C
Concentration of Supplier and Customer Risk, Policy (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
Policies | |
Concentration of Supplier and Customer Risk, Policy | Concentration of Supplier and Customer Risk |
Reclassifications, Policy (Poli
Reclassifications, Policy (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
Policies | |
Reclassifications, Policy | Reclassifications |
Recent Accounting Pronouncement
Recent Accounting Pronouncements (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
Policies | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In August 2016, the FASB issued ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”), which standardizes cash flow statement classification of certain transactions, including cash payments for debt prepayment or extinguishment, proceeds from insurance claim settlements, and distributions received from equity method investments. The new guidance is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted. We are considering the impact the adoption of ASU 2016-15 may have on our presentation of cash flows. From May 2014 through December 2016, the FASB issued several ASUs related to Revenue from Contracts with Customers. These ASUs are intended to provide greater insight into both revenue that has been recognized and revenue that is expected to be recognized in the future from existing contracts. The new guidance is effective for interim and annual periods beginning after December 15, 2017, although entities may adopt one year earlier if they choose. The two permitted transition methods under the new standard are the full retrospective method, in which case the standard would be applied to each prior reporting period presented and the cumulative effect of applying the standard would be recognized at the earliest period shown, or the modified retrospective method, in which case the cumulative effect of applying the standard would be recognized at the date of initial application. We do not currently anticipate there would be any change to timing or method of recognizing revenue. As such, we do not believe this new standard will have a material impact on our results of operations, financial condition or cash flows. In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements - Going Concern (“ASU 2014-15”), which would require disclosure of uncertainties about an entity’s ability to continue as a going concern. The new guidance is effective for the annual period ending after December 15, 2016 and for interim periods thereafter. We adopted ASU 2014-15 as of December 31, 2016, which did not have a significant impact on our financial statement disclosures. |
Income Taxes, Disclosure_ Sched
Income Taxes, Disclosure: Schedule of Deferred Tax Assets and Liabilities (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
Policies | |
Schedule of Deferred Tax Assets and Liabilities | December 31, 2016 December 31, 2015 Deferred Tax Assets: Current Net operating loss carry forward - Federal $ 4,452,146 $ 4,338,979 Net operating loss carry forward - State 617,509 598,096 Contribution carry forward 199 199 Accrued liabilities and deferred rent 723 1,519 Total current deferred tax assets 5,070,577 4,938,793 Noncurrent Depreciation (135) (16,533) Amortization -- -- Total noncurrent deferred tax (liabilities)/assets (135) (16,533) Total net deferred tax assets 5,070,442 4,992,260 Valuation allowance for deferred tax asset (5,070,442) (4,922,260) Total deferred tax assets $ -- $ -- |
Assets Held For Sale, Disclos40
Assets Held For Sale, Disclosure: Schedule of Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Tables/Schedules | |
Schedule of Fair Value Measurements | Assets held for sale Fair Value Measurements Using Significant Unobservable Inputs (Level 3) Equipment Inventory Total Beginning balance $ 25,875 $ 16,125 $ 42,000 Disposals (25,875) (16,125) (42,000) Ending balance $ -- $ -- $ -- |
Property and Equipment, Discl41
Property and Equipment, Disclosure: Summary of the cost of property and equipment (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Tables/Schedules | |
Summary of the cost of property and equipment | December 31, 2016 December 31, 2015 Computer equipment & software $ 19,150 $ 19,150 Accumulated depreciation (19,150) (18,991) $ -- $ 159 |
