Document and Entity Information
Document and Entity Information | 9 Months Ended |
Sep. 30, 2018 | |
Document And Entity Information | |
Entity Registrant Name | nFusz, Inc. |
Entity Central Index Key | 1,566,610 |
Document Type | S-1/A |
Document Period End Date | Sep. 30, 2018 |
Amendment Flag | true |
Amendment Description | Pre-Effective Amendment No. 1 |
Entity Filer Category | Non-accelerated Filer |
Entity Small Business Flag | true |
Entity Emerging Growth Company | true |
Entity Ex Transition Period | false |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Current assets: | |||
Cash | $ 379,461 | $ 10,560 | $ 16,762 |
Prepaid expenses | 63,378 | 40,909 | 10,871 |
Accounts receivable | 2,500 | 8,468 | |
Total current assets | 445,339 | 51,469 | 36,101 |
Deferred offering costs | 129,327 | ||
Property and equipment, net | 14,731 | 30,554 | 52,066 |
Other assets | 7,494 | 8,780 | 16,036 |
Total assets | 596,891 | 90,803 | 104,203 |
Current liabilities: | |||
Accounts payable and accrued expenses | 820,860 | 663,506 | 431,650 |
Accrued officers' salary | 168,895 | 607,333 | 200,028 |
Accrued interest (including $38,041, $99,425 and $56,628 payable to related parties) | 38,041 | 248,120 | 118,137 |
Deferred revenue | 2,694 | ||
Note payable | 125,000 | 177,358 | |
Notes payable - related party | 352,229 | 1,964,985 | 1,964,985 |
Convertible notes payable, net of discount of $0 and $675,443 and $0 respectively | 1,020,315 | 680,268 | |
Derivative liability | 673,376 | 1,250,581 | |
Total current liabilities | 2,056,095 | 5,879,840 | 3,572,426 |
Long-term liabilities: | |||
Notes payable - related party | 824,218 | ||
Total long-term liabilities | 824,218 | ||
Total liabilities | 2,880,313 | 5,879,840 | |
Commitments and contingencies | |||
Stockholders' deficit | |||
Preferred stock value | |||
Common stock value | 17,518 | 11,912 | 9,465 |
Additional paid-in capital | 34,431,536 | 22,738,574 | 17,815,732 |
Common stock issuable, 4,500,000 shares | 430 | (20,020) | |
Accumulated deficit | (36,732,476) | (28,539,953) | (21,273,400) |
Total stockholders' deficit | (2,283,422) | (5,789,037) | (3,468,223) |
Total liabilities and stockholders' deficit | $ 596,891 | $ 90,803 | $ 104,203 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Accrued interest, related parties | $ 38,041 | $ 99,425 | $ 56,628 |
Notes payable, discount | $ 0 | $ 48,942 | |
Preferred stock, par value | $ 0.0001 | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 15,000,000 | 15,000,000 | 15,000,000 |
Preferred stock, shares issued | |||
Preferred stock, shares outstanding | |||
Common stock, par value | $ 0.0001 | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 200,000,000 | 200,000,000 | 200,000,000 |
Common stock, shares issued | 175,176,248 | 119,118,513 | 94,661,566 |
Common stock, shares outstanding | 175,176,248 | 119,118,513 | 94,661,566 |
Common stock issuable, shares | 4,500,000 | 4,500,000 | |
Convertible Note Payable [Member] | |||
Notes payable, discount | $ 0 | $ 675,443 | $ 0 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
Income Statement [Abstract] | ||||||
Net Sales | $ 10,085 | $ 26,327 | $ 5,914 | |||
Operating Expenses: | ||||||
Research and development | 202,054 | 109,350 | 437,787 | 291,190 | 375,220 | 257,803 |
General and administrative | 472,538 | 1,082,131 | 5,251,967 | 3,052,161 | 4,327,529 | 2,873,185 |
Total operating expenses | (674,592) | (1,191,481) | (5,689,754) | (3,343,351) | (4,702,749) | (3,130,988) |
Loss from operations | (664,507) | (1,191,481) | (5,663,427) | (3,343,351) | (4,696,835) | (3,130,988) |
Other income (expense) | ||||||
Other Income / (Expense) | (12,818) | 21,920 | (25,197) | 21,921 | 20,099 | 52,898 |
Change in fair value of derivative liability | 340,851 | (839,872) | 5,900 | |||
Financing costs | (171,739) | (643,481) | ||||
Interest expense | (58,916) | (205,038) | (321,637) | (375,862) | (555,094) | (340,580) |
Interest expense - amortization of debt discount | (81,959) | (747,623) | (174,981) | (418,339) | (398,594) | |
Debt extinguishment, net | (1,074,602) | (424,331) | (423,028) | (977,201) | (977,203) | (455,975) |
Total other expense | (805,485) | (689,408) | (2,529,096) | (1,506,123) | (2,568,118) | (1,142,251) |
Loss before income tax provision | (7,264,953) | (4,273,239) | ||||
Income tax provision | 1,600 | 866 | ||||
