Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2017 | May 08, 2017 | |
Document And Entity Information | ||
Entity Registrant Name | CARDAX, INC. | |
Entity Central Index Key | 1,544,238 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 90,688,850 | |
Trading Symbol | CDXI | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2,017 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Mar. 31, 2017 | Dec. 31, 2016 |
CURRENT ASSETS | ||
Cash | $ 97,681 | $ 158,433 |
Accounts receivable | 17,378 | |
Inventory | 41,734 | 10,827 |
Deposits and other assets | 90,657 | 122,876 |
Prepaid expenses | 17,601 | 19,919 |
Total current assets | 265,051 | 312,055 |
PROPERTY AND EQUIPMENT, net | 6,246 | 7,755 |
INTANGIBLE ASSETS, net | 431,341 | 430,770 |
TOTAL ASSETS | 702,638 | 750,580 |
CURRENT LIABILITIES | ||
Accrued payroll and payroll related expenses | 3,528,874 | 3,510,464 |
Accounts payable and accrued expenses | 713,328 | 657,094 |
Fees payable to directors | 418,546 | 418,546 |
Employee settlement | 50,000 | 50,000 |
Total current liabilities | 4,710,748 | 4,636,104 |
COMMITMENTS AND CONTINGENCIES | ||
Total liabilities | 4,710,748 | 4,636,104 |
STOCKHOLDERS' DEFICIT | ||
Preferred Stock - $0.001 par value; 50,000,000 shares authorized, 0 shares issued and outstanding as of March 31, 2017 and December 31, 2016 | ||
Common stock - $0.001 par value; 400,000,000 shares authorized, 88,446,769 and 85,068,709 shares issued and outstanding as of March 31, 2017 and December 31, 2016, respectively | 88,447 | 85,069 |
Additional paid-in-capital | 52,288,141 | 51,963,269 |
Accumulated deficit | (56,384,698) | (55,933,862) |
Total stockholders' deficit | (4,008,110) | (3,885,524) |
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | $ 702,638 | $ 750,580 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Mar. 31, 2017 | Dec. 31, 2016 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 50,000,000 | 50,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 400,000,000 | 400,000,000 |
Common stock, shares issued | 88,446,769 | 85,068,709 |
Common stock, shares outstanding | 88,446,769 | 85,068,709 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Income Statement [Abstract] | ||
REVENUES, net | $ 107,990 | |
COST OF GOODS SOLD | 42,562 | |
GROSS PROFIT | 65,428 | |
OPERATING EXPENSES: | ||
General and administrative expenses | 273,528 | 222,131 |
Research and development | 115,918 | 66,187 |
Sales and marketing | 80,041 | |
Stock based compensation | 39,250 | 381,729 |
Depreciation and amortization | 7,401 | 7,748 |
Total operating expenses | 516,138 | 677,795 |
Loss from operations | (450,710) | (677,795) |
OTHER INCOME (EXPENSES): | ||
Interest income | 581 | 587 |
Interest expense | (707) | (538) |
Total other income (expenses) | (126) | 49 |
Loss before the provision for income taxes | (450,836) | (677,746) |
PROVISION FOR INCOME TAXES | ||
NET LOSS | $ (450,836) | $ (677,746) |
NET LOSS PER SHARE | ||
Basic | $ (0.01) | $ (0.01) |
Diluted | $ (0.01) | $ (0.01) |
SHARES USED IN CALCULATION OF NET LOSS PER SHARE | ||
Basic | 86,491,377 | 69,087,955 |
Diluted | 86,491,377 | 69,087,955 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (450,836) | $ (677,746) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 7,401 | 7,748 |
Stock based compensation | 39,250 | 87,500 |
Changes in assets and liabilities: | ||
Accounts receivable | (17,378) | |
Inventory | (30,907) | |
Deposits and other assets | 32,219 | (587) |
Prepaid expenses | 2,318 | (21,584) |
Accrued payroll and payroll related expenses | 18,410 | 242,033 |
Accounts payable and accrued expenses | 56,234 | 113,599 |
Net cash used in operating activities | (343,289) | (249,037) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Increase in patents | 6,463 | 11,711 |
Net cash used in investing activities | (6,463) | (11,711) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from the issuance of common stock | 289,000 | |
Net cash provided by financing activities | 289,000 | |
NET DECREASE IN CASH | (60,752) | (260,748) |
CASH AT THE BEGINNING OF THE PERIOD | 158,433 | 323,410 |
CASH AT THE END OF THE PERIOD | 97,681 | 62,662 |
NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||
Conversion of accrued payroll and payroll related expenses into stock options | 227,784 | |
Conversion of accounts payable into stock options | 66,445 | |
SUPPLEMENTAL DISCLOSURES: | ||
Cash paid for interest | 707 | 538 |
Cash paid for income taxes |
Company Background
Company Background | 3 Months Ended |
Mar. 31, 2017 | |
Accounting Policies [Abstract] | |
Company Background | NOTE 1 – COMPANY BACKGROUND Cardax Pharmaceuticals, Inc. (“Holdings”) was incorporated in the State of Delaware on March 23, 2006. Holdings was formed for the purpose of developing a platform of proprietary, exceptionally safe, small molecule compounds for large unmet medical needs where oxidative stress and inflammation play important causative roles. Holdings’ platform has application in arthritis, metabolic syndrome, liver disease, and cardiovascular disease, as well as macular degeneration and prostate disease. Holdings’ current primary focus is on the development of astaxanthin technologies. Astaxanthin is a naturally occurring marine compound that has robust anti-oxidant and anti-inflammatory activity. In May of 2013, Holdings formed a 100% owned subsidiary company called Cardax Pharma, Inc. (“Pharma”). Pharma was formed to maintain Holdings’ operations going forward, leaving Holdings as an investment holding company. On November 29, 2013, Holdings entered into a definitive merger agreement (“Merger Agreement”) with Koffee Korner Inc., a Delaware corporation (“Koffee Korner”) (OTCQB:KOFF), and its wholly owned subsidiary (“Koffee Sub”), pursuant to which, among other matters and subject to the conditions set forth in such Merger Agreement, Koffee Sub would merge with and into Pharma. In connection with such merger agreement and related agreements, upon the consummation of such merger, Pharma would become a wholly owned subsidiary of Koffee Korner and Koffee Korner would issue shares of its common stock to Holdings. At the effective time of such merger, Holdings would own a majority of the shares of the then issued and outstanding shares of common stock of Koffee Korner. On February 7, 2014, Holdings completed its merger with Koffee Korner, which was renamed to Cardax, Inc. (the “Company”) (OTCQB:CDXI). Concurrent with the merger: (i) the Company received aggregate gross cash proceeds of $3,923,100 in exchange for the issuance and sale of an aggregate 6,276,960 of shares of the Company’s common stock, together with five year warrants to purchase an aggregate of 6,276,960 shares of the Company’s common stock at $0.625 per share, (ii) the notes issued on January 3, 2014, in the outstanding principal amount of $2,076,000 and all accrued interest thereon, automatically converted into 3,353,437 shares of the Company’s common stock upon the reverse merger at $0.625 per share, together with five year warrants to purchase 3,321,600 shares of common stock at $0.625 per share, (iii) the notes issued in 2013, in the outstanding principal amount of $8,489,036 and all accrued interest thereon, automatically converted into 14,446,777 shares of the Company’s common stock upon the reverse merger at $0.625 per share, together with five year warrants to purchase 14,446,777 shares of common stock at $0.625 per share, (iv) stock options to purchase 15,290,486 shares of Holdings common stock at $0.07 per share were cancelled and substituted with stock options to purchase 6,889,555 shares of the Company’s common stock at $0.155 per share, (v) additional stock options to purchase 20,867,266 shares of the Company’s common stock at $0.625 per share were issued, and (vi) the notes issued in 2008 and 2009, in the outstanding principal amounts of $55,000 and $500,000, respectively, and all accrued interest thereon, were repaid in full. The assets and liabilities of Koffee Korner were distributed in accordance with the terms of a spin-off agreement on the closing date. The share exchange transaction was treated as a reverse acquisition, with Holdings and Pharma as the acquirers and Koffee Korner and Koffee Sub as the acquired parties. Unless the context suggests otherwise, when the Company refers to business and financial information for periods prior to the consummation of the reverse acquisition, the Company is referring to the business and financial information of Holdings and Pharma. Under accounting principles generally accepted in the United States of America (“U.S. GAAP”) guidance Accounting Standards Codification (“ASC”) No. 805-40, Business Combinations – Reverse Acquisitions On August 28, 2014, the