Discontinued Operations, Disc42
Discontinued Operations, Disclosure: Schedules of Discontinued Operations (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Tables/Schedules | |
Schedules of Discontinued Operations | 2016 2015 Revenue $ -- $ 28,870 Expense (1,733) 400,177 Net Income (loss), before Other income and expense and taxes 1,733 (371,307) Other income (expense) (536) Income tax benefit -- -- Net Loss, net of tax $ 1,197 $ (371,307) The balance sheet items for discontinued operations as of December 31, 2015 and 2014 are summarized below: 2016 2015 Cash and cash equivalents $ -- $ 12,350 Total assets $ -- $ 12,350 Payables and accrued liabilities -- 70,358 Short-term debt -- 229,980 Total liabilities $ -- $ 300,338 |
Notes Payable, Disclosure_ Sche
Notes Payable, Disclosure: Schedule of Notes Payable (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Tables/Schedules | |
Schedule of Notes Payable | Principal Balance Interest Rate Accrued Interest Warrants issued Warrant Fair Value - Discount Unamortized Discount Unsecured notes payable $ 420,000 12% $ 88,287 139,997 $ 115,159 $ -- Secured notes payable $ 962,361 12% - 18% $ 292,703 -- -- -- Revolving line of credit $ 229,980 12% $ 60,184 -- -- -- $ 1,612,341 $ 441,174 139,997 $ 115,159 $ -- |
Notes Payable, Disclosure_ Sc44
Notes Payable, Disclosure: Schedule of Loan Payable (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Tables/Schedules | |
Schedule of Loan Payable | Year Payments 2016 $ 1,612,341 2017 -- 2018 -- 2019 -- 2020 -- Total principal payments $ 1,612,341 Less: unamortized debt discount -- Total current portion $ 1,612,341 |
Income Taxes, Disclosure_ Sch45
Income Taxes, Disclosure: Schedule of Effective Income Tax Rate Reconciliation (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Tables/Schedules | |
Schedule of Effective Income Tax Rate Reconciliation | Year ended December 31, 2016 Year ended December 31, 2015 Federal statutory income tax rate 34.0% 34.0% State tax rate (net) 5.7% 7.1% Permanent differences (0.9)% 7.5% Deferred tax asset valuation allowance (38.8)% (48.6)% Effective income tax rate -- -- |
Stockholders' Equity, Disclos46
Stockholders' Equity, Disclosure: Schedule of Stock Option Activity (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Tables/Schedules | |
Schedule of Stock Option Activity | Number of Options Weighted Average Exercise Price Weighted Average Remaining Life (Years) Balance, December 31, 2014 1,246,500 $ 2.35 2.83 Granted 425,000 $ 1.50 Exercised -- -- Cancelled (1,080,333) $ 2.33 Balance, December 31, 2015 591,167 $ 1.78 3.75 Exercisable, December 31, 2015 463,000 $ 1.76 3.68 Granted -- -- Exercised -- -- Cancelled (321,667) $ 1.69 Balance, December 31, 2016 269,500 $ 1.88 2.04 Exercisable, December 31, 2016 269,500 $ 1.88 2.04 |
Stockholders' Equity, Disclos47
Stockholders' Equity, Disclosure: Schedule of Stock Option Valuation Assumptions (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Tables/Schedules | |
Schedule of Stock Option Valuation Assumptions | December 31, 2015 Risk-free interest rate range 1.43% Expected life 5.0 Years Vesting period 0 - 1 Year Expected volatility 42% Expected dividend -- Forfeiture rate 25% Fair value range of options at grant date $0.259 |
Stockholders' Equity, Disclos48
Stockholders' Equity, Disclosure: Schedule of Performance Stock Options (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Tables/Schedules | |
Schedule of Performance Stock Options | Number of Options Weighted Average Exercise Price Balance, December 31, 2014 1,440,000 $ 0.11 Granted -- -- Exercised -- -- Cancelled (1,400,000) $ 0.06 Balance, December 31, 2015 40,000 $ 2.00 Granted -- -- Exercised -- -- Cancelled -- -- Balance, December 31, 2016 40,000 $2.00 Exercisable, December 31, 2015 and 2016 40,000 $ 2.00 |
Stockholders' Equity, Disclos49
Stockholders' Equity, Disclosure: Schedule of Stockholders' Equity Note, Warrants (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Tables/Schedules | |
Schedule of Stockholders' Equity Note, Warrants | Number of Warrants Weighted Average Exercise Price Weighted Average Remaining Life (Years) Balance, December 31, 2014 2,424,980 $ 2.48 2.28 Granted 25,141 $ 2.00 Exercised -- -- Cancelled (449,817) $ 3.00 Balance, December 31, 2015 2,000,304 $ 2.36 1.64 Granted -- -- Exercised -- -- Cancelled -- -- Balance, December 31, 2016 2,000,304 $ 2.36 0.63 |
