Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Mar. 17, 2014 | Jun. 30, 2013 | |
Document and Entity Information | ' | ' | ' |
Entity Registrant Name | 'FRESH MEDICAL LABORATORIES, INC. | ' | ' |
Document Type | '10-K | ' | ' |
Document Period End Date | 31-Dec-13 | ' | ' |
Amendment Flag | 'false | ' | ' |
Entity Central Index Key | '0001541884 | ' | ' |
Current Fiscal Year End Date | '--12-31 | ' | ' |
Entity Common Stock, Shares Outstanding | ' | 17,923,467 | ' |
Entity Filer Category | 'Smaller Reporting Company | ' | ' |
Entity Current Reporting Status | 'Yes | ' | ' |
Entity Voluntary Filers | 'No | ' | ' |
Entity Well-known Seasoned Issuer | 'No | ' | ' |
Document Fiscal Year Focus | '2013 | ' | ' |
Document Fiscal Period Focus | 'FY | ' | ' |
Entity Public Float | ' | ' | $2,190,073 |
Consolidated_Balance_Sheets
Consolidated Balance Sheets (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Current Assets | ' | ' |
Cash | $87,082 | $2,876 |
Inventory | 11,610 | ' |
Total current assets | 98,692 | 2,876 |
Office Equipment | ' | ' |
Computer equipment | 7,228 | 11,486 |
Office furniture | 3,800 | 3,800 |
Total Assets | 11,028 | 15,286 |
Accumulated depreciation | -4,727 | -1,958 |
Net Office Equipment | 6,301 | 13,328 |
Total Assets (Net) | 104,993 | 16,204 |
Current Liabilities | ' | ' |
Accounts payable | 83,963 | 190,110 |
Accrued liabilities | 330,884 | 230,479 |
Related-party notes payable, current portion | 356,931 | 381,931 |
Convertible notes payable, current portion | ' | 70,588 |
Total Current Liabilities | 771,778 | 873,108 |
Long-Term Liabilities | ' | ' |
Related-party notes payable, net of current portion | 929,536 | 929,536 |
Convertible notes payable | 180,000 | 454,000 |
Convertible notes payable - related party | ' | 127,822 |
Total Long-Term Liabilities | 1,109,536 | 1,511,358 |
Total Liabilities | 1,881,314 | 2,384,466 |
Stockholders' Equity (Deficit): | ' | ' |
Preferred stock, $0.001 par value; 10,000,000 shares authorized; none issued and outstanding | 0 | 0 |
Common stock, $0.001 par value; 20,000,000 shares authorized;15,980,028 shares and 11,452,675 shares issued and outstanding, respectively | 15,980 | 11,452 |
Additional paid-in capital | 6,793,934 | 4,973,557 |
Deficit accumulated during the development stage | -8,586,235 | -7,353,271 |
Total Stockholders' Equity (Deficit) | -1,776,321 | -2,368,262 |
Total Liabilities and Stockholders' Equity (Deficit) | $104,993 | $16,204 |
Consolidated_Balance_Sheets_Pa
Consolidated Balance Sheets Parentheticals (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Balance Sheets Parentheticals | ' | ' |
Preferred Stock par value | $0.00 | $0.00 |
Preferred Stock Shares authorized | 10,000,000 | 10,000,000 |
Preferred Stock Shares issued | 0 | 0 |
Common Stock Par Value | $0.00 | $0.00 |
Common Stock Shares authorized | 20,000,000 | 20,000,000 |
Common Stock Shares issued | 15,980,028 | 11,452,675 |
Common Stock Shares outstanding | 15,980,028 | 11,452,675 |
Consolidated_Statements_of_Ope
Consolidated Statements of Operations (USD $) | 12 Months Ended | 109 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | |
Revenue | ' | ' | ' |
Licensing income | $115,000 | $0 | $215,000 |
Expenses | ' | ' | ' |
Research and development expense | 798,386 | 861,520 | 5,985,178 |
General and administrative expense | 258,954 | 415,802 | 1,932,198 |
Total expenses | 1,057,340 | 1,277,322 | 7,917,376 |
Loss from operations | -942,340 | -1,277,322 | -7,702,376 |
Other income (expense) | ' | ' | ' |
U.S. government grant income | 0 | 0 | 249,479 |
Loss on extinguishment of debt, net | -96,371 | 0 | -79,170 |
Interest expense | -194,253 | -248,361 | -1,054,168 |
Net other income (expenses) | -290,624 | -248,361 | -883,859 |
Net loss | ($1,232,964) | ($1,525,683) | ($8,586,235) |
Basic and diluted loss per share | ($0.10) | ($0.14) | ' |
Weighted-average common shares outstanding | 12,421,076 | 10,706,366 | ' |
Consolidated_Statements_of_Cas
Consolidated Statements of Cash Flows (USD $) | 12 Months Ended | 109 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | |
Operating activities | ' | ' | ' |
Net loss | ($1,232,964) | ($1,525,683) | ($8,586,235) |
Adjustments to reconcile net loss to net cash used in operating activities: | ' | ' | ' |
Depreciation | 4,741 | 1,958 | 6,699 |
Loss on disposition of computer equipment | 3,300 | 0 | 3,300 |
Loss on extinguishment of debt | 96,371 | 0 | 79,170 |
Stock-based compensation | 291,712 | 271,895 | 2,088,234 |
Amortization of debt discount | 0 | 16,636 | 88,239 |
Change in assets and liabilities: | ' | ' | ' |
Inventory | -11,610 | 0 | -11,610 |
Accounts payable | -106,147 | 100,642 | 83,963 |
Accrued liabilities | 142,817 | 219,313 | 965,564 |
Net cash used in operating activities | -811,780 | -915,239 | -5,282,676 |
Cash flows from investing activities: | ' | ' | ' |
Purchase of office equipment | -1,014 | -15,286 | -16,300 |
Net cash used in investing activities | -1,014 | -15,286 | -16,300 |
Cash flows from financing activities: | ' | ' | ' |
Proceeds from issuance of common stock | 742,000 | 60,000 | 3,175,058 |
Checks written in excess of bank balance | 0 | -3,592 | 0 |
Payments of related-party payable | 0 | -12,007 | 0 |
Proceeds from issuance of convertible notes payable | 5,000 | 739,000 | 744,000 |
Proceeds from issuance of related-party notes payable | 150,000 | 150,000 | 1,492,000 |
Principal payments on related-party notes payable and long-term debt | 0 | 0 | -25,000 |
Net cash provided by financing activities | 897,000 | 933,401 | 5,386,058 |
Net increase in cash | 84,206 | 2,876 | 87,082 |
Cash at beginning of period | 2,876 | 0 | 0 |
Cash at end of period | 87,082 | 2,876 | 87,082 |
Cash paid for interest | 0 | 0 | ' |
Supplemental disclosure of non-cash financing activities: | ' | ' | ' |
Accrued interest converted to note payable | 0 | 132,387 | ' |
Long-term debt and accrued interest converted to common stock | $791,193 | $258,795 | ' |
Condensed_Consolidated_Stateme
Condensed Consolidated Statements of Stockholders Deficit (USD $) | Common stock shares | Common Stock Amount | Additional Paid in capital | Deficit Accumulated During the Development Stage | Total Stockholders Deficit |
USD ($) | USD ($) | USD ($) | USD ($) | ||
Balance at Nov. 22, 2004 | ' | 0 | 0 | 0 | 0 |
Compensation at $0.32 per share | 320,000 | 320 | 102,080 | 0 | 102,400 |
Cash at $0.32 per share | 1,770,017 | 1,770 | 563,230 | 0 | 565,000 |
Compensation at $0.32 per share. | 32,000 | 32 | 10,208 | 0 | 10,240 |
Cash at $0.32 per share. | 1,109,983 | 1,110 | 353,203 | 0 | 354,313 |
Compensation at $0.32 per share, | 363,385 | 363 | 115,920 | 0 | 116,283 |
Interest on notes payable at $0.32 per share | 16,000 | 16 | 5,104 | 0 | 5,120 |
Issuance of 58,439 warrants for interest on notes payable; 2007 | ' | 0 | 18,653 | 0 | 18,653 |
Common stock issued for compensation at $0.32 per share; 2008 | 300,000 | 300 | 95,700 | 0 | 96,000 |
Issuance of 30,000 warrants for compensation; 2008 | ' | 0 | 4,153 | 0 | 4,153 |
Common stock issued for compensation at $.50 per share; 2009 | 302,000 | 302 | 39,098 | 0 | 39,400 |
Common stock issued for compensation at $0.65 per share; 2009 | 354,654 | 355 | 230,170 | 0 | 230,525 |
Common stock issued for extention of notes payable at $0.65 per share; 2009 | 9,000 | 9 | 5,841 | 0 | 5,850 |
Issuance of 40,000 warrants for settlement of loan origination fees;2009 | ' | 0 | 20,430 | 0 | 20,430 |
Issuance of 25,000 warrants for compensation; 2009 | ' | 0 | 9,196 | 0 | 9,196 |
Issuance of 30,000 warrants for extension of notes payable; 2009 | ' | 0 | 14,762 | 0 | 14,762 |
Common stock issued for cash at $0.50 per share; 2009 | 745,000 | 745 | 371,755 | 0 | 372,500 |
Common stock issued for cash at $0.65 per share; 2009 | 143,085 | 142 | 92,863 | 0 | 93,005 |
Common stock issued for cash at $0.60 per share; 2009 | 3,077 | 3 | 1,847 | 0 | 1,850 |
Conversion of accrued liabilitites into common stock at $0.50 per share; 2009 | 294,652 | 295 | 147,031 | 0 | 147,326 |
Stock-based compensation; 2009 | ' | 0 | 94,844 | 0 | 94,844 |
Common stock issued for cash at $.65 per share; 2010 | 72,193 | 72 | 46,853 | 0 | 46,925 |
Common stock and 180,000 warrants issued for cash at $0.50 per share; 2010 | 900,000 | 900 | 449,100 | 0 | 450,000 |
Common stock issued for compensation at $.65 per share; 2010 | 688,397 | 688 | 56,770 | 0 | 57,458 |