Net loss | $ (1,469,992) | $ (1,880,889) | $ (8,192,523) | $ (4,849,474) | $ (7,266,553) | $ (4,274,105) |
Loss per share - basic and diluted | $ (0.01) | $ (0.02) | $ (0.06) | $ (0.05) | $ (0.07) | $ (0.05) |
Weighted average number of common shares outstanding - basic and diluted | 153,322,179 | 108,542,493 | 146,164,472 | 102,376,462 | 106,148,101 | 79,602,170 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Operations (Parenthetical) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Income Statement [Abstract] | ||||
Interest expense, related parties | $ 58,916 | $ 59,434 | $ 175,846 | $ 176,364 |
Related party debt | $ 1,074,602 | $ 172,456 | $ 1,074,602 | $ 689,747 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Stockholders' Deficit - USD ($) | Common Stock [Member] | Additional Paid-in Capital [Member] | Common Stock Issuable [Member] | Accumulated Deficit [Member] | Total |
Balance at Dec. 31, 2015 | $ 6,386 | $ 14,650,519 | $ (16,999,295) | $ (2,342,390) | |
Balance, shares at Dec. 31, 2015 | 63,859,000 | ||||
Fair value vested options | 457,881 | 457,881 | |||
Fair value of common shares, warrants and beneficial conversion feature of issued notes | $ 24 | 33,067 | 33,091 | ||
Fair value of common shares, warrants and beneficial conversion feature of issued notes, shares | 240,000 | ||||
Fair value of warrants issued for debt extension | 455,975 | 455,975 | |||
Stock repurchase | $ (831) | (165,395) | (166,226) | ||
Stock repurchase, shares | (8,311,324) | ||||
Proceeds from sale of common stock | $ 3,133 | 1,540,917 | (20,020) | 1,524,030 | |
Proceeds from sale of common stock, shares | 31,335,556 | ||||
Share based compensation - shares issued for vendor services | $ 638 | 726,201 | 726,839 | ||
Share based compensation - shares issued for vendor services, shares | 6,388,334 | ||||
Share based compensation - shares issued for BOD services | $ 115 | 116,567 | $ 116,682 | ||
Share based compensation - shares issued for BOD services, shares | 1,150,000 | ||||
Common shares issued upon exercise of options, shares | |||||
Net loss | (4,274,105) | $ (4,274,105) | |||
Balance at Dec. 31, 2016 | $ 9,465 | 17,815,732 | (20,020) | (21,273,400) | (3,468,223) |
Balance, shares at Dec. 31, 2016 | 94,661,566 | ||||
Fair value of common shares, warrants and beneficial conversion feature of issued notes | $ 5 | 154,345 | 154,350 | ||
Fair value of common shares, warrants and beneficial conversion feature of issued notes, shares | 50,000 | ||||
Proceeds from sale of common stock | $ 1,118 | 774,882 | 20,000 | 796,000 | |
Proceeds from sale of common stock, shares | 11,182,143 | ||||
Fair value vested options and warrants | 445,085 | 445,085 | |||
Fair value of common shares issued for services | $ 829 | 2,086,881 | 450 | 2,088,160 | |
Fair value of common shares issued for services, shares | 8,280,435 | ||||
Fair value of common stock issued upon conversion Preferred Series A | $ 286 | 303,355 | 303,641 | ||
Fair value of common stock issued upon conversion Preferred Series A, shares | 2,862,006 | ||||
Fair value of common stock issued upon conversion of debt | $ 103 | 181,742 | $ 181,845 | ||
Fair value of common stock issued upon conversion of debt, shares | 1,026,195 | 1,026,195 | |||
Common shares issued upon exercise of put option | $ 66 | 49,934 | $ 50,000 | ||
Common shares issued upon exercise of put option, shares | 656,168 | ||||
Fair value of shares of common stock issued to settle accounts payable | $ 40 | 55,960 | $ 56,000 | ||
Fair value of shares of common stock issued to settle accounts payable, shares | 400,000 | ||||
Fair value of warrants issued to extinguish debt and accounts payable | 870,658 | $ 870,658 | |||
Common shares issued upon exercise of options, shares | |||||
Net loss | (7,266,553) | $ (7,266,553) | |||
Balance at Dec. 31, 2017 | $ 11,912 | 22,738,574 | 430 | (28,539,953) | (5,789,037) |
Balance, shares at Dec. 31, 2017 | 119,118,513 | ||||
Fair value vested options | 1,413,304 | 1,413,304 | |||
Fair value of warrants issued for debt extension | 1,074,602 | 1,074,602 | |||
Stock repurchase | $ (70) | (19,930) | (20,000) | ||
Stock repurchase, shares | (700,000) | ||||
Proceeds from sale of common stock | $ 1,746 | 2,976,754 | $ 2,978,500 | ||
Proceeds from sale of common stock, shares | 17,459,067 | 1,679,276 | |||
Fair value of common shares issued for services | $ 479 | 1,547,380 | (430) | $ 1,547,429 | |