Net Loss Per Common Share, Di50
Net Loss Per Common Share, Disclosure: Schedule of Earnings Per Share (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Tables/Schedules | |
Schedule of Earnings Per Share | For the year ended December 31, 2016 2015 Net loss from continuing operations $ (337,179) $ (2,982,920) Net income (loss) from discontinued operations 1,197 (371,307) Net loss (335,982) (3,354,227) Basic and diluted: Preferred stock cumulative dividend - Series D (43,058) (42,942) Income applicable to preferred stockholders (43,058) (42,942) Net loss applicable to common stockholders $ (379,040) $ (3,397,169) |
Supplemental Cash Flow Inform51
Supplemental Cash Flow Information, Disclosure: Schedule of Cash Flow, Supplemental Disclosures (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Tables/Schedules | |
Schedule of Cash Flow, Supplemental Disclosures | For the year ended December 31, 2016 2015 Cash paid for interest $ -- $ 25,356 Cash paid for income taxes $ -- $ -- Non-Cash investing and financing transactions Assumption of Revolving line of credit $ 229,980 $ -- Returned equipment applied to outstanding loan principal $ -- $ 98,098 Conversion of unsecured notes to senior secured notes $ -- $ 174,361 Shares issued for consulting services $ -- $ 25,500 |
Going Concern and Management'52
Going Concern and Management's Plan (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Details | ||
Net loss from continuing operations | $ 337,179 | $ 2,982,920 |
Net cash used in operating activities from continuing operations | 30,853 | 639,550 |
Net cash used from operating activities from discontinued operations | 12,350 | |
Cash and cash equivalents | $ 3,237 | $ 2,090 |
Accounts Receivable and Bad D53
Accounts Receivable and Bad Debt Expense (Details) | 12 Months Ended |
Dec. 31, 2015USD ($) | |
Details | |
Bad debt expense | $ 5,148 |
Impairment of Long-Lived Asse54
Impairment of Long-Lived Assets, Policy (Details) | 12 Months Ended |
Dec. 31, 2015USD ($) | |
Details | |
Impairment of intangible asset | $ 1,517,859 |
Debt Discount Policy (Details)
Debt Discount Policy (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Details | ||
Amortization of debt discount | $ 967 | $ 58,801 |
Advertising Expense, Policy (De
Advertising Expense, Policy (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Details | ||
Advertising costs | $ 69 | $ 25,431 |
Assets Held For Sale, Disclos57
Assets Held For Sale, Disclosure: Schedule of Fair Value Measurements (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Assets held for sale | $ 42,000 | |
Assets disposed of | $ (42,000) | |
-Equipment- | ||
Assets held for sale | 25,875 | |
Assets disposed of | (25,875) | |
-Inventory- | ||
Assets held for sale | $ 16,125 | |
Assets disposed of | $ (16,125) |
Assets Held For Sale, Disclos58
Assets Held For Sale, Disclosure (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Details | ||
Gain (loss) on disposal of assets | $ 25,000 | $ 60,743 |
Property and Equipment, Discl59
Property and Equipment, Disclosure: Summary of the cost of property and equipment (Details) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Accumulated depreciation | $ (19,150) | $ (18,991) |
Computer Equipment | ||
Property, Plant and Equipment, Gross | $ 19,150 | $ 19,150 |
Property and Equipment, Discl60
Property and Equipment, Disclosure (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Details | ||
Depreciation expense | $ 159 | $ 60,251 |
Gain (loss) on disposal of assets | $ 25,000 | 60,743 |
Gain (loss) on impairment of assets held for sale | $ 62,554 |
Asset Purchase Agreement Disc61
Asset Purchase Agreement Disclosure (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Feb. 10, 2015 | Apr. 15, 2011 | |
Impairment of intangible asset | $ 1,517,859 | ||
Amortization of intangible asset | $ 178,571 | ||
Asset Purchase Agreement | |||
Total purchase price | $ 2,500,000 | ||
Performance stock options granted | 1,400,000 | ||
Performance stock options, exercise price | $ 0.057 | ||
Performance stock options granted cancelled | 1,400,000 |
Discontinued Operations, Disc62