Common stock issued for compensation at $.43 per share; 2010 | 175,317 | 176 | 19,310 | 0 | 19,486 |
Common stock and 97,898 warrants for conversion of notes payable and accrued interest; 2010 | 489,491 | 490 | 246,624 | 0 | 247,114 |
Common stock issued for extension of notes payable at $0.57 per share; 2010 | 15,000 | 15 | 8,463 | 0 | 8,478 |
Common stock issued for extension of notes payable at $0.65 per share; 2010 | 15,000 | 15 | 9,735 | 0 | 9,750 |
Exercise of warrants; 2010 | 70,000 | 70 | -70 | 0 | 0 |
Stock-based compensation; 2010 | ' | 0 | 445,471 | 0 | 445,471 |
Common stock issued for cash at $0.65 per share, 2011 | 10,000 | 10 | 6,490 | 0 | 6,500 |
Common stock issued for cash at $0.50 per share, 2011 | 507,930 | 508 | 253,457 | 0 | 253,965 |
Common stock issued for cash and a $60,000 receivable from a shareholder, at $0.30 per share, 2011 | 950,002 | 950 | 288,050 | 0 | 289,000 |
Common stock issued for extension of notes payable at $0.50 per share | 50,000 | 50 | 24,950 | 0 | 25,000 |
Stock-based compensation:2011. | 715,535 | 715 | 292,606 | 0 | 293,321 |
Net loss for the period from November 24 2004 (date of inception) through December 31, 2011 | ' | $0 | $0 | ($5,827,588) | ($5,827,588) |
Balance at Dec. 31, 2011 | 10,421,718 | 10,421 | 4,443,897 | -5,827,588 | -1,373,270 |
Stock-based compensation 2012, | 703,000 | 703 | 241,865 | 0 | 242,568 |
Fair value of warrants issued for extension of notes payable | ' | 0 | 25,757 | 0 | 25,757 |
Common stock issued for conversion of notes and accrued interest, | 323,493 | 324 | 258,471 | 0 | 258,795 |
Common stock issued for services at $0.80 per share | 4,464 | 4 | 3,567 | 0 | 3,571 |
Net loss for the year 2012 | ' | 0 | 0 | -1,525,683 | -1,525,683 |
Balance at Dec. 31, 2012 | 11,452,675 | 11,452 | 4,973,557 | -7,353,271 | -2,368,262 |
Stock-based compensation 2013. | 1,849,146 | 1,850 | 289,862 | 0 | 291,712 |
Common stock issued for conversion of notes and accrued interest, | 1,234,457 | 1,234 | 789,959 | 0 | 791,193 |
Common stock issued for cash at $0.50 per share, | 1,443,750 | 1,444 | 740,556 | 0 | 742,000 |
Net loss for the year 2013. | ' | $0 | $0 | ($1,232,964) | ($1,232,964) |
Balance at Dec. 31, 2013 | 15,980,028 | 15,980 | 6,793,934 | -8,586,235 | -1,776,321 |
Organization_and_Summary_of_Si
Organization and Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2013 | |
Organization and Summary of Significant Accounting Policies | ' |
Organization and Summary of Significant Accounting Policies | ' |
Note 1 – Organization and Summary of Significant Accounting Policies | |
Organization – Fresh Medical Laboratories, Inc. (the “Company”) is a Delaware corporation that was incorporated on November 22, 2004. On September 10, 2012, the Company filed an application to do business as ProLung. The Company’s headquarters are located in Salt Lake City, Utah. The Company’s business is the development and deployment of medical devices and procedures specializing in the immediate, non-invasive evaluation of indeterminate masses seen in CT and radiography. The Company is in the development stage and its activities to date consist of research and development, developing markets for its products, securing strategic alliances, and obtaining financing. In April 2013, the Company entered into an agreement to license its technology to a distributor for the China market. In May 2013, the Company received the “CE” mark in Europe permitting the marketing of the Company’s device in the European Union and certain other countries. In the United States, the Company has submitted its application for marketing approval to the United States Food and Drug Administration. | |
During the year ended December 31, 2012, the Company formed a wholly-owned subsidiary, Hilltop Acquisition Corporation, Inc., which has had no activity since its inception and is included in the accompanying consolidated financial statements from the date of its formation. | |
Development Stage – The Company is in the development stage and its activities to date consist of research and development, developing markets for its products, securing strategic alliances, and obtaining financing. For the period from November 22, 2004 (date of inception) to December 31, 2013, the Company has not generated significant revenues from operations and has been developing its products. Therefore, the Company is considered to be in the development stage in accordance with the provisions of FASB ASC 915-10-05, Accounting and Reporting by Development Stage Enterprises. | |
Business Condition – The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company’s products are not yet fully developed. The Company has generated minimal revenues from operations, has incurred substantial and recurring losses to date from operations, and has used cash in its operating activities during the years ended December 31, 2013 and 2012, and cumulative from inception through December 31, 2013. Additionally, the Company had negative working capital and a stockholders’ deficit as of December 31, 2013 and 2012. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty. | |
The ability of the Company to continue as a going concern is dependent on the Company successfully developing products that can be sold profitably, and in the near term successfully generating cash through financing activities. Management’s plans include issuing equity or debt securities to fund capital requirements and ongoing operations. However, there can be no assurance the Company will be successful in these efforts. Subsequent to December 31, 2013, the Company has obtained additional financing, as further discussed in Note 10. | |
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 certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. | |
Fair Value of Financial Instruments – Related party notes payable bear interest rates that are not market interest rates given the risks associated with a company in the development Related-party stage. The conversion terms and risks associated with a company in the development stage also cause the interest rate borne by the convertible notes payable to unrelated parties to not approximate a market interest rate for similar instruments. However, due to the relatively short terms remaining to the notes’ maturity dates as of December 31, 2013, the carrying value of the related-party notes payable and the convertible notes payable approximates their fair value. | |
Research and Development – The Company expenses research and development costs as incurred. Research and development costs primarily consist of clinical study costs, consulting fees, compensation of employees related to activities to obtain regulatory approval for the Company’s devices, legal fees associated with the Company’s intellectual property, and materials and supplies. | |
Inventory – Inventory consists of materials purchased during the quarter ended December 31, 2013 for the initial assembly of the Company’s product which has received regulatory approval in Europe. The Company has recorded these costs as inventory because regulatory approval has been received and management has determined that a future benefit is probable. Inventory is valued at the lower of cost or market value, with cost determined based on the first-in-first-out method. | |
Office Equipment – Office Equipment is stated at cost and depreciated using the straight-line method over useful lives of 3 to 5 years. Depreciation expense for the years ended December 31, 2013 and 2012 was $4,741 and $1,958, respectively. | |
Revenue Recognition – Revenue is recognized by the Company when a binding sales or service agreement exists between the parties, services have been rendered, the price for the services is fixed or determinable, collection is reasonably assured, and the Company has no significant obligations remaining with respect to the arrangement. | |
Stock-based Compensation – The Company measures the cost of employee and consulting services received in exchange for an award of equity instruments based on the grant-date fair value of the award. The awards issued are valued using a fair value-based measurement method. The resulting cost is recognized over the period during which an employee or consultant is required to provide services in exchange for the award, usually the vesting period. | |