Company entered into an Agreement and Plan of Merger (the “Holdings Merger Agreement”) with its principal stockholder, Holdings, pursuant to which Holdings would merge with and into the Company (the “Holdings Merger”). On September 18, 2015, the Company filed a Form S-4 with the SEC in contemplation of the Holdings Merger. There would not be any cash consideration exchanged in the Holdings Merger. Upon the closing of the Holdings Merger, the stockholders of Holdings would receive an aggregate number of shares and warrants to purchase shares of the Company’s common stock equal to the aggregate number of shares of the Company’s common stock that were held by Holdings on the date of the closing of the Holdings Merger. The Company’s restricted shares of common stock held by Holdings would be cancelled upon the closing of the Holdings Merger. Accordingly, there would not be not any change to the Company’s fully diluted capitalization due to the Holdings Merger. On November 24, 2015, the Holdings Merger Agreement was amended and restated (the “Amended Holdings Merger Agreement”). Under the terms of Amended Holdings Merger Agreement, the shares of common stock, par value $0.001 per share of Holdings and the shares of all other issued and outstanding capital stock of Holdings that by their terms were convertible or could otherwise be exchanged for shares of Holdings common stock, would be converted into and exchanged for the Company’s shares of Common Stock in a ratio of approximately 2.2:1. In addition, the Company would grant Holdings’ option and warrant holders warrants to purchase the Company’s warrants at the same stock conversion ratio. On November 24, 2015, the Company filed an amendment to the Form S-4 with the SEC and on December 29, 2015, the Form S-4 was declared effective by the SEC. On December 30, 2015, the Company completed its merger with Holdings, pursuant to the Amended Holdings Merger Agreement. At closing, Holdings merged with and into the Company, with the Company surviving the Holdings Merger. Pursuant to the Amended Holdings Merger Agreement, there was not any cash consideration exchanged in the Holdings Merger. Upon the closing of the Holdings Merger, the stockholders of Holdings received an aggregate number of shares and warrants to purchase shares of Company common stock equal to the aggregate number of shares of Company common stock that were held by Holdings on the date of the closing of the Holdings Merger. The Company’s restricted shares of common stock held by Holdings were cancelled upon the closing of the Holdings Merger. Accordingly, there was not any change to the Company’s fully diluted capitalization due to the Holdings Merger. The Company is engaged in the development, marketing, and distribution of consumer health products in the United States. On August 24, 2016, the Company launched its first commercial product, ZanthoSyn™. On January 25, 2017, the Company began selling ZanthoSyn™ to GNC stores in Hawaii on a wholesale basis. ZanthoSyn™ is marketed as a novel astaxanthin dietary supplement with superior absorption and purity. Astaxanthin is a clinically studied ingredient with safe anti-inflammatory activity that supports joint health, cardiovascular health, metabolic health, and liver health. As a second generation product, the Company is developing CDX-085, its patented astaxanthin derivative, which could reduce the size/number of capsules or tablets required to achieve equivalent circulating levels of astaxanthin. The Company also plans to pursue pharmaceutical applications of astaxanthin and related compounds. Going concern matters The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As shown in the accompanying consolidated financial statements, the Company incurred a net loss of $450,836 and $677,746 for the three-months ended March 31, 2017 and 2016, respectively. The Company has incurred losses since inception resulting in an accumulated deficit of $56,384,698 as of March 31, 2017, and has had negative cash flows from operating activities since inception. The Company expects that its initial marketing program for ZanthoSyn™ will continue to focus on outreach to physicians, healthcare professionals, and consumers over the following several fiscal quarters, and anticipates further losses in the development of its business. As a result of these and other factors, the Company’s independent registered public accounting firm has determined there is substantial doubt about the Company’s ability to continue as a going concern. In addition to the $289,000 raised in the three-months ended March 31, 2017 and the $190,000 raised in April and May 2017 (through May 8, 2017), the Company plans to raise additional capital to carry out its business plan. The Company’s ability to raise additional capital through future equity and debt securities issuances is unknown. Obtaining additional financing, the successful development of the Company’s contemplated plan of operations, and its transition, ultimately, to profitable operations are necessary for the Company to continue operations. The ability to successfully resolve these factors raises substantial doubt about the Company’s ability to continue as a going concern. The consolidated financial statements of the Company do not include any adjustments that may result from the outcome of these uncertainties. On March 28, 2016, the Company furloughed all of its employees and independent contractors indefinitely and arranged with its Chief Executive Officer, David G. Watumull; its Chief Financial Officer, John B. Russell; and its Vice President, Operations, David M. Watumull, to continue their services for cash compensation equal to the minimum wage. On May 30, 2016, the compensation arrangement of our Vice President, Operations, David M. Watumull, was amended so that he would receive bi-weekly compensation equal to $3,269. On May 30, 2016, the compensation arrangement of our Vice President, Research, Timothy J. King, was amended so that he would receive bi-weekly compensation equal to $1,635. The Company continues to assess its commercial opportunities, which may include developing products or licensing its intellectual property, and may re-engage furloughed employees and contractors from time to time to the extent their services are required. In addition, each of the directors has agreed, effective April 1, 2016, to suspend any additional equity compensation, until otherwise agreed by the Company. In addition, the Company has deferred payment of other trade payables. On September 6, 2016, the compensation arrangements of certain officers were amended so that effective September 8, 2016, (i) our Chief Executive Officer, David G. Watumull would receive bi-weekly compensation equal to $4,327, (ii) our Chief Science Officer, Gilbert M. Rishton would receive bi-weekly compensation equal to $1,923, and (iii) our Vice President, Research, Timothy J. King would receive bi-weekly compensation equal to $3,269. On September 6, 2016, the compensation arrangement with JBR Business Solutions, LLC, under which John B. Russell serves as our Chief Financial Officer, was amended so that effective September 30, 2016, he would receive monthly compensation of $3,500. On September 6, 2016, the compensation arrangements of the independent directors of the Company were amended so that effective September 30, 2016, they would each receive quarterly equity compensation of $12,500 in arrears in the form of a grant of shares of our common stock or non-qualified stock options to purchase shares of the Company’s common stock under the Cardax, Inc. 2014 Equity Compensation Plan based on the higher of the then current market price or $0.15 per share. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2017 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial information. In the opinion of the Company’s management, the accompanying condensed consolidated financial statements reflect all adjustments, consisting of normal, recurring adjustments, considered necessary for a fair presentation of the results for the interim periods ended March 31, 2017 and 2016. Although management believes that the disclosures in these unaudited condensed consolidated financial statements are adequate to make the information presented not misleading, certain information and footnote disclosures normally included in financial statements that have been prepared in accordance U.S. GAAP have been condensed or omitted pursuant to the rules and regulations of the SEC. The condensed consolidated financial statements include the accounts of Cardax, Inc., and its wholly owned subsidiary, Cardax Pharma, Inc., and its predecessor, Cardax Pharmaceuticals, Inc., which was merged with and into Cardax, Inc., on December 30, 2015. All significant intercompany balances and transactions have been eliminated in consolidation. Accounts receivable Accounts receivable of $17,378 and $0 as of March 31, 2017 and December 31, 2016, respectively, consists of amounts due from sales of consumer health products. It is the Company’s policy to provide for an allowance for doubtful collections based upon a review of outstanding receivables, historical collection information, and existing economic conditions. Normal receivables are due 30 days after the issuance of the invoice. Receivables past due more than 60 days are considered delinquent. Delinquent receivables are written off based on individual credit evaluation and specific circumstances of the customer. There was no allowance as of March 31, 2017 and December 31, 2016. Inventory Inventory is stated at the lower of cost or market. Cost is determined using the average cost method. Market is defined as sales price less cost to dispose and a normal profit margin. Inventory costs include third party costs for finished goods. The Company utilizes contract manufacturers and receives inventory in finished form. The Company provides a reserve against inventory for known or expected inventory obsolescence. The reserve is determined by specific review of inventory items for product age and quality that may affect salability. There were no reserves for inventory as of March 31, 2017 and December 31, 2016. Revenue recognition The Company recognizes revenue from the sale of its products through e-commerce and wholesale channels when the transfer of title and risk of loss occurs. For shipments with terms of FOB Shipping Point, revenue is recognized upon shipment. For shipments with terms of FOB Destination, revenue is recognized upon delivery. Sales returns and allowances are recorded as a reduction to sales in the period in which sales are recorded. The Company records shipping charges and sales tax gross in revenues and cost of goods sold. Sales discounts and other adjustments are recorded at the time of sale. Cost of Goods Sold Cost of goods sold is comprised of costs to manufacture or acquire products sold to customers, and direct and indirect distribution costs incurred in the sale of goods. Shipping and Handling Costs Shipping and handling costs are included in cost of goods sold. Shipping and handling costs were $2,824 and $0 for the three-months ended March 31, 2017 and 2016, respectively. Sales and use tax Revenues, as presented on the accompanying income statement, include taxes collected from customers and remitted to governmental authorities. Such taxes were $1,218 and $0 for the three-months ended March 31, 2017 and 2016, respectively. Recent accounting pronouncements In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, Leases In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flow (Topic 23) The Company does not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the consolidated financial statements. |
Inventory
Inventory | 3 Months Ended |
Mar. 31, 2017 | |
Inventory Disclosure [Abstract] | |
Inventory | NOTE 3 – INVENTORY Inventory consists of the following as of: March 31, 2017 December 31, 2016 (Unaudited) Finished goods $ 41,734 $ 10,827 Total inventories $ 41,734 $ 10,827 |
Property and Equipment, Net
Property and Equipment, Net | 3 Months Ended |
Mar. 31, 2017 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment, Net | NOTE 4 – PROPERTY AND EQUIPMENT, net Property and equipment, net, consists of the following as of: March 31, 2017 December 31, 2016 (Unaudited) Information technology equipment $ 31,892 $ 31,892 Less accumulated depreciation (25,646 ) (24,137 ) Total property and equipment, net $ 6,246 $ 7,755 Depreciation expense was $1,509 and $1,606 for the three-months ended March 31, 2017 and 2016, respectively. |
Intangible Assets, Net
Intangible Assets, Net | 3 Months Ended |
Mar. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets, Net | NOTE 5 – INTANGIBLE ASSETS, net Intangible assets, net, consists of the following as of: March 31, 2017 December 31, 2016 (Unaudited) Patents $ 432,985 $ 432,985 Less accumulated amortization (246,167 ) (240,275 ) 186,818 192,710 Patents pending 244,523 238,060 Total intangible assets, net $ 431,341 $ 430,770 Patents are amortized straight-line over a period of fifteen years. Amortization expense was $5,892 and $6,142, for the three-months ended March 31, 2017 and 2016, respectively. The Company has capitalized costs for several patents that are still pending. In those instances, the Company has not recorded any amortization. The Company will commence amortization when these patents are approved. The Company owns 21 issued patents, including 14 in the United States and 7 others in China, India, Japan, and Hong Kong. These patents will expire during the years of 2023 to 2028, subject to any patent term extensions of the individual patent. The Company has 5 foreign patent applications pending in Europe, Canada, and Brazil. |
Stockholders' Deficit
Stockholders' Deficit | 3 Months Ended |
Mar. 31, 2017 | |
Equity [Abstract] | |
Stockholders' Deficit | NOTE 6 – STOCKHOLDERS’ DEFICIT Self-directed stock issuance During the year ended December 31, 2016, the Company sold securities in a self-directed offering in the aggregate amount of $1,121,000 at $0.08 per unit. Each unit consisted of 1 share of restricted common stock (14,012,500 shares), a five-year warrant to purchase 1 share of restricted common stock (14,012,500 warrant shares) at $0.08 per share, a five-year warrant to purchase 1 share of restricted common stock (14,012,500 warrant shares) at $0.12 per share, and a five-year warrant to purchase 1 share of restricted common stock (14,012,500 warrant shares) at $0.16 per share. During the three-months ended March 31, 2017, the Company sold securities in a self-directed offering in the aggregate amount of $179,000 at $0.08 per unit. Each unit consisted of 1 share of restricted common stock (2,237,500 shares), a five-year warrant to purchase 1 share of restricted common stock (2,237,500 warrant shares) at $0.08 per share, a five-year warrant to purchase 1 share of restricted common stock (2,237,500 warrant shares) at $0.12 per share, and a five-year warrant to purchase 1 share of restricted common stock (2,237,500 warrant shares) at $0.16 per share. On March 27, 2017, the Company sold securities in a self-directed offering in the aggregate amount of $50,000 at $0.12 per unit. Each unit consisted of 1 share of restricted common stock (416,666 shares) and a five-year warrant to purchase 1 share of restricted common stock (416,666 warrant shares) at $0.12 per share. Equity purchase agreement On July 13, 2016, the Company entered into an equity purchase agreement (the “EPA”) and a registration rights agreement with an investor. Pursuant to the terms of the EPA, the Company has the right, but not the obligation, to sell shares of its common stock to the investor on the terms specified in the EPA. On the date of the EPA, the Company issued 1,500,000 shares to the investor. The total fair value of this stock on the date of grant was $106,500. These shares were fully vested upon issuance. During the three-months ended March 31, 2017, the Company sold 567,644 shares of common stock for $60,000, pursuant to the EPA. |
Stock Grants
Stock Grants | 3 Months Ended |
Mar. 31, 2017 | |
Equity [Abstract] | |
Stock Grants | NOTE 7 – STOCK GRANTS Director stock grants In 2016, the Company granted its independent directors an aggregate of 468,254 shares of restricted common stock in the Company. The total fair value of this stock on the date of grant was $41,666. These shares were fully vested upon issuance. During the three-months ended March 31, 2017, the Company granted its independent directors an aggregate of 156,250 shares of restricted common stock in the Company. The total fair value of this stock on the date of grant was $25,000. These shares were fully vested upon issuance. The Company recognizes the expense related to these grants ratably over the requisite service period. Total stock compensation expense recognized as a result of these grants was $25,000 for the three-months ended March 31, 2017 and 2016. |
Stock Option Plans
Stock Option Plans | 3 Months Ended |