Discontinued Operations, Disclosure: Schedules of Discontinued Operations (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Details | ||
Revenue related to discontinued operations | $ 28,870 | |
Expense related to discontinued operations | $ (1,733) | 400,177 |
Net income (loss) from discontinued operations | $ 1,197 | (371,307) |
Cash and cash equivalents, discontinued opertions | 12,350 | |
Total assets, discontinued operations | 12,350 | |
Payables and accrued liabilities, discontinued operations | 70,358 | |
Short-term debt, discontinued operations | 229,980 | |
Total liabilities, discontinued operations | $ 300,338 |
Notes Payable, Disclosure (Deta
Notes Payable, Disclosure (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Notes and warrants | ||
Amortization of discount on notes payable | $ 967 | $ 58,801 |
Notes Payable, Disclosure_ Sc64
Notes Payable, Disclosure: Schedule of Notes Payable (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2016 | |
Notes payable, principal balance | $ 1,612,341 | |
Accrued interest | $ 161,608 | 441,174 |
Warrants issued | 139,997 | |
Warrants fair value - discount | $ 115,159 | |
Unsecured Notes Payable | ||
Notes payable, principal balance | 420,000 | |
Accrued interest | 88,287 | |
Warrants issued | 139,997 | |
Warrants fair value - discount | $ 115,159 | |
Secured Notes Payable | ||
Notes payable, principal balance | 962,361 | |
Accrued interest | 292,703 | |
Revolving line of credit | ||
Notes payable, principal balance | 229,980 | |
Accrued interest | $ 60,184 |
Notes Payable, Disclosure_ Sc65
Notes Payable, Disclosure: Schedule of Loan Payable (Details) | Dec. 31, 2016USD ($) |
Total current portion of loans | $ 1,612,341 |
Loans Payable Due | |
Mandatory principal loan payments (2016) | 1,612,341 |
Total principal payments | $ 1,612,341 |
Income Taxes, Disclosure (Detai
Income Taxes, Disclosure (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Change in the valuation allowance for deferred tax assets | $ 148,182 | $ 1,359,848 |
Federal | ||
Operating losses for income tax purposes | 13,094,547 | 12,761,702 |
State | ||
Operating losses for income tax purposes | $ 12,407,648 | $ 12,704,903 |
Income Taxes, Disclosure_ Sch67
Income Taxes, Disclosure: Schedule of Deferred Tax Assets and Liabilities (Details) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Details | ||
Net operating loss carry forward - Federal | $ 4,452,146 | $ 4,338,979 |
Net operating loss carry forward - State | 617,509 | 598,096 |
Contribution carry forward | 199 | 199 |
Accrued liabilities and deferred rent carry forward | 723 | 1,519 |
Deferred tax assets, current | 5,070,577 | 4,938,793 |
Depreciation carried forward | (135) | (16,533) |
Deferred tax assets, noncurrent | (135) | (16,533) |
Deferred tax assets, net | 5,070,442 | 4,992,260 |
Valuation allowance for deferred tax asset | $ (5,070,442) | $ (4,922,260) |
Income Taxes, Disclosure_ Sch68
Income Taxes, Disclosure: Schedule of Effective Income Tax Rate Reconciliation (Details) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Details | ||
Federal statutory income tax rate | 34.00% | 34.00% |
State tax rate | 5.70% | 7.10% |
Permanent differences | (0.90%) | 7.50% |
Deferred tax asset valuation allowance | (38.80%) | (48.60%) |
Stockholders' Equity, Disclos69
Stockholders' Equity, Disclosure (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Common stock authorized | 20,000,000 | 20,000,000 |
Common shares issued | 11,017,388 | 11,017,388 |
Common stock issued | 50,285 | |
Proceeds from common stock issuance | $ 88,000 | |
Common stock issued for services | 15,000 | |
Value of stock issued for services | $ 25,500 | |
Preferred stock authorized | 4,500,000 | 4,500,000 |
Number of options granted | 425,000 | |
Stock-based compensation expense | $ 6,691 | $ 96,929 |
Unrecognized compensation expense | $ 6,691 | |
Warrants issued | 139,997 | |
Former Ceo | ||
Number of options granted | 125,000 | |
Employees For Continued Consulting Services | ||
Number of options granted | 100,000 | |
Employees Of The Company | ||
Number of options granted | 200,000 | |
Private Equity Offering Dated October 1, 2014 | ||
Warrants issued | 25,141 | |
Series D Preferred Stock | ||
Shares outstanding | 178,924 | |
Dividends paid | $ 31,475 | |