Income Taxes – The Company accounts for income taxes under the asset and liability method. Deferred income tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and for operating loss and tax credit carry-forwards. Deferred income tax assets and liabilities are measured using the enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred income tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date. The Company has established a valuation allowance to reduce deferred income tax assets to their realizable values based on whether it is more likely than not that such deferred income tax assets will be realized. At December 31, 2013, the Company has recorded a full valuation allowance against the net deferred tax assets related to temporary differences and operating losses because there is significant uncertainty as to the realizability of the deferred tax assets. | |
Basic and Diluted Loss Per Share – The Company computes basic loss per share by dividing net loss by the weighted-average number of common shares outstanding during the period. The Company computes diluted loss per share by dividing net loss by the sum of the weighted-average number of common shares outstanding and the weighted-average dilutive common share equivalents outstanding. The computation of diluted loss per share does not assume exercise or conversion of securities that would have an anti-dilutive effect. As of December 31, 2013, there were warrants to purchase 576,650 shares of common stock outstanding, 1,297,722 non-vested shares of common stock and $180,000 of convertible notes payable that were excluded from the computation of diluted net loss per common share as they were anti-dilutive. As of December 31, 2012, there were warrants to purchase 566,337 shares of common stock outstanding, 130,000 non-vested shares of common stock, $524,588 of convertible notes payable, and $127,822 of convertible notes payable to related parties that were excluded from the computation of diluted net loss per common share as they were anti-dilutive. | |
Reclassifications – Certain amounts in the accompanying consolidated financial statements as of December 31, 2012 and for the year then ended have been reclassified in the current presentation to conform to the presentation as of December 31, 2013 and for the year then ended. These reclassifications had no effect on the total amount of assets, liabilities, or of stockholders’ deficit as of December 31, 2012, and had no effect on the amount of net loss, or on the basic and diluted loss per common share for the year ended December 31, 2012. | |
Recent Accounting Pronouncements – In July 2013, the Financial Accounting Standards Board issued Accounting Standards Update No. 2013-11, Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists (ASU 2013-11) to provide guidance on the presentation of unrecognized tax benefits. ASU 2013-11 requires an entity to present an unrecognized tax benefit, or a portion of an unrecognized tax benefit, as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, except as follows: to the extent a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position or the tax law of the applicable jurisdiction does not require the entity to use, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. ASU 2013-11 is effective January 1, 2015 with earlier adoption permitted. ASU 2013-11 should be applied prospectively with retroactive application permitted. Management is currently evaluating the impact of the pending adoption of ASU 2013-11 on the Company’s consolidated financial statements. | |
Accrued_Liabilities
Accrued Liabilities | 12 Months Ended | ||||||
Dec. 31, 2013 | |||||||
Accrued liabilities {2} | ' | ||||||
Accrued Liabilities | ' | ||||||
Note 2 – Accrued Liabilities | |||||||
Accrued liabilities consisted of the following as of December 31: | |||||||
2013 | 2012 | ||||||
Accrued interest | $ | 329,128 | $ | 177,287 | |||
Accrued payroll and payroll taxes | 1,756 | 53,192 | |||||
Total accrued liabilities | $ | 330,884 | $ | 230,479 | |||
Related_Party_Notes_Payable
Related Party Notes Payable | 12 Months Ended | |||||||
Dec. 31, 2013 | ||||||||
Related Party Notes Payable: | ' | |||||||
Related Party Notes Payable | ' | |||||||
Note 3 – Related-Party Notes Payable | ||||||||
As of December 31, 2013 and 2012, the Company was obligated under the terms of a promissory note payable to a founding shareholder and former member of its board of directors in the amount of $929,536. The note matures on April 30, 2015, bears interest at 11.10% and is unsecured. As of December 31, 2013 and 2012, the balance of accrued interest payable was $172,153 and $68,974, respectively. Interest expense for the years ended December 31, 2013 and 2012 was $103,179 and $98,574, respectively. | ||||||||
At December 31, 2013 and 2012, the Company was obligated under the terms of a master note payable to an individual related to an executive officer of the Company in the amount of $356,931. The note is secured by all the assets of the Company, was due on December 31, 2012, and bears interest at 15% per annum. The note holder has not filed a notice of default. On March 27, 2014, the note holder and the Company entered into an amendment of the master note to extend the maturity date to June 30, 2016. The balance of accrued interest payable at December 31, 2013 and 2012 was $134,070 and 80,530, respectively. Interest expense for each of the years ended December 31, 2013 and 2012 was $53,540. | ||||||||
During 2012 and 2013, the Company received advances from a member of its board of directors in the amounts of $25,000 and $150,000, respectively. The terms of the advances were not initially established such as the interest rate, the security or the conversion terms. During the three months ended December 31, 2013, the advances totaling $175,000 were converted into 350,000 shares of common stock, or $0.50 per share. There was no interest paid on the advances during the years ended December 31, 2013 or 2012. | ||||||||
On June 30, 2012, the Company issued $127,822 of convertible notes payable to three members of the board of directors. The notes were due February through April 2015, bore interest at 8% per annum, and were unsecured. The notes and accrued interest were originally convertible into common stock at the greater of $0.80 per share or 85% of the closing price for the previous ten trading days prior to the conversion, or if the Company’s stock was not publicly traded, then the conversion price would be the average of the three prior private stock purchases of the Company’s common stock for cash. During the three months ended December 31, 2013, all of the principal of these notes plus accrued interest of $14,680 were converted into 285,009 shares of the Company’s common stock at $0.50 per share. The Company recognized a loss on extinguishment of debt of $53,439 as a result of the modification of the conversion price of the promissory notes. Interest expense for the years ended December 31, 2013 and 2012 was $9,525 and $5,155, respectively. | ||||||||
Notes payable to related parties are summarized as follows at December 31: | ||||||||
2013 | 2012 | |||||||
Related-Party Notes Payable: | ||||||||
Note payable to a former director; unsecured; interest at 11.10% per annum; due April 30, 2015 | $ | 929,536 | $ | 929,536 | ||||
Note payable to a related party; secured by all the assets of the Company; interest at 15% per annum; due December 31, 2012 | 356,931 | 356,931 | ||||||
Advances payable to a director | - | 25,000 | ||||||
Total Related-Party Notes Payable | 1,286,467 | 1,311,467 | ||||||
Less: Current Portion | 356,931 | 381,931 | ||||||
Long-Term Related Party Notes Payable | $ | 929,536 | $ | 929,536 | ||||
Long-Term Convertible Related-Party Notes Payable: | ||||||||
Convertible notes payable to related parties; unsecured; interest at 8% per annum | $ | - | $ | 127,822 |
Convertible_Notes_Payable
Convertible Notes Payable | 12 Months Ended | |||||||
Dec. 31, 2013 | ||||||||
Convertible Notes Payable {1} | ' | |||||||
Convertible Notes Payable | ' | |||||||
Note 4 – Convertible Notes Payable | ||||||||