Mar. 31, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock Option Plans | NOTE 8 – STOCK OPTION PLANS On February 7, 2014, the Company adopted the 2014 Equity Compensation Plan. Under this plan, the Company may issue options to purchase shares of common stock to employees, directors, advisors, and consultants. The aggregate number of shares that may be issued under this plan is 30,420,148. On April 16, 2015, the majority stockholder of the Company approved an increase in the Company’s 2014 Equity Compensation Plan by 15 million shares. Under the terms of the 2014 Equity Compensation Plan and the 2006 Stock Incentive Plan (collectively, the “Plans”), incentive stock options may be granted to employees at a price per share not less than 100% of the fair market value at date of grant. If the incentive stock option is granted to a 10% stockholder, then the purchase or exercise price per share shall not be less than 110% of the fair market value per share of common stock on the grant date. Non-statutory stock options and restricted stock may be granted to employees, directors, advisors, and consultants at a price per share, not less than 100% of the fair market value at date of grant. Options granted are exercisable, unless specified differently in the grant documents, over a default term of ten years from the date of grant and generally vest over a period of four years. A summary of stock option activity is as follows: Options Weighted average exercise price Weighted average remaining contractual term in years Aggregate intrinsic value Outstanding January 1, 2016 34,167,354 $ 0.47 6.57 $ 974,066 Exercisable January 1, 2016 34,167,354 $ 0.47 6.57 $ 974,066 Canceled - Granted 6,156,580 Exercised - Forfeited (3,501,965 ) Outstanding December 31, 2016 36,821,969 $ 0.41 5.94 $ 301,273 Exercisable December 31, 2016 36,771,969 $ 0.41 5.94 $ 299,273 Canceled - Granted 78,125 Exercised - Forfeited - Outstanding March 31, 2017 36,900,094 $ 0.41 5.69 $ 910,360 Exercisable March 31, 2017 36,875,094 $ 0.41 5.69 $ 907,485 The aggregate intrinsic value in the table above is before applicable income taxes and represents the excess amount over the exercise price option recipients would have received if all options had been exercised on March 31, 2017, based on a valuation of the Company’s stock for that day. A summary of the Company’s non-vested options for the year ended December 31, 2016 and the three-months ended March 31, 2017, are presented below: Non-vested at January 1, 2016 - Granted 6,156,580 Vested (6,106,580 ) Forfeited - Non-vested at December 31, 2016 50,000 Granted 78,125 Vested (103,125 ) Forfeited - Non-vested at March 31, 2017 25,000 As of March 31, 2017, total unrecognized stock-based compensation expense related to unvested stock options was $1,750, which is expected to be expensed over the next quarter. The Company estimates the fair value of stock options granted on each grant date using the Black-Scholes option valuation model and recognizes an expense ratably over the requisite service period. The range of fair value assumptions related to options outstanding were as follows as of: March 31, 2017 December 31, 2016 (Unaudited) Dividend yield 0.0 % 0.0 % Risk-free rate 0.12% - 1.47 % 0.12% - 1.47 % Expected volatility 112% - 231 % 112% - 225 % Expected term 1.1 - 5.5 years 1.1 - 5.5 years The expected volatility was calculated based on the historical volatilities of publicly traded peer companies, determined by the Company, and the historical volatility of the Company. The risk-free interest rate used was based on the U.S. Treasury constant maturity rate in effect at the time of grant for the expected term of the stock options to be valued. The expected dividend yield was zero, as the Company does not anticipate paying a dividend within the relevant timeframe. Due to a lack of historical information needed to estimate the Company’s expected term, it was estimated using the simplified method allowed. In calculating the number of options issued in lieu of pay during the three-months ended March 31, 2016, the Company used assumptions comparable to December 31, 2015, with a 20-day weighted average stock price. As part of the requirements of ASC Nos. 718 and 505, the Company is required to estimate potential forfeitures of stock grants and adjust stock based compensation expense accordingly. The estimate of forfeitures will be adjusted over the requisite service period to the extent that actual forfeitures differ, or are expected to differ, from such estimates. Changes in estimated forfeitures will be recognized in the period of change and will also impact the amount of stock based compensation expenses to be recognized in future periods. The Company recognized $14,250 and $356,729 in stock based compensation expense related to options during the three-months ended March 31, 2017 and 2016, respectively. Of these amounts, $0 and $227,784 were related to 0 and 3,796,385 options issued to employees in lieu of salaries accrued for services during the three-months ended March 31, 2017 and 2016, respectively; $0 and $66,445 were related to 0 and 1,107,417 options issued to consultants in lieu of fees accrued for services during the three-months ended March 31, 2017 and 2016, respectively; $1,750 and $0 were related to 25,000 and 0 vested options issued to a consultant as compensation for services during the three-months ended March 31, 2017 and 2016, respectively; and $12,500 and $62,500 were related to 78,125 and 1,041,667 options issued to directors as compensation for services during the three-months ended March 31, 2017 and 2016, respectively. |
Warrants
Warrants | 3 Months Ended |
Mar. 31, 2017 | |
Warrants | |
Warrants | NOTE 9 – WARRANTS The following is a summary of the Company’s warrant activity: Weighted average Weighted average remaining contractual Aggregate intrinsic Warrants exercise price term in years value Outstanding January 1, 2016 47,003,962 $ 0.46 3.49 $ 2,579,541 Exercisable January 1, 2016 47,003,962 $ 0.46 3.49 $ 2,579,541 Canceled - Granted 42,037,500 Exercised - Forfeited (676,426 ) Outstanding December 31, 2016 88,365,036 $ 0.30 3.50 $ 543,770 Exercisable December 31, 2016 88,365,036 $ 0.30 3.50 $ 543,770 Canceled - Granted 7,129,166 Exercised - Forfeited (289,145 ) Outstanding March 31, 2017 95,205,057 $ 0.28 3.38 $ 4,329,366 Exercisable March 31, 2017 95,205,057 $ 0.28 3.38 $ 4,329,366 The Company estimates the fair value of warrants granted on each grant date using the Black-Scholes option valuation model. The fair value of warrants issued with debt is recorded as a debt discount and amortized over the life of the debt. The range of fair value assumptions related to warrants outstanding were as follows as of: March 31, 2017 December 31, 2016 (Unaudited) Dividend yield 0.0 % 0.0 % Risk-free rate 0.12% - 0.86 % 0.12% - 0.86 % Expected volatility 102% - 159 % 102% - 159 % Expected term 1.0 - 2.5 years 1.0 - 2.5 years The expected volatility was calculated based on the historical volatilities of publicly traded peer companies, determined by the Company. The risk-free interest rate used was based on the U.S. Treasury constant maturity rate in effect at the time of grant for the expected term of the warrants to be valued. The expected dividend yield was zero, as the Company does not anticipate paying a dividend within the relevant timeframe. The expected warrant term is the life of the warrant. The Company did not recognize any in stock based compensation expense related to warrants for the three-months ended March 31, 2017 and 2016, respectively. Warrant expiration During the three-months ended March 31, 2017, warrants to purchase an aggregate of 289,145 shares of restricted common stock expired. |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Mar. 31, 2017 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | NOTE 10 – RELATED PARTY TRANSACTIONS Executive chairman agreement As part of an executive chairman agreement, a director provided services to the Company. This agreement was amended on April 1, 2015. Under the terms of this amendment, the director received $37,500 in equity instruments issued quarterly in arrears as compensation. Effective April 1, 2016, the director agreed to suspend any additional equity compensation, until otherwise agreed by the Company. Effective August 12, 2016, the Company accepted the request for a leave of absence and resignation by the director as Executive Chairman and member of the Board of Directors. The Company incurred $0 and $37,500 in stock based compensation to this director during the three-months ended March 31, 2017 and 2016, respectively. Amounts payable to this director was $293,546 as of March 31, 2017 and December 31, 2016. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | NOTE 11 – INCOME TAXES The Company accounts for income taxes using the asset and liability method. Under this method, deferred income tax assets and liabilities are determined based upon the difference between the financial statement carrying amounts and the tax basis of assets and liabilities and are measured using the enacted tax rate expected to apply to taxable income in the years in which the differences are expected to be reversed. The effective tax rate for the three months ended March 31, 2017 and 2016, differs from the statutory rate of 34% as a result of the state taxes (net of Federal benefit) and permanent differences. The Company’s valuation allowance was primarily related to the operating losses. The valuation allowance is determined in accordance with the provisions of ASC No. 740, Income Taxes The Company is subject to taxation in the United States and two state jurisdictions. The preparation of tax returns requires management to interpret the applicable tax laws and regulations in effect in such jurisdictions, which could affect the amount of tax paid by the Company. Management, in consultation with its tax advisors, files its tax returns based on interpretations that are believed to be reasonable under the circumstances. The income tax returns, however, are subject to routine reviews by the various taxing authorities. As part of these reviews, a taxing authority may disagree with respect to the tax positions taken by management (“uncertain tax positions”) and therefore may require the Company to pay additional taxes. Management evaluates the requirement for additional tax accruals, including interest and penalties, which the Company could incur as a result of the ultimate resolution of its uncertain tax positions. Management reviews and updates the accrual for uncertain tax positions as more definitive information becomes available from taxing authorities, completion of tax audits, expiration of statute of limitations, or upon occurrence of other events. As of March 31, 2017 and 2016, there was no liability for income tax associated with unrecognized tax benefits. The Company recognizes accrued interest related to unrecognized tax benefits as well as any related penalties in interest income or expense in its consolidated statements of operations, which is consistent with the recognition of these items in prior reporting periods. The federal and state income tax returns of the Company are subject to examination by the IRS and state taxing authorities, generally for three years after they were filed. |
Basic and Diluted Net Loss Per
Basic and Diluted Net Loss Per Share | 3 Months Ended |
Mar. 31, 2017 | |
Earnings Per Share [Abstract] | |
Basic and Diluted Net Loss Per Share | NOTE 12 – BASIC AND DILUTED NET LOSS PER SHARE The following table sets forth the computation of the Company’s basic and diluted net loss per share for the: Three-months ended March 31, 2017 (Unaudited) Net Loss (Numerator) Shares (Denominator) Per share amount Basic loss per share $ (450,836 ) 86,491,377 $ (0.01 ) Effect of dilutive securities—Common stock options and warrants - - - Diluted loss per share $ (450,836 ) 86,491,377 $ (0.01 ) Three-months ended March 31, 2016 (Unaudited) Net Loss (Numerator) Shares (Denominator) Per share amount Basic loss per share $ (677,746 ) 69,087,955 $ (0.01 ) Effect of dilutive securities—Common stock options and warrants - - - Diluted loss per share $ (677,746 ) 69,087,955 $ (0.01 ) The following outstanding shares of common stock equivalents were excluded from the computation of diluted net loss per share for the periods presented because including them would have been antidilutive for the periods ended: March 31, 2017 March 31, 2016 (Unaudited) (Unaudited) Common stock options 36,900,094 40,112,823 Common stock warrants 95,205,057 46,413,374 Total common stock equivalents 132,105,151 86,526,197 |
Leases
Leases | 3 Months Ended |
Mar. 31, 2017 | |
Leases [Abstract] | |
Leases | NOTE 13 – LEASES Manoa Innovation Center The Company entered into an automatically renewable month-to-month lease for office space on August 13, 2010. Under the terms of this lease, the Company must provide a written notice 45 days prior to vacating the premises. Total rent expense under this agreement as amended was $7,929 and $7,927, for the three-months ended March 31, 2017 and 2016, respectively. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | NOTE 14 – SUBSEQUENT EVENTS The Company evaluated its March 31, 2017, condensed consolidated financial statements for subsequent events through May 12, 2017, the date the consolidated financial statements were available to be issued and noted the following non-recognized events for disclosure. Stock issuance In April and May 2017 (through May 8, 2017), the Company sold securities in a self-directed offering in the aggregate amount of $190,000 at $0.12 per unit. Each unit consisted of 1 share of restricted common stock (1,583,331 shares) and a five-year warrant to purchase 1 share of restricted common stock (1,583,331 warrant shares) at $0.12 per share. On April 10, 2017, the Company granted 100,000 shares of restricted common stock to a service provider. These shares are subject to a risk of forfeiture and vest quarterly in arrears commencing on April 1, 2017. On May 3, 2017, the Company settled a payable in the amount of $44,700 with a previously engaged broker dealer through the issuance of securities at $0.08 per unit. Each unit consisted of 1 share of restricted common stock (558,750 shares), a five-year warrant to purchase 1 share of restricted common stock (558,750 warrant shares) at $0.08 per share, a five-year warrant to purchase 1 share of restricted common stock (558,750 warrant shares) at $0.12 per share, and a five-year warrant to purchase 1 share of restricted common stock (558,750 warrant shares) at $0.16 per share. |
Summary of Significant Accoun20
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2017 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial information. In the opinion of the Company’s management, the accompanying condensed consolidated financial statements reflect all adjustments, consisting of normal, recurring adjustments, considered necessary for a fair presentation of the results for the interim periods ended March 31, 2017 and 2016. Although management believes that the disclosures in these unaudited condensed consolidated financial statements are adequate to make the information presented not misleading, certain information and footnote disclosures normally included in financial statements that have been prepared in accordance U.S. GAAP have been condensed or omitted pursuant to the rules and regulations of the SEC. The condensed consolidated financial statements include the accounts of Cardax, Inc., and its wholly owned subsidiary, Cardax Pharma, Inc., and its predecessor, Cardax Pharmaceuticals, Inc., which was merged with and into Cardax, Inc., on December 30, 2015. All significant intercompany balances and transactions have been eliminated in consolidation. |
Accounts Receivable | Accounts receivable Accounts receivable of $17,378 and $0 as of March 31, 2017 and December 31, 2016, respectively, consists of amounts due from sales of consumer health products. It is the Company’s policy to provide for an allowance for doubtful collections based upon a review of outstanding receivables, historical collection information, and existing economic conditions. Normal receivables are due 30 days after the issuance of the invoice. Receivables past due more than 60 days are considered delinquent. Delinquent receivables are written off based on individual credit evaluation and specific circumstances of the customer. There was no allowance as of March 31, 2017 and December 31, 2016. |
Inventory | Inventory Inventory is stated at the lower of cost or market. Cost is determined using the average cost method. Market is defined as sales price less cost to dispose and a normal profit margin. Inventory costs include third party costs for finished goods. The Company utilizes contract manufacturers and receives inventory in finished form. The Company provides a reserve against inventory for known or expected inventory obsolescence. The reserve is determined by specific review of inventory items for product age and quality that may affect salability. There were no reserves for inventory as of March 31, 2017 and December 31, 2016. |
Revenue Recognition | Revenue recognition The Company recognizes revenue from the sale of its products through e-commerce and wholesale channels when the transfer of title and risk of loss occurs. For shipments with terms of FOB Shipping Point, revenue is recognized upon shipment. For shipments with terms of FOB Destination, revenue is recognized upon delivery. Sales returns and allowances are recorded as a reduction to sales in the period in which sales are recorded. The Company records shipping charges and sales tax gross in revenues and cost of goods sold. Sales discounts and other adjustments are recorded at the time of sale. |