Fair value of common shares issued for services, shares | 4,790,181 | ||||
Fair value of common stock issued upon conversion of debt | $ 1,865 | 3,063,972 | 3,065,837 | ||
Fair value of common stock issued upon conversion of debt, shares | 18,647,831 | ||||
Common shares issued upon exercise of put option | $ 305 | 999,695 | 1,000,000 | ||
Common shares issued upon exercise of put option, shares | 3,048,105 | ||||
Common shares issued upon exercise of warrants | $ 1,191 | 20,809 | 22,000 | ||
Common shares issued upon exercise of warrants, shares | 11,917,705 | ||||
Common shares issued upon exercise of options | $ 49 | 34,084 | $ 34,133 | ||
Common shares issued upon exercise of options, shares | 487,620 | 487,620 | |||
Fair value of common stock issued upon conversion of accrued expenses | $ 41 | 582,292 | $ 582,333 | ||
Fair value of common stock issued upon conversion of accrued expenses, shares | 407,226 | ||||
Net loss | (8,192,523) | (8,192,523) | |||
Balance at Sep. 30, 2018 | $ 17,518 | $ 34,431,536 | $ (36,732,476) | $ (2,283,422) | |
Balance, shares at Sep. 30, 2018 | 175,176,248 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows - USD ($) | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
Operating Activities: | ||||
Net loss | $ (8,192,523) | $ (4,849,474) | $ (7,266,553) | $ (4,274,105) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||||
Share-based compensation | 2,960,733 | 1,824,045 | 2,533,245 | 1,301,402 |
Change in fair value of derivative liability | 839,872 | (5,900) | ||
Amortization of debt discount | 747,623 | 174,981 | 418,339 | 404,041 |
Conversion of Series A | 118,698 | 217,106 | ||
Debt extinguishment costs, net | 423,028 | 977,201 | 977,203 | 455,975 |
Financing costs | 171,739 | 643,481 | ||
Depreciation and amortization | 15,823 | 16,090 | 21,512 | 21,301 |
Effect of changes in assets and liabilities: | ||||
Accounts payable, accrued expenses, and accrued interest | 253,289 | 569,881 | 799,144 | 456,774 |
Deferred revenue | 2,694 | |||
Other assets | 1,286 | 7,256 | 7,256 | (16,036) |
Accounts receivable | (2,500) | 2,468 | 8,468 | (8,417) |
Prepaid expenses | (22,469) | (15,680) | (30,038) | 55,052 |
Net cash used in operating activities | (2,801,405) | (1,174,534) | (1,676,737) | (1,604,013) |
Investing Activities: | ||||
Purchase of property and equipment | (2,494) | |||
Other | ||||
Net cash used in investing activities | (2,494) | |||
Financing Activities: | ||||
Proceeds from sale of common stock | 2,978,500 | 470,000 | 796,000 | 1,524,030 |
Proceeds from exercise of put option | 1,000,000 | 50,000 | ||
Proceeds from convertible note payable | 130,000 | 813,000 | ||
Proceeds from option exercise | 34,133 | |||
Proceeds from warrant exercise | 22,000 | |||
Proceeds from series A preferred stock | 555,000 | 555,000 | ||
Proceeds / (payment) of convertible notes payable | (845,000) | 300,000 | ||
Redemption of series A preferred | (138,322) | (543,465) | ||
Repurchase common stock | (20,000) | (166,226) | ||
Deferred offering costs | (129,327) | |||
Proceeds from note payable | 80,000 | |||
Proceeds from notes payable - related parties | 92,446 | |||
Payment of notes payable - related parties | (10,000) | |||
Net cash provided by financing activities | 3,170,306 | 1,186,678 | 1,670,535 | 1,520,250 |
Net change in cash | 368,901 | 12,144 | (6,202) | (86,257) |
Cash - beginning of period | 10,560 | 16,762 | 16,762 | 103,019 |
Cash - end of period | 379,461 | 28,906 | 10,560 | 16,762 |
Supplemental disclosures of cash flow information: | ||||
Cash paid for interest | 369,597 | 171,375 | 326,221 | 129,869 |
Cash paid for income taxes | 800 | 1,600 | 800 | |
Supplemental disclosure of non-cash investing and financing activities: | ||||
Conversion of note payable and accrued interest to common stock | 3,065,837 | 181,845 | ||
Common stock issued to settle accrued officers salary | 582,333 | 180,686 | ||
Fair value of derivative liability, common shares, warrants and beneficial conversion feature of issued convertible note | 150,000 | 196,953 | 154,350 | |
Conversion of notes payable to common stock | 181,845 | 181,845 | ||
Common stock issued to settle accounts payable | 56,000 | 56,000 | ||
Conversion of series A Preferred to common stock | $ 263,876 | 303,641 | ||
Fair value of derivative liability from issuance of convertible debt and warrant features | $ 301,739 | |||