In March 2012, the Company issued two notes payable to unrelated parties. The two notes had an aggregate principal balance of $60,000 and an aggregate carrying value of $70,588. The notes bore interest at 8%, were unsecured, and matured on October 1, 2013. The notes were convertible into common stock at 85% of the closing price for the previous ten trading days prior to the conversion. If the Company’s stock was not publicly traded, then the price would be the average of the three prior private stock purchases of the Company’s common stock for cash. During the three months ended December 31, 2013, all of the principal of these notes plus accrued interest of $7,686 was converted into 135,371 shares of the Company’s common stock at $0.50 per share. | ||||||||
During 2012 and 2013, the Company issued notes payable to unrelated parties totaling $679,000 and $5,000, respectively. These notes bear interest at 8%, are unsecured and mature from June through August 2015. The notes payable were originally convertible into common stock at the greater of $0.80 per share or 85% of the closing price for the previous ten trading days prior to the conversion. If the Company’s stock is not publicly traded, then the price will be the average of the three prior private stock purchases of the Company’s common stock for cash. During the year ended December 31, 2012, notes payable totaling $225,000 and related accrued interest of $4,570 were converted into 323,493 shares of the Company’s common stock, principally at $0.70 per share. During the year ended December 31, 2013, notes payable totaling $279,000 and related accrued interest of $20,045 were converted into 464,077 shares of the Company’s common stock, principally at $0.50 per share. The Company recognized a loss on extinguishment of debt of $42,931 as a result of the modification of the conversion price of certain of the promissory notes. The balance due on the notes payable was $180,000 and $454,000 at December 31, 2013 and 2012, respectively. | ||||||||
Convertible notes payable are summarized as follows at December 31: | ||||||||
2013 | 2012 | |||||||
Convertible Notes Payable: | ||||||||
Convertible notes payable; unsecured; interest at 8% per annum | $ | - | $ | 70,588 | ||||
Convertible notes payable; unsecured; interest at 8% per annum; due June through August 2015 | 180,000 | 454,000 | ||||||
Total Convertible Notes Payable | 180,000 | 524,588 | ||||||
Less: Current Portion | - | 70,588 | ||||||
Long-Term Convertible Notes Payable | $ | 180,000 | $ | 454,000 |
Preferred_Stock
Preferred Stock | 12 Months Ended |
Dec. 31, 2013 | |
Preferred Stock | ' |
Preferred Stock | ' |
Note 5 – Preferred Stock | |
The shareholders of the Company have authorized 10,000,000 shares of preferred stock, par value $0.001 per share. The preferred stock may be issued in one or more series. The board of directors has the right to fix the number of shares of each series (within the total number of authorized shares of the preferred stock available for designation as a part of such series), and designate, in whole or part, the preferences, limitations and relative rights of each series of preferred stock. As of December 31, 2013, the board of directors has not designated any series of preferred stock and there are no shares of preferred stock issued or outstanding. | |
Common_Stock
Common Stock | 12 Months Ended | ||||||
Dec. 31, 2013 | |||||||
Capital Stock | ' | ||||||
Capital Stock | ' | ||||||
Note 6 – Common Stock | |||||||
The Company has authorized 20,000,000 shares of common stock, par value $0.001 per share. | |||||||
Common Stock and Warrants Issued for Cash | |||||||
At December 31, 2011, the Company had a $60,000 receivable from a shareholder from the issuance of common stock. The receivable was collected in January 2012. | |||||||
During the year ended December 31, 2013, the Company issued 1,443,750 shares of common stock and warrants for the purchase of 10,313 shares of common stock for cash (none in 2012). Proceeds from the issuances total $742,000, principally at $0.50 per share. The warrants are exercisable at $0.80 per share for a period of ten years. | |||||||
Common Stock Issued for Services During the years ended December 31, 2013 and 2012, the Company issued 9,860 shares and 707,464 shares, respectively, to employees, directors, and contractors as compensation for current services. The Company recognized share-based compensation of $4,930 ($0.50 per share) and $219,471 (principally at $0.30 per share) for the years ended December 31, 2013 and 2012, respectively. The Company issues non-vested common stock to various employees and directors as compensation for future services. The Company values the non-vested shares of common stock based on the fair value of the stock on the date of issuance and records compensation over the requisite service period which is usually the vesting period. The non-vested shares are included in the total outstanding shares recorded in the financial statements. On August 1, 2013, the Company issued 1,839,286 non-vested shares of common stock to directors, officers, and consultants for their future services (none issued in 2012). These shares were valued at $919,643, or $0.50 per share, based on the price that common stock was issued to third parties for cash. A summary of the status of the Company’s non-vested shares as of December 31, 2013 and changes during the year then ended, is presented below: | |||||||
Non-vested | |||||||
Shares of | Weighted | ||||||
Common | Average | ||||||
Stock | Fair Value | ||||||
Balance at December 31, 2012 | 130,000 | $ | 0.3 | ||||
Awarded | 1,839,286 | 0.5 | |||||
Vested | -671,564 | 0.43 | |||||
Balance at December 31, 2013 | 1,297,722 | $ | 0.5 | ||||
As of December 31, 2013 and 2012, there was $648,861 and $16,000, respectively, of total unrecognized compensation cost related to the non-vested share-based compensation arrangements awarded to directors, employees, and consultants. That cost is expected to be recognized over a weighted-average period of 2.4 years. The total fair value of shares vested during the years ended December 31, 2013 and 2012 was $286,782 and $26,668, respectively. | |||||||
Total share-based compensation expense for the years ended December 31, 2013 and 2012 has been included in the consolidated statements of operations as follows: | |||||||
2013 | 2012 | ||||||
Research and development expense | $ | 191,548 | $ | - | |||
General and administrative expense | 100,164 | 271,895 | |||||
Total share-based compensation | $ | 291,712 | $ | 271,895 | |||
Common_Stock_Warrants
Common Stock Warrants | 12 Months Ended | ||||||||||
Dec. 31, 2013 | |||||||||||
Common Stock Warrants | ' | ||||||||||
Common Stock Warrants | ' | ||||||||||
Note 7 – Common Stock Warrants | |||||||||||
The Company has issued warrants to purchase its common stock for payment of consulting services, in connection with the extension of a note payable, and for cash. The fair value of warrants issued for consulting services was estimated on the date of issuance using the Black-Scholes option pricing model and was recognized as consulting expense at that date, which was the date the warrants were first exercisable. The Black-Scholes option pricing model incorporates ranges of assumptions for each input. Expected volatilities are based on the historical volatility of an appropriate industry sector index, comparable companies in the index and other factors. The Company estimates expected life of each warrant based on the midpoint between the dates the warrant vests, which is usually the date of issuance, and the contractual term of the warrant. The risk-free interest rate represents the U.S. Treasury bill rate for the expected life of the related warrant. | |||||||||||
For the year ended December 31, 2013, the Company issued warrants to purchase 10,313 shares of common stock in connection with the issuance of common stock for cash. The warrants issued have an exercise price of $0.80 per share and are exercisable for a term of ten years. | |||||||||||
For the year ended December 31, 2012, the Company issued warrants to purchase 150,000 shares of common stock in connection with the extension of the due date of a note payable. The warrants issued had an exercise price of $0.80 per share with a 10 year term and immediate vesting. The warrants were valued using the Black-Scholes option pricing model with the following assumptions: stock price on the measurement date $0.30; expected term of 5 years; expected volatility of 97%; and risk-free interest rate of 0.64%. The total fair value of the warrants issued was calculated at $25,757. | |||||||||||