Cost of Goods Sold | Cost of Goods Sold Cost of goods sold is comprised of costs to manufacture or acquire products sold to customers, and direct and indirect distribution costs incurred in the sale of goods. |
Shipping and Handling Costs | Shipping and Handling Costs Shipping and handling costs are included in cost of goods sold. Shipping and handling costs were $2,824 and $0 for the three-months ended March 31, 2017 and 2016, respectively. |
Sales and Use Tax | Sales and use tax Revenues, as presented on the accompanying income statement, include taxes collected from customers and remitted to governmental authorities. Such taxes were $1,218 and $0 for the three-months ended March 31, 2017 and 2016, respectively. |
Recent Accounting Pronouncements | Recent accounting pronouncements In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, Leases In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flow (Topic 23) The Company does not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the consolidated financial statements. |
Inventory (Tables)
Inventory (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory | Inventory consists of the following as of: March 31, 2017 December 31, 2016 (Unaudited) Finished goods $ 41,734 $ 10,827 Total inventories $ 41,734 $ 10,827 |
Property and Equipment, Net (Ta
Property and Equipment, Net (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment, Net | Property and equipment, net, consists of the following as of: March 31, 2017 December 31, 2016 (Unaudited) Information technology equipment $ 31,892 $ 31,892 Less accumulated depreciation (25,646 ) (24,137 ) Total property and equipment, net $ 6,246 $ 7,755 |
Intangible Assets, Net (Tables)
Intangible Assets, Net (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Intangible Assets, Net | Intangible assets, net, consists of the following as of: March 31, 2017 December 31, 2016 (Unaudited) Patents $ 432,985 $ 432,985 Less accumulated amortization (246,167 ) (240,275 ) 186,818 192,710 Patents pending 244,523 238,060 Total intangible assets, net $ 431,341 $ 430,770 |
Stock Option Plans (Tables)
Stock Option Plans (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of Stock Option Activity | A summary of stock option activity is as follows: Options Weighted average exercise price Weighted average remaining contractual term in years Aggregate intrinsic value Outstanding January 1, 2016 34,167,354 $ 0.47 6.57 $ 974,066 Exercisable January 1, 2016 34,167,354 $ 0.47 6.57 $ 974,066 Canceled - Granted 6,156,580 Exercised - Forfeited (3,501,965 ) Outstanding December 31, 2016 36,821,969 $ 0.41 5.94 $ 301,273 Exercisable December 31, 2016 36,771,969 $ 0.41 5.94 $ 299,273 Canceled - Granted 78,125 Exercised - Forfeited - Outstanding March 31, 2017 36,900,094 $ 0.41 5.69 $ 910,360 Exercisable March 31, 2017 36,875,094 $ 0.41 5.69 $ 907,485 |
Schedule of Non-vested Shares Granted Under Stock Option Plan | A summary of the Company’s non-vested options for the year ended December 31, 2016 and the three-months ended March 31, 2017, are presented below: Non-vested at January 1, 2016 - Granted 6,156,580 Vested (6,106,580 ) Forfeited - Non-vested at December 31, 2016 50,000 Granted 78,125 Vested (103,125 ) Forfeited - Non-vested at March 31, 2017 25,000 |
Schedule of Fair Value Assumptions | The range of fair value assumptions related to options outstanding were as follows as of: March 31, 2017 December 31, 2016 (Unaudited) Dividend yield 0.0 % 0.0 % Risk-free rate 0.12% - 1.47 % 0.12% - 1.47 % Expected volatility 112% - 231 % 112% - 225 % Expected term 1.1 - 5.5 years 1.1 - 5.5 years |
Warrants (Tables)
Warrants (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Warrants | |
Schedule of Stock Warrants Activity | The following is a summary of the Company’s warrant activity: Weighted average Weighted average remaining contractual Aggregate intrinsic Warrants exercise price term in years value Outstanding January 1, 2016 47,003,962 $ 0.46 3.49 $ 2,579,541 Exercisable January 1, 2016 47,003,962 $ 0.46 3.49 $ 2,579,541 Canceled - Granted 42,037,500 Exercised - Forfeited (676,426 ) Outstanding December 31, 2016 88,365,036 $ 0.30 3.50 $ 543,770 Exercisable December 31, 2016 88,365,036 $ 0.30 3.50 $ 543,770 Canceled - Granted 7,129,166 Exercised - Forfeited (289,145 ) Outstanding March 31, 2017 95,205,057 $ 0.28 3.38 $ 4,329,366 Exercisable March 31, 2017 95,205,057 $ 0.28 3.38 $ 4,329,366 |
Schedule of Fair Value Assumptions Related to Warrants Outstanding | The range of fair value assumptions related to warrants outstanding were as follows as of: March 31, 2017 December 31, 2016 (Unaudited) Dividend yield 0.0 % 0.0 % Risk-free rate 0.12% - 0.86 % 0.12% - 0.86 % Expected volatility 102% - 159 % 102% - 159 % Expected term 1.0 - 2.5 years 1.0 - 2.5 years |
Basic and Diluted Net Loss Pe26
Basic and Diluted Net Loss Per Share (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Earnings Per Share [Abstract] | |
Schedule of Basic and Diluted Net Income (loss) | The following table sets forth the computation of the Company’s basic and diluted net loss per share for the: Three-months ended March 31, 2017 (Unaudited) Net Loss (Numerator) Shares (Denominator) Per share amount Basic loss per share $ (450,836 ) 86,491,377 $ (0.01 ) Effect of dilutive securities—Common stock options and warrants - - - Diluted loss per share $ (450,836 ) 86,491,377 $ (0.01 ) Three-months ended March 31, 2016 (Unaudited) Net Loss (Numerator) Shares (Denominator) Per share amount Basic loss per share $ (677,746 ) 69,087,955 $ (0.01 ) Effect of dilutive securities—Common stock options and warrants - - - Diluted loss per share $ (677,746 ) 69,087,955 $ (0.01 ) |
Schedule of Computation of Diluted Net Income (loss) Per Share | The following outstanding shares of common stock equivalents were excluded from the computation of diluted net loss per share for the periods presented because including them would have been antidilutive for the periods ended: March 31, 2017 March 31, 2016 (Unaudited) (Unaudited) Common stock options 36,900,094 40,112,823 Common stock warrants 95,205,057 46,413,374 Total common stock equivalents 132,105,151 86,526,197 |
Company Background (Details Nar
Company Background (Details Narrative) - USD ($) | Sep. 06, 2016 | May 30, 2016 | Nov. 24, 2015 | Feb. 07, 2014 | Jan. 03, 2014 | Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2013 | Dec. 31, 2016 | May 31, 2013 | Dec. 31, 2009 | Dec. 31, 2008 |
Ownership interest | 100.00% | |||||||||||
Proceeds from sale of common stock | $ 3,923,100 | $ 60,000 | ||||||||||
Number of common stock shares sold | 6,276,960 | 567,644 | ||||||||||
Warrants term | 5 years | 5 years | 5 years | |||||||||
Warrants to purchase of common stock shares | 6,276,960 | 3,321,600 | 14,446,777 | |||||||||
Warrant exercise price per share | $ 0.625 | $ 0.625 | $ 0.625 | |||||||||
Outstanding principal amount of notes payable | $ 2,076,000 | $ 8,489,036 | ||||||||||
Shares of common stock issued upon conversion of notes payable | 3,353,437 | 14,446,777 | ||||||||||
Warrants converted into common stock upon reverse merger | $ 0.625 | $ 0.625 | ||||||||||
Stock options cancelled | 15,290,486 | |||||||||||
Stock option cancelled price per share | $ 0.07 | |||||||||||
Stock options issued in substitution of cancelled options | 6,889,555 | |||||||||||
Stock options issued in substitution of cancelled options, price per share | $ 0.155 | |||||||||||
Additional stock options issued purchase number of common stock | 20,867,266 | |||||||||||
Additional stock options issued purchase number of common stock, price per share | $ 0.625 | |||||||||||
Outstanding principal notes repaid in full | $ 500,000 | $ 55,000 | ||||||||||
Common stock, par value | $ 0.001 | $ 0.001 | $ 0.001 | |||||||||
Company's shares of common stock in ratio approximately | Common Stock in a ratio of approximately 2.2:1 | |||||||||||
Net losses | $ 450,836 | $ 677,746 | ||||||||||
Accumulated deficit | 56,384,698 | $ 55,933,862 | ||||||||||
Additional paid in capital to business plan | 289,000 | |||||||||||
Monthly compensation | 39,250 | $ 381,729 | ||||||||||
David M. Watumull [Member] | ||||||||||||
Compensation arrangement bi-weekly compensation expense | $ 3,269 | |||||||||||
Timothy J. King [Member] | ||||||||||||
Compensation arrangement bi-weekly compensation expense | $ 3,269 | $ 1,635 | ||||||||||
David G. Watumull [Member] | ||||||||||||
Compensation arrangement bi-weekly compensation expense | 4,327 | |||||||||||
Gilbert M. Rishton [Member] | ||||||||||||
Compensation arrangement bi-weekly compensation expense | 1,923 | |||||||||||
John B. Russell [Member] | ||||||||||||
Monthly compensation | 3,500 | |||||||||||
Director [Member] | ||||||||||||
Quarterly equity compensation | $ 12,500 | |||||||||||