Dividends payable | $ 89,000 | |
Original issue price per share | $ 3 |
Stockholders' Equity, Disclos70
Stockholders' Equity, Disclosure: Schedule of Stock Option Activity (Details) - $ / shares | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Details | |||
Number of options outstanding | 269,500 | 591,167 | 1,246,500 |
Weighted average exercise price, options outstanding | $ 1.88 | $ 1.78 | $ 2.35 |
Number of options granted | 425,000 | ||
Weighted average exercise price, options granted | $ 1.50 | ||
Number of options cancelled | (321,667) | (1,080,333) | |
Weighted average exercise price, options cancelled | $ 1.69 | $ 2.33 | |
Number of options exercisable | 269,500 | 463,000 | |
Weighted average exercise price, options exercisable | $ 1.88 | $ 1.76 |
Stockholders' Equity, Disclos71
Stockholders' Equity, Disclosure: Schedule of Performance Stock Options (Details) - $ / shares | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2014 | |
Details | |||
Performance Stock options outstanding | 40,000 | 40,000 | 1,440,000 |
Weighted average exercise price, performance stock options outstanding | $ 2 | $ 2 | $ 0.11 |
Performance Stock cancelled | (1,400,000) | ||
Performance Stock cancelled, weighted average exercise price | $ 0.06 | ||
Performance Stock options exercisable | 40,000 |
Stockholders' Equity, Disclos72
Stockholders' Equity, Disclosure: Schedule of Stockholders' Equity Note, Warrants (Details) - $ / shares | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2014 | |
Details | |||
Warrants outstanding | 2,000,304 | 2,000,304 | 2,424,980 |
Weighted average exercise price, warrants | $ 2.36 | $ 2.36 | $ 2.48 |
Warrants granted | 25,141 | ||
Warrants cancelled | (449,817) |
Net Loss Per Common Share, Di73
Net Loss Per Common Share, Disclosure: Schedule of Earnings Per Share (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Net loss from continuing operations | $ (337,179) | $ (2,982,920) |
Net income (loss) from discontinued operations | 1,197 | (371,307) |
Net loss | (335,982) | (3,354,227) |
Net income (loss) available to preferred stockholders | (43,058) | (42,942) |
Net loss applicable to common stockholders | (379,040) | (3,397,169) |
Series D Dividend | ||
Dividends paid or accrued on preferred stock | $ (43,058) | $ (42,942) |
Commitments and Contingencies74
Commitments and Contingencies, Disclosure (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Details | ||
Total rent expense | $ 2,250 | $ 50,035 |
Accounts payable and accrued expenses from continuing operations | 300,678 | |
Debt and accrued interest from continuing operations | $ 2,053,515 |
Related Party Transactions, D75
Related Party Transactions, Disclosure (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Accrued interest | $ 441,174 | $ 161,608 |
Secured notes payable - Mr. Yorke | ||
Due to related party | 962,361 | 947,361 |
Revolving line of credit - Mr. Yorke | ||
Due to related party | 138,000 | |
Mr. Yorke (Director) | ||
Interest and/or dividends earned | 192,728 | 120,565 |
Accrued interest | 332,566 | 139,838 |
Mr. Gus Blass (former Director) | ||
Interest and/or dividends earned | 24,065 | 24,000 |
Accrued dividends | 48,065 | 24,000 |
Reginald Greenslade (former Director) | ||
Interest and/or dividends earned | 5,533 | 5,519 |
Accrued interest | 10,158 | 4,626 |
David Dworsky (former CEO) | ||
Interest and/or dividends earned | 361 | 360 |
Accrued dividends | $ 721 | $ 360 |
Supplemental Cash Flow Inform76
Supplemental Cash Flow Information, Disclosure: Schedule of Cash Flow, Supplemental Disclosures (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Details | ||
Cash paid for interest | $ 25,356 | |
Assumption of Revolving line of credit | $ 229,980 | |
Returned equipment applied to outstanding loan principal | 98,098 | |
Conversion of unsecured debt to secured note payable | 174,361 | |
Stock issued for services | $ 25,500 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) | 7 Months Ended | 12 Months Ended | |
Aug. 07, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Secured note entered into | $ 15,000 | $ 753,000 | |
June 9, 2017 | |||
Secured note entered into | $ 75,000 | ||
July 26, 2017 | |||
Secured note entered into | 15,000 | ||
August 7, 2017 | |||
Secured note entered into | $ 105,000 |