A summary of warrant activity for the year ended December 31, 2013 is presented below: | |||||||||||
Weighted | |||||||||||
Weighted | Average | ||||||||||
Shares | Average | Remaining | Aggregate | ||||||||
Under | Exercise | Contractual | Intrinsic | ||||||||
Warrants | Price | Life | Value | ||||||||
Outstanding at December 31, 2012 | 566,337 | $ | 0.54 | 7.6 years | $ | 160,207 | |||||
Issued | 10,313 | $ | 0.8 | ||||||||
Exercised | - | $ | - | ||||||||
Expired | - | $ | - | ||||||||
Outstanding at December 31, 2013 | 576,650 | $ | 0.55 | 6.7 years | $ | 44,306 | |||||
The year-end intrinsic value at December 31, 2013 is calculated at $0.50 per share, based on the last price for which the Company issued shares of common stock for cash. |
Income_Taxes
Income Taxes | 12 Months Ended | ||||||
Dec. 31, 2013 | |||||||
Income Taxes: | ' | ||||||
Income Tax Disclosure | ' | ||||||
Note 8 – Income Taxes | |||||||
The Company provides for income taxes using an asset and liability based approach. Deferred income tax assets and liabilities are recorded to reflect the future tax consequences of temporary differences between the financial statement and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. The significant components of net deferred tax assets and liabilities were as follows at December 31, 2013 and 2012: | |||||||
2013 | 2012 | ||||||
Operating loss carry forwards | $ | 2,370,617 | $ | 2,057,935 | |||
Research credit carryforwards | 11,858 | 11,858 | |||||
Other | -1,209 | -2,650 | |||||
Valuation allowance | -2,381,266 | -2,067,143 | |||||
Net Deferred Tax Assets | $ | - | $ | - | |||
As of December 31, 2013, the Company had no unrecognized tax benefits that, if recognized, would affect the Company’s effective income tax rate over the next 12 months. A reconciliation of the expected income tax benefit at the U.S. Federal income tax rate to the income tax benefit actually recognized for the years ended December 31, 2013 and 2012 is set forth below: | |||||||
2013 | 2012 | ||||||
Benefit at federal statutory rate (34%) | $ | -419,208 | $ | -518,732 | |||
State income tax benefit, net of federal tax | -27,791 | -39,187 | |||||
Stock-based compensation | 99,182 | 91,231 | |||||
Non-deductible financing costs | - | 22,576 | |||||
Loss on extinguishment of debt | 32,766 | - | |||||
Research credits | - | -11,858 | |||||
Other differences | 928 | 1,176 | |||||
Change in valuation allowance | 314,123 | 454,794 | |||||
Benefit from Income Taxes | $ | - | $ | - | |||
As of December 31, 2013, the Company has a net operating loss carry-forward for U.S. federal income tax purposes of approximately $6.4 million. This carry-forward is available to offset future taxable income, if any, and will expire, if not used, from 2023 through 2033. The utilization of the net operating loss carry-forward is dependent upon the tax laws in effect at the time the net operating loss carry-forward can be utilized and may be limited by changes in ownership control of the Company. The Company’s U.S. federal and Utah income tax returns, constituting the returns of the major taxing jurisdictions, are subject to examination by the taxing authorities for all open years as prescribed by applicable statute. No income tax waivers have been executed that would extend the period subject to examination beyond the period prescribed by statute. The Company is no longer subject to U.S. federal tax examinations for tax years before and including December 31, 2009. The Company is no longer subject to Utah state tax examinations for tax years before and including December 31, 2007. During the years ended December 31, 2013 and 2012, the Company did not recognize interest and penalties. | |||||||
Commitment_and_Contingencies
Commitment and Contingencies | 12 Months Ended |
Dec. 31, 2013 | |
Income Taxes | ' |
Commitments and Contingencies Disclosure | ' |
Note 9 – Commitments and Contingencies | |
Lease Agreement – The Company leases office space under a non-cancelable operating lease that expires in July 2014. Current monthly rental payments are $2,888 per month. Lease expense charged to operations for the years ended December 31, 2013 and 2012 was $31,908 and $29,512, respectively. | |
License Agreement – The Company has a license agreement with a party related through a shareholder and former member of the board of directors. Under the agreement, the Company has the right to the exclusive use of certain patents pending and related technology (the “technology”) in its medical devices and other products for an indefinite term. In return, the Company has agreed to incur a minimum of $4,750,000 in development costs by the year 2014 to develop and market its products worldwide based on a graduated schedule and to make royalty payments based on a percentage of the aggregate worldwide net sales (as defined in the agreement) of its medical device and other products that utilize the technology. |
Subsequent_Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2013 | |
Subsequent Events | ' |
Subsequent Events | ' |
Note 10 Subsequent Events | |
Common Stock Issued for Cash | |
During the period subsequent to December 31, 2013 through the date of issuance of the consolidated financial statements, the Company issued, 1,770,000 shares of common stock for cash. Proceeds from the issuances total $885,000, or $0.50 per share. | |
Common Stock Issued for Services | |
On January 8, 2014, the Company issued 120,000 shares of common stock to a new member of the board of directors for future services to be rendered over the following three years. The shares were valued at $60,000, or $0.50 per share. | |
Common Stock Issued for Exercise of Common Stock Warrant | |
On February 25, 2014, a founding shareholder exercised a warrant to purchase 53,439 shares of common stock for $53, or $0.001 per share. | |
Extension of Maturity Date of Master Note Payable to a Related Party | |
On March 27, 2014, the note holder and the Company entered into an amendment of the master note described in Note 3 to these consolidated financial statements to extend the maturity date of the note from December 31, 2012 to June 30, 2016. |
Organization_and_Summary_of_Si1
Organization and Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2013 | |
Organization and Summary of Significant Accounting Policies (Policies) | ' |
Organization | ' |
Organization – Fresh Medical Laboratories, Inc. (the “Company”) is a Delaware corporation that was incorporated on November 22, 2004. On September 10, 2012, the Company filed an application to do business as ProLung. The Company’s headquarters are located in Salt Lake City, Utah. The Company’s business is the development and deployment of medical devices and procedures specializing in the immediate, non-invasive evaluation of indeterminate masses seen in CT and radiography. The Company is in the development stage and its activities to date consist of research and development, developing markets for its products, securing strategic alliances, and obtaining financing. In April 2013, the Company entered into an agreement to license its technology to a distributor for the China market. In May 2013, the Company received the “CE” mark in Europe permitting the marketing of the Company’s device in the European Union and certain other countries. In the United States, the Company has submitted its application for marketing approval to the United States Food and Drug Administration. | |
During the year ended December 31, 2012, the Company formed a wholly-owned subsidiary, Hilltop Acquisition Corporation, Inc., which has had no activity since its inception and is included in the accompanying consolidated financial statements from the date of its formation. | |
Development stage | ' |
Development Stage – The Company is in the development stage and its activities to date consist of research and development, developing markets for its products, securing strategic alliances, and obtaining financing. For the period from November 22, 2004 (date of inception) to December 31, 2013, the Company has not generated significant revenues from operations and has been developing its products. Therefore, the Company is considered to be in the development stage in accordance with the provisions of FASB ASC 915-10-05, Accounting and Reporting by Development Stage Enterprises. | |