Equity compensation market price per share | $ 0.15 | |||||||||||
April and May 2017 [Member] | ||||||||||||
Additional paid in capital to business plan | $ 190,000 |
Summary of Significant Accoun28
Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 3 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | |
Accounting Policies [Abstract] | |||
Accounts receivable | $ 17,378 | ||
Allowance for doubtful accounts receivable | |||
Inventory reserves | |||
Shipping and handling costs | 2,824 | $ 0 | |
Sales taxes | $ 1,218 | $ 0 |
Inventory - Schedule of Invento
Inventory - Schedule of Inventory (Details) - USD ($) | Mar. 31, 2017 | Dec. 31, 2016 |
Inventory Disclosure [Abstract] | ||
Finished goods | $ 41,734 | $ 10,827 |
Total inventories | $ 41,734 | $ 10,827 |
Property and Equipment, Net (De
Property and Equipment, Net (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $ 1,509 | $ 1,606 |
Property and Equipment, Net - S
Property and Equipment, Net - Schedule of Property and Equipment, Net (Details) - USD ($) | Mar. 31, 2017 | Dec. 31, 2016 |
Total property and equipment, net | $ 6,246 | $ 7,755 |
Information Technology Equipment [Member] | ||
Information technology equipment | 31,892 | 31,892 |
Less accumulated depreciation | (25,646) | (24,137) |
Total property and equipment, net | $ 6,246 | $ 7,755 |
Intangible Assets, Net (Details
Intangible Assets, Net (Details Narrative) | 3 Months Ended | |
Mar. 31, 2017USD ($)Units | Mar. 31, 2016USD ($) | |
Patent, amortization period | 15 years | |
Amortization expense | $ | $ 5,892 | $ 6,142 |
Patents, units | 21 | |
Patents expiration date | patents will expire during the years of 2023 to 2028 | |
United States [Member] | ||
Patents, units | 14 | |
China, India, Japan And Hong Kong [Member] | ||
Patents, units | 7 | |
Europe, Canada, and Brazil [Member] | ||
Number of patent application pending | 5 |
Intangible Assets, Net - Schedu
Intangible Assets, Net - Schedule of Intangible Assets, Net (Details) - USD ($) | Mar. 31, 2017 | Dec. 31, 2016 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Patents | $ 432,985 | $ 432,985 |
Less accumulated amortization | (246,167) | (240,275) |
Patents, Total | 186,818 | 192,710 |
Patents pending | 244,523 | 238,060 |
Total intangible assets, net | $ 431,341 | $ 430,770 |
Stockholders' Deficit (Details
Stockholders' Deficit (Details Narrative) - USD ($) | Mar. 27, 2017 | Jul. 13, 2016 | Feb. 07, 2014 | Jan. 03, 2014 | Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | Dec. 31, 2013 |
Sold securities in a self-directed offering, aggregate amount | $ 289,000 | |||||||
Warrants to purchase of common stock shares | 6,276,960 | 3,321,600 | 14,446,777 | |||||
Warrants term | 5 years | 5 years | 5 years | |||||
Number of common stock shares sold | 6,276,960 | 567,644 | ||||||
Proceeds from sale of common stock | $ 3,923,100 | $ 60,000 | ||||||
Equity Purchase Agreement [Member] | Investor [Member] | ||||||||
Number of shares issued | 1,500,000 | |||||||
Fair value of stock grant fully vested | $ 106,500 | |||||||
Restricted Stock One [Member] | ||||||||
Warrants to purchase of common stock shares | 416,666 | 2,237,500 | 14,012,500 | |||||
Restricted common stock price per share | $ 0.12 | $ 0.08 | $ 0.08 | |||||
Warrants term | 5 years | 5 years | 5 years | |||||
Restricted Stock Two [Member] | ||||||||
Warrants to purchase of common stock shares | 2,237,500 | 14,012,500 | ||||||
Restricted common stock price per share | $ 0.12 | $ 0.12 | ||||||
Warrants term | 5 years | 5 years | ||||||
Restricted Stock Three [Member] | ||||||||
Warrants to purchase of common stock shares | 2,237,500 | 14,012,500 | ||||||
Restricted common stock price per share | $ 0.16 | $ 0.16 | ||||||
Warrants term | 5 years | 5 years | ||||||
Self Directed Stock Issuance [Member] | ||||||||
Sold securities in a self-directed offering, aggregate amount | $ 50,000 | $ 179,000 | $ 1,121,000 | |||||
Issuance of stock per share | $ 0.12 | $ 0.08 | $ 0.08 | |||||
Conversion stock, description | Each unit consisted of 1 share of restricted common stock (416,666 shares) and a five-year warrant to purchase 1 share of restricted common stock (416,666 warrant shares) at $0.12 per share. | Each unit consisted of 1 share of restricted common stock (2,237,500 shares), a five-year warrant to purchase 1 share of restricted common stock (2,237,500 warrant shares) at $0.08 per share, a five-year warrant to purchase 1 share of restricted common stock (2,237,500 warrant shares) at $0.12 per share, and a five-year warrant to purchase 1 share of restricted common stock (2,237,500 warrant shares) at $0.16 per share. | Each unit consisted of 1 share of restricted common stock (14,012,500 shares), a five-year warrant to purchase 1 share of restricted common stock (14,012,500 warrant shares) at $0.08 per share, a five-year warrant to purchase 1 share of restricted common stock (14,012,500 warrant shares) at $0.12 per share, and a five-year warrant to purchase 1 share of restricted common stock (14,012,500 warrant shares) at $0.16 per share. |
Stock Grants (Details Narrative
Stock Grants (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | |
Stock compensation expense | $ 39,250 | $ 87,500 | |
Director [Member] | |||
Restricted common stock, shares | 156,250 | 468,254 | |
Restricted common stock, value | $ 25,000 | $ 41,666 | |
Stock compensation expense | $ 25,000 | $ 25,000 |
Stock Option Plans (Details Nar
Stock Option Plans (Details Narrative) - USD ($) | Feb. 07, 2014 | Mar. 31, 2017 | Mar. 31, 2016 | Apr. 16, 2015 |
Unrecognized stock-based compensation expense | $ 1,750 | |||
Stock based compensation expense | 14,250 | $ 356,729 | ||
Compensation expense, in lieu of salaries | $ 0 | $ 227,784 | ||
Options issued, in lieu of salaries | 0 | 3,796,385 | ||
Compensation expense, in lieu of fees | $ 0 | $ 66,445 | ||
Options issued, in lieu of fees | 0 | 1,107,417 | ||
Director [Member] | ||||
Compensation expense, in lieu of fees | $ 12,500 | $ 62,500 | ||
Options issued, in lieu of fees | 78,125 | 1,041,667 | ||
Consultant [Member] | ||||
Compensation expense, in lieu of fees | $ 1,750 | $ 0 | ||
Options issued, in lieu of fees | 25,000 | 0 | ||
2014 Equity Compensation Plan [Member] | ||||
Aggregate number of shares issuable under this plan | 30,420,148 | |||
Shares authorized | 15,000,000 | |||
2014 Equity Compensation Plan and 2006 Stock Incentive Plan [Member] | ||||
Percentage of stock option granted to stockholders | 10.00% | |||
2014 Equity Compensation Plan and 2006 Stock Incentive Plan [Member] | Maximum [Member] | ||||
Percentage granted to employees at a price per share | 100.00% | |||
Percentage exercise price per share | 110.00% | |||
Percentage restricted stock to related parties price per share | 100.00% |
Stock Option Plans - Schedule o
Stock Option Plans - Schedule of Stock Option Activity (Details) - USD ($) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2017 | Dec. 31, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||
Options Outstanding, Beginning balance | 36,821,969 | 34,167,354 |
Options Exercisable, Beginning balance | 36,771,969 | 34,167,354 |
Options, Canceled | ||
Options, Granted | 78,125 | 6,156,580 |
Options, Exercised | ||
Options, Forfeited | (3,501,965) | |
Options Outstanding, Ending balance | 36,900,094 | 36,821,969 |
Options Exercisable, Ending balance | 36,875,094 | 36,771,969 |
Weighted Average Exercise Price, Outstanding, Beginning balance | $ 0.41 | $ 0.47 |
Weighted Average Exercise Price, Exercisable, Beginning balance | 0.41 | 0.47 |
Weighted Average Exercise Price, Canceled | ||
Weighted Average Exercise Price, Granted | ||
Weighted Average Exercise Price, Exercised | ||
Weighted Average Exercise Price, Forfeited | ||
Weighted Average Exercise Price, Outstanding, Ending balance | 0.41 | 0.41 |
Weighted Average Exercise Price, Exercisable, Ending balance | $ 0.41 | $ 0.41 |
Weighted Average Remaining Contractual Terms (Years), Outstanding Beginning | 5 years 11 months 9 days | 6 years 6 months 26 days |
Weighted Average Remaining Contractual Terms (Years), Outstanding Ending | 5 years 11 months 9 days | 6 years 6 months 26 days |
Weighted Average Remaining Contractual Terms (Years), Exercisable, Beginning | 5 years 8 months 9 days | 5 years 11 months 9 days |
Weighted Average Remaining Contractual Terms (Years), Exercisable, Ending | 5 years 8 months 9 days | 5 years 11 months 9 days |
Aggregate Intrinsic Value, Outstanding Beginning balance | $ 301,273 | $ 974,066 |
Aggregate Intrinsic Value, Exercisable Beginning balance | 299,273 | 974,066 |
Aggregate Intrinsic Value, Outstanding Ending balance | 910,360 | 301,273 |
Aggregate Intrinsic Value, Exercisable Ending balance | $ 907,485 | $ 299,273 |