Fair value of warrants issued and beneficial conversion feature to extinguish debt | 860,601 | |||
Conversion of accrued interest on notes payable to related parties note | 10,900 | |||
Conversion of accrued payroll to related party note | 121,875 | |||
Conversion of accrued interest on notes payable to convertible notes payable | $ 80,268 |
Description of Business
Description of Business | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018 | Dec. 31, 2017 | |
Accounting Policies [Abstract] | ||
Description of Business | 1. DESCRIPTION OF BUSINESS Organization Cutaia Media Group, LLC (“CMG”) was organized on December 12, 2012, as a limited liability company under the laws of the State of Nevada. On May 19, 2014, bBooth, Inc. was incorporated under the laws of the State of Nevada. On May 19, 2014, CMG merged into bBooth, Inc. and, thereafter, bBooth, Inc. changed its name to bBooth (USA), Inc., effective as of October 16, 2014. On October 16, 2014, bBoothUSA was acquired by Global System Designs, Inc. (“GSD”), pursuant to a Share Exchange Agreement entered into with GSD (the “Share Exchange Agreement”). GSD was incorporated in the state of Nevada on November 27, 2012. The acquisition was accounted for as a reverse merger transaction. In connection with the closing of the transactions contemplated by the Share Exchange Agreement, GSD’s management was replaced by bBoothUSA’s management, and GSD changed its name to bBooth, Inc. The operations of CMG and bBooth (USA), Inc. became known as, and are referred to herein as, “bBooth USA.” Effective April 21, 2017, we changed our corporate name from bBooth, Inc. to nFüsz, Inc. The name change was effected through a parent/subsidiary short-form merger of nFüsz, Inc., our wholly-owned Nevada subsidiary, formed solely for the purpose of the name change, with and into us. We were the surviving entity. To effectuate the merger, we filed Articles of Merger and a Certificate of Correction (relative to the effective date of the name change merger) with the Secretary of State of the State of Nevada on April 4, 2017, and April 17, 2017, respectively. The merger became effective on April 21, 2017. Our board of directors approved the merger, which resulted in the name change on that date. In accordance with Section 92A.180 of the Nevada Revised Statutes, stockholder approval of the merger was not required. Our Business We are an applications services provider marketing cloud-based business software products on a subscription basis. Our flagship product, notifiCRM, is a Customer Relationship Management (“CRM”) application that is distinguishable from other CRM programs because it utilizes interactive video as the primary means of communication between sales and marketing professionals and their clients or prospects. notifiCRM allows our users to create, distribute, and post interactive videos that contain on-screen interactive icons, buttons, and other elements, that when clicked, allow their prospects and customers to respond to our users’ call to action in real-time, in the video, while the video is playing, without leaving or stopping the video. Our users report increased sales conversion rates compared to traditional, non-interactive video. We developed the proprietary interactive video technology, which serves as the basis for our cloud, Software-as-a-Service (SaaS) products and services that we market under the brand name “notifi” and they are accessible on all mobile and desktop devices. No download is required to access and use our applications. Our users also have access to detailed analytics in the application dashboard that reflect when the videos were viewed, by whom, how many times, for how long, and what interactive elements were clicked-on in the video, among other things, all of which assist our users in focusing their sales and marketing efforts by identifying which clients or prospects have interest in the subject matter of the video. Our notifiCRM platform can accommodate any size campaign or sales organization, and it is enterprise-class scalable to meet the needs of today’s global organizations. We are working with our vendors to ensure that it is so scalable based upon our current agreements with them. We offer stand-alone versions of our notifiCRM product on a subscription basis to individual consumers, sales-based organizations, consumer brands, marketing and advertising