Business Condition | ' |
Business Condition – The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company’s products are not yet fully developed. The Company has generated minimal revenues from operations, has incurred substantial and recurring losses to date from operations, and has used cash in its operating activities during the years ended December 31, 2013 and 2012, and cumulative from inception through December 31, 2013. Additionally, the Company had negative working capital and a stockholders’ deficit as of December 31, 2013 and 2012. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty. | |
The ability of the Company to continue as a going concern is dependent on the Company successfully developing products that can be sold profitably, and in the near term successfully generating cash through financing activities. Management’s plans include issuing equity or debt securities to fund capital requirements and ongoing operations. However, there can be no assurance the Company will be successful in these efforts. Subsequent to December 31, 2013, the Company has obtained additional financing, as further discussed in Note 10. | |
UseOfEstimates | ' |
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 certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. | |
Fair Value of Financial Instruments | ' |
Fair Value of Financial Instruments – Related-party notes payable bear interest rates that are not market interest rates given the risks associated with a company in the development stage. The conversion terms and risks associated with a company in the development stage also cause the interest rate borne by the convertible notes payable to unrelated parties to not approximate a market interest rate for similar instruments. However, due to the relatively short terms remaining to the notes’ maturity dates as of December 31, 2013, the carrying value of the related-party notes payable and the convertible notes payable approximates their fair value. | |
Research and Development | ' |
Research and Development – The Company expenses research and development costs as incurred. Research and development costs primarily consist of clinical study costs, consulting fees, compensation of employees related to activities to obtain regulatory approval for the Company’s devices, legal fees associated with the Company’s intellectual property, and materials and supplies. | |
Inventory | ' |
Inventory – Inventory consists of materials purchased during the quarter ended December 31, 2013 for the initial assembly of the Company’s product which has received regulatory approval in Europe. The Company has recorded these costs as inventory because regulatory approval has been received and management has determined that a future benefit is probable. Inventory is valued at the lower of cost or market value, with cost determined based on the first-in-first-out method. | |
Office Equipment | ' |
Office Equipment – Office Equipment is stated at cost and depreciated using the straight-line method over useful lives of 3 to 5 years. Depreciation expense for the years ended December 31, 2013 and 2012 was $4,741 and $1,958, respectively. | |
Revenue Recognition | ' |
Revenue Recognition – Revenue is recognized by the Company when a binding sales or service agreement exists between the parties, services have been rendered, the price for the services is fixed or determinable, collection is reasonably assured, and the Company has no significant obligations remaining with respect to the arrangement. | |
Share-based Compensation, | ' |
Stock-based Compensation – The Company measures the cost of employee and consulting services received in exchange for an award of equity instruments based on the grant-date fair value of the award. The awards issued are valued using a fair value-based measurement method. The resulting cost is recognized over the period during which an employee or consultant is required to provide services in exchange for the award, usually the vesting period. | |
Income Taxes | ' |
Income Taxes – The Company accounts for income taxes under the asset and liability method. Deferred income tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and for operating loss and tax credit carry-forwards. Deferred income tax assets and liabilities are measured using the enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred income tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date. The Company has established a valuation allowance to reduce deferred income tax assets to their realizable values based on whether it is more likely than not that such deferred income tax assets will be realized. At December 31, 2013, the Company has recorded a full valuation allowance against the net deferred tax assets related to temporary differences and operating losses because there is significant uncertainty as to the realizability of the deferred tax assets. | |
Basic and Diluted Loss Per Share | ' |
Basic and Diluted Loss Per Share – The Company computes basic loss per share by dividing net loss by the weighted-average number of common shares outstanding during the period. The Company computes diluted loss per share by dividing net loss by the sum of the weighted-average number of common shares outstanding and the weighted-average dilutive common share equivalents outstanding. The computation of diluted loss per share does not assume exercise or conversion of securities that would have an anti-dilutive effect. As of December 31, 2013, there were warrants to purchase 576,650 shares of common stock outstanding, 1,297,722 non-vested shares of common stock and $180,000 of convertible notes payable that were excluded from the computation of diluted net loss per common share as they were anti-dilutive. As of December 31, 2012, there were warrants to purchase 566,337 shares of common stock outstanding, 130,000 non-vested shares of common stock, $524,588 of convertible notes payable, and $127,822 of convertible notes payable to related parties that were excluded from the computation of diluted net loss per common share as they were anti-dilutive. | |
Reclassification, Policy | ' |
Reclassifications – Certain amounts in the accompanying consolidated financial statements as of December 31, 2012 and for the year then ended have been reclassified in the current presentation to conform to the presentation as of December 31, 2013 and for the year then ended. These reclassifications had no effect on the total amount of assets, liabilities, or of stockholders’ deficit as of December 31, 2012, and had no effect on the amount of net loss, or on the basic and diluted loss per common share for the year ended December 31, 2012. | |
Recent Accounting Pronouncements | ' |
Recent Accounting Pronouncements – In July 2013, the Financial Accounting Standards Board issued Accounting Standards Update No. 2013-11, Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists (ASU 2013-11) to provide guidance on the presentation of unrecognized tax benefits. ASU 2013-11 requires an entity to present an unrecognized tax benefit, or a portion of an unrecognized tax benefit, as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, except as follows: to the extent a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position or the tax law of the applicable jurisdiction does not require the entity to use, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. ASU 2013-11 is effective January 1, 2015 with earlier adoption permitted. ASU 2013-11 should be applied prospectively with retroactive application permitted. Management is currently evaluating the impact of the pending adoption of ASU 2013-11 on the Company’s consolidated financial statements. | |
Accrued_Liabilities_Tables
Accrued Liabilities (Tables) | 12 Months Ended | ||||||
Dec. 31, 2013 | |||||||
Accrued Liabilities (Tables) | ' | ||||||
Accrued Liabilities | ' | ||||||
Accrued liabilities consisted of the following as of December 31: | |||||||
2013 | 2012 | ||||||
Accrued interest | $ | 329,128 | $ | 177,287 | |||
Accrued payroll and payroll taxes | 1,756 | 53,192 | |||||
Total accrued liabilities | $ | 330,884 | $ | 230,479 |
Related_Party_Notes_Payable_Ta
Related Party Notes Payable (Tables) | 12 Months Ended | |||||||
Dec. 31, 2013 | ||||||||
Related Party Notes Payable (Tables) | ' | |||||||