Stock Option Plans - Schedule38
Stock Option Plans - Schedule of Non-vested Shares Granted Under Stock Option Plan (Details) - shares | 3 Months Ended | 12 Months Ended |
Mar. 31, 2017 | Dec. 31, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||
Non-vested, Options Outstanding, Beginning balance | 50,000 | |
Non-vested, Options Granted | 78,125 | 6,156,580 |
Non-vested, Options Vested | (103,125) | (6,106,580) |
Non-vested, Options Forfeited | ||
Non-vested, Options Outstanding, Ending balance | 25,000 | 50,000 |
Stock Option Plans - Schedule39
Stock Option Plans - Schedule of Fair Value Assumptions (Details) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2017 | Dec. 31, 2016 | |
Dividend yield | 0.00% | 0.00% |
Minimum [Member] | ||
Risk-free rate | 0.12% | 0.12% |
Expected volatility | 112.00% | 112.00% |
Expected term | 1 year 1 month 6 days | 1 year 1 month 6 days |
Maximum [Member] | ||
Risk-free rate | 1.47% | 1.47% |
Expected volatility | 231.00% | 225.00% |
Expected term | 5 years 6 months | 5 years 6 months |
Warrants (Details Narrative)
Warrants (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Stock compensation expense | $ 39,250 | $ 87,500 |
Warrant [Member] | ||
Stock compensation expense | $ 0 | $ 0 |
Warrants to purchase an aggregate number of shares | 289,145 |
Warrants - Schedule of Stock Wa
Warrants - Schedule of Stock Warrants Activity (Details) - Warrant [Member] - USD ($) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2017 | Dec. 31, 2016 | |
Warrants, Outstanding, Beginning balance | 88,365,036 | 47,003,962 |
Warrants, Exercisable, Beginning balance | 88,365,036 | 47,003,962 |
Warrants, Canceled | ||
Warrants, Granted | 7,129,166 | 42,037,500 |
Warrants, Exercised | ||
Warrants, Forfeited | (289,145) | (676,426) |
Warrants, Outstanding, Ending balance | 95,205,057 | 88,365,036 |
Warrants, Exercisable, Ending balance | 95,205,057 | 88,365,036 |
Weighted Average Exercise Price, Outstanding, Beginning | $ 0.30 | $ 0.46 |
Weighted Average Exercise Price, Exercisable, Beginning | 0.30 | 0.46 |
Weighted Average Exercise Price, Canceled | ||
Weighted Average Exercise Price, Granted | ||
Weighted Average Exercise Price, Exercised | ||
Weighted Average Exercise Price, Forfeited | ||
Weighted Average Exercise Price, Outstanding, Ending | 0.28 | 0.30 |
Weighted Average Exercise Price, Exercisable, Ending | $ 0.28 | $ 0.30 |
Weighted Average Remaining Contractual Terms (Years), Beginning Outstanding | 3 years 6 months | 3 years 5 months 27 days |
Weighted Average Remaining Contractual Terms (Years), Beginning Exercisable | 3 years 6 months | 3 years 5 months 27 days |
Weighted Average Remaining Contractual Terms (Years), Ending Outstanding | 3 years 4 months 17 days | 3 years 6 months |
Weighted Average Remaining Contractual Terms (Years), Ending Exercisable | 3 years 4 months 17 days | 3 years 6 months |
Aggregate Intrinsic Value, Outstanding, Beginning | $ 543,770 | $ 2,579,541 |
Aggregate Intrinsic Value, Exercisable, Beginning | 543,770 | 2,579,541 |
Aggregate Intrinsic Value, Outstanding, Ending | 4,329,366 | 543,770 |
Aggregate Intrinsic Value, Exercisable, Ending | $ 4,329,366 | $ 543,770 |
Warrants - Schedule of Fair Val
Warrants - Schedule of Fair Value Assumptions Related to Warrants Outstanding (Details) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2017 | Dec. 31, 2016 | |
Dividend yield | 0.00% | 0.00% |
Minimum [Member] | ||
Risk-free rate | 0.12% | 0.12% |
Expected volatility | 112.00% | 112.00% |
Expected term | 1 year 1 month 6 days | 1 year 1 month 6 days |
Maximum [Member] | ||
Risk-free rate | 1.47% | 1.47% |
Expected volatility | 231.00% | 225.00% |
Expected term | 5 years 6 months | 5 years 6 months |
Warrant [Member] | ||
Dividend yield | 0.00% | 0.00% |
Warrant [Member] | Minimum [Member] | ||
Risk-free rate | 0.12% | 0.12% |
Expected volatility | 102.00% | 102.00% |
Expected term | 1 year | 1 year |
Warrant [Member] | Maximum [Member] | ||
Risk-free rate | 0.86% | 0.86% |
Expected volatility | 159.00% | 159.00% |
Expected term | 2 years 6 months | 2 years 6 months |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - USD ($) | 3 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | |
Stock compensation expense | $ 39,250 | $ 381,729 | |
Amounts payable | 293,546 | $ 293,546 | |
Director [Member] | |||
Settled in option value | 37,500 | ||
Stock compensation expense | $ 0 | $ 37,500 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Income Tax Disclosure [Abstract] | ||
Effective tax statutory rate | 34.00% | 34.00% |
Basic and Diluted Net Loss Pe45
Basic and Diluted Net Loss Per Share - Schedule of Basic and Diluted Net Income (loss) (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Earnings Per Share [Abstract] | ||
Net loss (numerator) basic loss per share, basic | $ (450,836) | $ (677,746) |
Net loss (numerator) effect of dilutive securities-common stock options and warrants | ||
Net loss (numerator) diluted loss per share, diluted | $ (450,836) | $ (677,746) |
Shares (denominator) basic loss per shares , basic | 86,491,377 | 69,087,955 |
Shares (denominator) effect of dilutive securities-common stock options and warrants | ||
Shares (denominator) diluted loss per shares, diluted | 86,491,377 | 69,087,955 |
Per share amount basic loss per share, basic | $ (0.01) | $ (0.01) |
Per share amount effect of dilutive securities-common stock options and warrants | ||
Per share amount diluted loss per share, diluted | $ (0.01) | $ (0.01) |
Basic and Diluted Net Loss Pe46
Basic and Diluted Net Loss Per Share - Schedule of Computation of Diluted Net Income (Loss) Per Share (Details) - shares | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Total common stock equivalents | 132,105,151 | 86,526,197 |
Common Stock Warrants [Member] | ||
Total common stock equivalents | 95,205,057 | 46,413,374 |
Common Stock Options [Member] | ||
Total common stock equivalents | 36,900,094 | 40,112,823 |
Leases (Details Narrative)
Leases (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Lease Settlement Agreement [Member] | Hawaii Research Center [Member] | ||
Rent expenses | $ 7,929 | $ 7,927 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - USD ($) | May 03, 2017 | Apr. 10, 2017 | Feb. 07, 2014 | Jan. 03, 2014 | Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2013 |
Sale of securities in self-directed offering | $ 289,000 | ||||||
Warrants to purchase of common stock shares | 6,276,960 | 3,321,600 | 14,446,777 | ||||
Warrants price per share | $ 0.625 | $ 0.625 | $ 0.625 | ||||
Subsequent Event [Member] | |||||||
Sale of securities in self-directed offering | $ 44,700 | ||||||
Sale of securities, price per unit | $ 0.08 | ||||||
Conversion stock, description | Each unit consisted of 1 share of restricted common stock (558,750 shares), a five-year warrant to purchase 1 share of restricted common stock (558,750 warrant shares) at $0.08 per share, a five-year warrant to purchase 1 share of restricted common stock (558,750 warrant shares) at $0.12 per share, and a five-year warrant to purchase 1 share of restricted common stock (558,750 warrant shares) at $0.16 per share. | ||||||
Number of restricted common stock shares issued | 100,000 | ||||||
Subsequent Event [Member] | Restricted Stock One [Member] | |||||||
Warrants to purchase of common stock shares | 558,750 | ||||||
Warrant expiration term | 5 years | ||||||
Warrants price per share | $ 0.08 | ||||||
Subsequent Event [Member] | Restricted Stock Two [Member] | |||||||
Warrants to purchase of common stock shares | 558,750 | ||||||
Warrant expiration term | 5 years | ||||||
Warrants price per share | $ 0.12 | ||||||
Subsequent Event [Member] | Restricted Stock Three [Member] | |||||||
Warrants to purchase of common stock shares | 558,750 | ||||||
Warrant expiration term | 5 years | ||||||
Warrants price per share | $ 0.16 | ||||||
Subsequent Event [Member] | April and May 2017 [Member] | |||||||
Sale of securities in self-directed offering | $ 190,000 | ||||||
Sale of securities, price per unit | $ 0.12 | ||||||
Conversion stock, description | Each unit consisted of 1 share of restricted common stock ([1,516,665] shares) and a five-year warrant to purchase 1 share of restricted common stock ([1,516,665] warrant shares) at $0.12 per share. | ||||||
Subsequent Event [Member] | April and May 2017 [Member] | Restricted Stock One [Member] | |||||||
Warrants to purchase of common stock shares | 1,583,331 | ||||||
Warrant expiration term | 5 years | ||||||
Warrants price per share | $ 0.12 | ||||||
Subsequent Event [Member] | April and May 2017 [Member] | Restricted Stock One [Member] | Warrant Shares [Member] | |||||||
Warrants to purchase of common stock shares | 1,583,331 |