agencies, as well as to artists and social influencers. We also offer notifiCRM through a network of partners and resellers that include Oracle/NetSuite and Marketo, who offer notifiCRM to their respective clients and customers as an upgrade to their existing Oracle/NetSuite or Marketo subscriptions. notifiCRM is fully integrated into each of their platforms and upon payment of the upgrade fee, is accessible through the respective dashboards of Oracle/NetSuite and Marketo. We are actively developing integrations of notifiCRM into other popular marketing, CRM, and Enterprise Resource Management (ERP) platforms. Our notifiMED application is designed for physicians and other healthcare providers to create more efficient and effective interactive communications with patients. Patients are able to avoid unnecessary and inconvenient visits to their physicians’ or other healthcare providers’ offices by viewing and responding to interactive videos through in-video, on-screen clicks that are designed to assess the patients’ need for an office visit. If the patient’s responses to the interactive video indicate that an office visit is either necessary or desirable, the patient can schedule the office visit right in through video in real time. Patients can also download and print prescriptions, care instructions, and other physician distributed documents right from and through the video. notifiMED is offered on a subscription basis. Our notifiEDU application is designed for teachers and school administrators for more effective communications with students, parents, and faculty. notifiEDU allows teachers to deliver interactive lessons to students which are both more engaging and more effective. notifiEDU allows teachers to communicate with students through their mobile devices and computers to deliver lessons and tests/quizzes on the screen and in the video. The analytics capabilities of notifiEDU available on the dashboard of the teacher or school administrator allows them to track which students watched the lesson, when, for how long, how many times, and track and report on test/quiz results. notifiEDU is offered on a subscription basis. Our notifiTV and notifiLIVE products are also part of our proprietary interactive video platform that allows viewers to interact with pre-recorded as well as live broadcast video content by clicking on links embedded in on-screen people, objects, graphics, or sponsors’ signage. Viewers can experience our notifiTV and notifiLIVE interactive content and capabilities on most devices available in the market today without the need to download special software or proprietary video players. | 1. DESCRIPTION OF BUSINESS Organization Cutaia Media Group, LLC (“CMG”) was a limited liability company formed on December 12, 2012 under the laws of the State of Nevada. On May 19, 2014, bBooth, Inc. was incorporated under the laws of the State of Nevada. On May 19, 2014, CMG was merged into bBooth, Inc. and bBooth, Inc. changed its name to bBooth (USA), Inc. The operations of CMG and bBooth (USA), Inc. became known as “bBoothUSA”. On October 16, 2014, bBoothUSA completed a Share Exchange Agreement with Global System Designs, Inc. (“GSD”) which was accounted for as a reverse merger transaction. In connection with the closing of the Share Exchange Agreement, GSD management was replaced by bBoothUSA management, and GSD changed its name to bBooth, Inc. Effective April 21, 2017, we changed our corporate name from bBooth, Inc. to nFüsz, Inc. The name change was effected through a parent/subsidiary short-form merger of nFüsz, Inc., our wholly-owned Nevada subsidiary, formed solely for the purpose of the name change, with and into us. We were the surviving entity. To effectuate the merger, we filed Articles of Merger with the Secretary of State of the State of Nevada on April 4, 2017 and a Certificate of Correction with the Secretary of State of the State of Nevada on April 17, 2017. The merger became effective on April 21, 2017. Our board of directors approved the merger, which resulted in the name change on that date. In accordance with Section 92A.180 of the Nevada Revised Statutes, stockholder approval of the merger was not required. On the effective date of the merger, our name was changed to “nFüsz, Inc.” and our Articles of Incorporation, as amended (the “Articles”), were further amended to reflect our new