Notes Payable to Related Party | ' | |||||||
Notes payable to related parties are summarized as follows at December 31: | ||||||||
2013 | 2012 | |||||||
Related-Party Notes Payable: | ||||||||
Note payable to a former director; unsecured; interest at 11.10% per annum; due April 30, 2015 | $ | 929,536 | $ | 929,536 | ||||
Note payable to a related party; secured by all the assets of the Company; interest at 15% per annum; due December 31, 2012 | 356,931 | 356,931 | ||||||
Advances payable to a director | - | 25,000 | ||||||
Total Related-Party Notes Payable | 1,286,467 | 1,311,467 | ||||||
Less: Current Portion | 356,931 | 381,931 | ||||||
Long-Term Related Party Notes Payable | $ | 929,536 | $ | 929,536 | ||||
Long-Term Convertible Related-Party Notes Payable: | ||||||||
Convertible notes payable to related parties; unsecured; interest at 8% per annum | $ | - | $ | 127,822 | ||||
Convertible_notes_payable_summ
Convertible notes payable - summarized (Table) | 12 Months Ended | |||||||
Dec. 31, 2013 | ||||||||
Convertible notes payable - summarized (Table): | ' | |||||||
Convertible notes payable - summarized (Table) | ' | |||||||
Convertible notes payable are summarized as follows at December 31: | ||||||||
2013 | 2012 | |||||||
Convertible Notes Payable: | ||||||||
Convertible notes payable; unsecured; interest at 8% per annum | $ | - | $ | 70,588 | ||||
Convertible notes payable; unsecured; interest at 8% per annum; due June through August 2015 | 180,000 | 454,000 | ||||||
Total Convertible Notes Payable | 180,000 | 524,588 | ||||||
Less: Current Portion | - | 70,588 | ||||||
Long-Term Convertible Notes Payable | $ | 180,000 | $ | 454,000 | ||||
Capital_Stock_Tables
Capital Stock (Tables) | 12 Months Ended | ||||||
Dec. 31, 2013 | |||||||
Capital Stock (Tables) | ' | ||||||
Company's Nonvested Shares | ' | ||||||
A summary of the status of the Company’s non-vested shares as of December 31, 2013 and changes during the year then ended, is presented below: | |||||||
Non-vested | |||||||
Shares of | Weighted | ||||||
Common | Average | ||||||
Stock | Fair Value | ||||||
Balance at December 31, 2012 | 130,000 | $ | 0.3 | ||||
Awarded | 1,839,286 | 0.5 | |||||
Vested | -671,564 | 0.43 | |||||
Balance at December 31, 2013 | 1,297,722 | $ | 0.5 | ||||
Schedule of Compensation Cost for Share-based Payment Arrangements, Allocation of Share-based Compensation Costs by Plan | ' | ||||||
Total share-based compensation expense for the years ended December 31, 2013 and 2012 has been included in the consolidated statements of operations as follows: | |||||||
2013 | 2012 | ||||||
Research and development expense | $ | 191,548 | $ | - | |||
General and administrative expense | 100,164 | 271,895 | |||||
Total share-based compensation | $ | 291,712 | $ | 271,895 | |||
Warrants_Tables
Warrants (Tables) | 12 Months Ended | ||||||||||
Dec. 31, 2013 | |||||||||||
Warrants (Tables) | ' | ||||||||||
Summary of Warrants Outstanding | ' | ||||||||||
A summary of warrant activity for the year ended December 31, 2013 is presented below: | |||||||||||
Weighted | |||||||||||
Weighted | Average | ||||||||||
Shares | Average | Remaining | Aggregate | ||||||||
Under | Exercise | Contractual | Intrinsic | ||||||||
Warrants | Price | Life | Value | ||||||||
Outstanding at December 31, 2012 | 566,337 | $ | 0.54 | 7.6 years | $ | 160,207 | |||||
Issued | 10,313 | $ | 0.8 | ||||||||
Exercised | - | $ | - | ||||||||
Expired | - | $ | - | ||||||||
Outstanding at December 31, 2013 | 576,650 | $ | 0.55 | 6.7 years | $ | 44,306 | |||||
Income_taxes_Table
Income taxes (Table) | 12 Months Ended | ||||||
Dec. 31, 2013 | |||||||
Income Taxes | ' | ||||||
Schedule of Components of Income Tax Expense (Benefit) | ' | ||||||
The significant components of net deferred tax assets and liabilities were as follows at December 31, 2013 and 2012: | |||||||
2013 | 2012 | ||||||
Operating loss carry forwards | $ | 2,370,617 | $ | 2,057,935 | |||
Research credit carryforwards | 11,858 | 11,858 | |||||
Other | -1,209 | -2,650 | |||||
Valuation allowance | -2,381,266 | -2,067,143 | |||||
Net Deferred Tax Assets | $ | - | $ | - | |||
Schedule of Effective Income Tax Rate Reconciliation | ' | ||||||
A reconciliation of the expected income tax benefit at the U.S. Federal income tax rate to the income tax benefit actually recognized for the years ended December 31, 2013 and 2012 is set forth below: | |||||||
2013 | 2012 | ||||||
Benefit at federal statutory rate (34%) | $ | -419,208 | $ | -518,732 | |||
State income tax benefit, net of federal tax | -27,791 | -39,187 | |||||
Stock-based compensation | 99,182 | 91,231 | |||||
Non-deductible financing costs | - | 22,576 | |||||
Loss on extinguishment of debt | 32,766 | - | |||||
Research credits | - | -11,858 | |||||
Other differences | 928 | 1,176 | |||||
Change in valuation allowance | 314,123 | 454,794 | |||||
Benefit from Income Taxes | $ | - | $ | - |
Organization_and_Summary_of_Si2
Organization and Summary of Significant Accounting Policies Business Condition (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Organization and Summary of Significant Accounting Policies Business Condition | ' | ' |
Depreciation expenses | $4,741 | $1,958 |
Useful life Minimum | 3 | 3 |
Useful life Maximum | 5 | 5 |
Organization_and_Summary_of_Si3
Organization and Summary of Significant Accounting Policies Loss Per Share (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Organization and Summary of Significant Accounting Policies Loss Per Share | ' | ' |
Warrants to purchase common stock | 576,650 | 566,337 |
Non-vested shares | 1,297,722 | 130,000 |
Convertible Notes Payable | $180,000 | $524,588 |
Convertible Notes Payable to related parties | ' | $127,822 |
Accrued_liabilities_consisted_
Accrued liabilities consisted of the following (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Accrued liabilities {3} | ' | ' |
Accrued interest | $329,128 | $177,287 |
Payroll and related liabilities | 1,756 | 53,192 |
Total Accrued Liabilites | $330,884 | $230,479 |
Notes_payable_to_related_parti
Notes payable to related parties - summarized (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Related-Party Note Payable | ' | ' |
Note payable to a director; unsecured; interest at 11.10% per annum; due April 30, 2015 | $929,536 | $929,536 |
Total Related-Party Notes Payable | 1,286,467 | 1,311,467 |
Long-Term Related-Party Notes Payable | $929,536 | $929,536 |
Notes_payable_to_related_parti1
Notes payable to related parties are summarized as follows at December 31: (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Related-Party Notes Payable: | ' | ' |
Note payable to a director; unsecured; interest at 11.10% per annum; due April 30, 2015 | $929,536 | $929,536 |
Notes payable to a related party; secured by all the assets of the Company; interest at 15% per annum; due December 31, 2012, in default | 356,931 | 356,931 |
Advances payable to a director | ' | 25,000 |
Total Related-Party Notes Payable. | 1,286,467 | 1,311,467 |
Less: Current Portion notes payable. | 356,931 | 381,931 |
Long-Term Related Party Notes Payable. | 929,536 | 929,536 |
Convertible notes payable to related parties; unsecured; interest at 8% per annum | ' | $127,822 |
Convertible_Notes_Payable_Conv
Convertible Notes Payable Convertible Debentures (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Convertible Notes Payable Convertible Debentures | ' | ' |
Convertible debentures from unrelated third parties | $279,000 | $225,000 |
Accrued interest on the notes (279000) | 20,045 | 4,570 |
Convertible common stock price from unrelated third parties | $0.70 | $0.70 |
Percentage of discount on conversion from unrelated third parties | 85 | 85 |
Three notes issued with accrued interest of 20045 were converted into common stock at $0.50 per share | 464,077 | ' |
Notes payable with accrued interest $4570 were converted into shares at $0.70 per share | ' | 323,493 |
Total convertible notes taken from unrelated third parties | 5,000 | 679,000 |
Recognized interest expense | 3,865 | ' |
Convertible notes payable carried | 70,588 | ' |
Aggregate Principal balance of Convertible notes payable carried | 60,000 | ' |
Accrued Interest on the notes | 7,686 | 4,570 |
Convertible debentures interest rate matured 36 months | 8 | ' |
Three notes issued during 2012 and accrued interest 7686 converted into common stock at $0.50 per share | 135,371 | ' |
Recognized loss on extinguishment of debt of | 42,931 | ' |
Balance due on the notes payable for the year ended | $180,000 | $454,000 |
Convertible_notes_payable_are_
Convertible notes payable are summarized as follows at December 31: (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Convertible Notes Payable: | ' | ' |
Convertible notes payable; unsecured; interest at 8% per annum | ' | $70,588 |
Convertible notes payable; unsecured; interest at 8% per annum; due June through August 2015 | 180,000 | 454,000 |
Total Convertible Notes Payable | 180,000 | 524,588 |
Less: Current Portion | ' | 70,588 |
Long-Term Convertible Notes Payable | $180,000 | $454,000 |
Capital_Stock_Common_And_Prefe
Capital Stock Common And Prefered Stock (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Capital Stock Common And Prefered Stock | ' | ' | ' |
Authorized preferred stock shares | 10,000,000 | 10,000,000 | 10,000,000 |
Par value of preferred stock | $0.00 | $0.00 | $0.00 |
Authorized common stock shares | 20,000,000 | 20,000,000 | 20,000,000 |
Par value of Common stock | $0.00 | $0.00 | $0.00 |
Common stock issued and outstanding | 1,443,750 | 11,452,675 | ' |
The Company had a receivable from a shareholder from the issuance of common stock | ' | ' | $60,000 |
Common stock shares issued for consulting services employees, directors, and contractors as compensation for current and future services. | 1,839,286 | 0 | ' |
These shares were valued at $0.50 per share, based on the price that common stock was issued to third parties for cash. | 919,643 | 0 | ' |
unrecognized compensation cost related to the non-vested share-based compensation arrangements awarded to directors, employees, and consultants | 648,861 | 16,000 | ' |
cost is expected to be recognized over a weighted-average period in years. | 2.4 | 0 | ' |
The total fair value of shares vested during the year | 286,782 | 26,668 | ' |
Per share value of stock based compensation | $0.50 | $0.30 | ' |
Stock based compensation expense recorded | 4,930 | 219,471 | ' |
warrants for the purchase of shares of common stock | 10,313 | 0 | ' |
Proceeds from the issuances total principally at $0.50 per share | $742,000 | ' | ' |
Company issued non-vested shares of common stock to directors, officers, and consultants for their future services | 1,839,286 | 0 | ' |
Common_Stock_Issued_for_Servic
Common Stock Issued for Services (Details) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Common Stock Issued for Services | ' | ' |
Company issued share to employees, directors and contractor as compensation for current services | 9,860 | 707,464 |
Total_sharebased_compensation_
Total share-based compensation expense included in the consolidated statements of operations (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Total share-based compensation expense included in the consolidated statements of operations | ' | ' |
Research and development expense, | $191,548 | ' |
General and administrative expense, | 100,164 | 271,895 |
Total share-based compensation, | $291,712 | $271,895 |
Warrants_Outstanding_Summary_D
Warrants Outstanding Summary (Details) | Shares Under Option | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life (years) | Aggregate Intrinsic Value |
Outstanding warrants at Dec. 31, 2012 | 566,337 | 0.54 | 7.61 | 160,207 |
Issued warrants. | 10,313 | 0.8 | ' | ' |
Expired Warrants, | 0 | ' | ' | ' |
Outstanding warrants., at Dec. 31, 2013 | 576,650 | 0.55 | 6.7 | 44,306 |
Exercised warrants. at Dec. 31, 2013 | 0 | ' | ' | ' |
Warrants_Issuance_To_Purchase_
Warrants Issuance To Purchase Common Stock (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Warrants Issuance To Purchase Common Stock | ' | ' |
Issuance of warrants | 10,313 | 150,000 |
Warrants exercise price | $0.80 | $0.45 |
Warrants term | 10 | 10 |
Warrants Stock price on the measurement date | ' | $0.30 |
Warrants expected term | ' | 5 |
Warrants Expected Volatility | ' | 97.00% |
Risk free interest rate percent | ' | 0.64% |
Total Fair Value of Warrants Issued | $0 | $25,757 |
Warrants_Intrinsic_Value_Detai
Warrants Intrinsic Value (Details) (USD $) | Dec. 31, 2013 |
Warrants Intrinsic Value | ' |
Estimated fair value of common stock per share | $0.50 |
Related_Party_Notes_Payable_to
Related Party Notes Payable to Three Directors And Officers (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Related Party Notes Payable to Three Directors And Officers | ' | ' |
Company was obligated under the terms of a promissory note payable to a founding shareholder and former member of its board of directors in the amount of | $929,536 | ' |
Interest rate on notes payable on promissory notes | 11.10% | ' |
Accrued interest on the notes payable total | 172,153 | 68,974 |
Interest on the notes payable recognized | $103,179 | $98,574 |
Related_party_Advances_Textual
Related party Advances Textuals (Details) (USD $) | 3 Months Ended |
Dec. 31, 2013 | |
Related party Advances Textuals | ' |
Advances Amount converted into shares of common stock | $175,000 |
Converted into number of shares of common stock at $0.50 per share | 350,000 |
Interest paid on the advances | $0 |
Related_Party_Notes_Payable_Co
Related Party Notes Payable Components (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Related Party Notes Payable Components | ' | ' |
Company consolidated the notes payable and accrued interest payable into two notes with principal balances of $265,000 and $91,932 | $356,932 | ' |
Company received advances from a member of its board of directors in the amounts of | 150,000 | 25,000 |
Conversion price per share | $0.50 | ' |
consolidated notes bear interest per annum | 15.00% | ' |
Accrued interest on these notes totaled to | 134,070 | 80,530 |
Unsecured convertible notes payable to Directors of the Company Long Term | 127,822 | 0 |
Interest rate on the unsecured convertible notes | 8.00% | ' |
Accrued interest on unsecured notes totaled to | 14,680 | ' |
Interest expense for each of the years | 53,540 | 53,540 |
Interest expense on unsecured notes | $9,525 | $5,155 |
Unsecured notes were converted into common stock share at $0.50 per share | 285,009 | ' |
Provision_for_income_taxes_is_
Provision for income taxes is as follows: (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Provision for income taxes is as follows: | ' | ' |
Benefit at federal statutory rate (34%) | ($419,208) | ($518,732) |
State income tax benefit, net of federal tax | -27,791 | -39,187 |
Stock-based compensation' | 99,182 | 91,231 |
Non-deductible financing costs. | ' | 22,576 |
Loss on extinguishment of debt | 32,766 | ' |
Research credits. | ' | -11,858 |
Other differences. | 928 | 1,176 |
Change in valuation allowance | 314,123 | 454,794 |
Benefit from Income Taxes. | $0 | ' |
Net_deferred_income_tax_assets
Net deferred income tax assets are comprised of (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Net deferred income tax assets are comprised of | ' | ' |
Operating loss carry forwards | $2,370,617 | $2,057,935 |
Research credit carryforwards | 11,858 | 11,858 |
Other | -1,209 | -2,650 |
Valuation allowance | -2,381,266 | -2,067,143 |
Net Deferred Tax Assets | 0 | ' |
Net Operating loss carry forwards for U.S. federal income tax | $6,400,000 | ' |
Commitments_and_Contingencies_
Commitments and Contingencies (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Commitments and Contingencies textuals | ' | ' |
License Agreement - minimum development costs by 2014 | $4,750,000 | $4,750,000 |
Lease Agreement - Current Monthly payments | 2,888 | 0 |
Lease expense charged to operations | $31,908 | $29,512 |
Subsequent_Events_textuals_Det
Subsequent Events textuals (Details) (USD $) | Feb. 25, 2014 | Jan. 08, 2014 | Jan. 02, 2014 |
Subsequent Events textuals | ' | ' | ' |
Common stock issued for cash | ' | ' | 1,770,000 |
Value of common stock issued | ' | ' | $885,000 |
Price per share of the shares | ' | ' | $0.50 |
Common stock issued for future services to be rendered over the following 3 years to a new member of the board of directors | ' | 120,000 | ' |
Shares were valued at $0.50 per share | ' | 60,000 | ' |
Founding shareholder exercised a warrant to purchase shares of common stock at $0.001 per share | 53,439 | ' | ' |
Value of common stock issued total | $53 | ' | ' |