legal name. With the exception of the name change, there were no other changes to our Articles. Nature of Business We have developed proprietary interactive video technology which serves as the basis for certain products and services that we market under the brand name “notifi”. Our notifiCRM, notifiADS, notifiLINKS, and notifiWEB products are cloud-based, software-as-a-service (“SaaS”), customer relationship management (“CRM”), sales lead generation, advertising and social engagement software, accessible on mobile and desktop platforms, that we license to individual consumers, sales-based organizations, consumer brands, marketing and advertising agencies, as well as to artists and social influencers. Our notifiCRM platform is an enterprise scalable, subscription-based customer relationship management program that incorporates proprietary, interactive audio/video messaging and interactive on-screen “virtual salesperson” communications technology. Our notifiCRM is distinguished from other CRM programs because it utilizes interactive video as the primary means of communication between the subscribers and their clients or prospects. Such clients and prospects can respond to notifiCRM subscribers’ calls to action in real time by clicking on links embedded in the video, all without leaving or stopping the video. Subscribers also have access to detailed analytics that reflect when the videos were viewed, by whom, how many times, for how long, and what items were clicked-on in the video to assist subscribers in determining the possible interest level of that particular client or prospect in the subject matter of the video. Our notifiTV and notifiLIVE products are also part of our proprietary interactive video platform that allows viewers to interact with pre-recorded as well as live broadcast video content by clicking on links embedded in on-screen people, objects, graphics or sponsors’ signage. Viewers can experience our notifiTV and notifiLIVE interactive content and capabilities on most devices available in the market today without the need to download special software or proprietary video players. Going Concern The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. As reflected in the accompanying consolidated financial statements, during the year ended December 31, 2017, the Company incurred a net loss of $7,266,553 used cash in operations of $1,676,737 and had a stockholders’ deficit of $5,789,037 as of December 31, 2017. These factors raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date of the financial statements being issued. The ability of the Company to continue as a going concern is dependent upon the Company’s ability to raise additional funds and implement its business plan. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. At December 31, 2017, the Company had cash on hand in the amount of $10,560. The Company raised an additional $3.4 million from January 2018 through March 2018 through the sale of its debt and equity securities (see Note 15). Management estimates that the current funds on hand will be sufficient to continue operations through December 2018. The continuation of the Company as a going concern is dependent upon its ability to obtain necessary debt or equity financing to continue operations until it begins generating positive cash flow. No assurance can be given that any future financing will be available or, if available, that it will be on terms that are satisfactory to the Company. Even if the Company is able to obtain additional financing, it may contain undue restrictions on our operations, in the case of debt financing or cause substantial dilution for our stock holders, in the case of equity financing. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018 | Dec. 31, 2017 | |
Accounting Policies [Abstract] | ||
Summary of Significant Accounting Policies | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying condensed consolidated financial statements are unaudited. These unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Accordingly, these interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017 filed with the SEC. The condensed consolidated balance sheet as of December 31, 2017 included herein was derived from the audited consolidated financial statements as of that date. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments necessary to fairly present the Company’s financial position and results of operations for the interim periods reflected. Except as noted, all adjustments contained herein are of a normal recurring nature. Results of operations for the fiscal periods presented herein are not necessarily indicative of fiscal year-end results. Principles of Consolidation The consolidated financial statements include the accounts of nFüsz, Inc., (formerly bBooth, Inc.) and Songstagram, Inc., our wholly owned subsidiary. All intercompany transactions and balances have been eliminated in consolidation. Going Concern We have incurred operating losses since inception and have negative cash flows from operations. We had a stockholders’ deficit of $2,283,422 as of September 30, 2018 and incurred a net loss of $8,192,523 and utilized $2,801,405 of cash during the nine-month period then ended September 30, 2018. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent upon the Company’s ability to raise additional funds and implement its business plan. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. In addition, the Company’s independent registered public accounting firm, in its report on the Company’s December 31, 2017 consolidated financial statements, has raised substantial doubt about the Company’s ability to continue as a going concern. Our continuation as a going concern is dependent on our ability to obtain additional financing until we can generate sufficient cash flows from operations to meet our obligations. We intend to continue to seek additional debt or equity financing to continue our operations. There is no assurance that we will ever be profitable or that debt or equity financing will be available to us. The consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should we be unable to continue as a going concern. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reported periods. Significant estimates include assumptions made in valuing derivative liabilities, valuation of debt and equity instruments, share-based compensation arrangements and realization of deferred tax assets. Amounts could materially change in the future. Revenue Recognition We generate substantially all of our revenue from subscription services, which are comprised of subscription fees from customer accounts. Subscription service arrangements are generally non-cancelable and do not provide for refunds to customers in the event of cancellations or any other right of return. We record revenue net of sales or excise taxes. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), and (ASC 606). The underlying principle of ASC 606 is to recognize revenue to depict the transfer of goods or services to customers at the amount expected to be collected. ASC 606 creates a five-step model that requires entities to exercise judgment when considering the terms of contract(s), which includes (1) identifying the contract(s) or agreement(s) with a customer, (2) identifying our performance obligations in the contract or agreement, (3) determining the transaction price, (4) allocating the transaction price to the separate performance obligations, and (5) recognizing revenue as each performance obligation is satisfied. Under ASC 606, revenue is recognized when performance obligations under the terms of a contract are satisfied, which occurs for the Company upon shipment or delivery of products or services to our customers based on written sales terms, which is also when control is transferred. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring the products or services to a customer. The Company adopted the guidance of ASC 606 on January 1, 2018. The implementation of ASC 606 had no impact on the prior period financial statements and no cumulative effect adjustment was recognized. Derivative Financial Instruments The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the consolidated statements of operations. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date. The Company uses Level 2 inputs for its valuation methodology for the derivative liabilities as their fair values were determined by using a probability weighted average Black-Scholes-Merton pricing model based on various assumptions. The Company’s derivative liabilities are adjusted to reflect fair value at each period end, with any increase or decrease in the fair value being recorded in results of operations as adjustments to fair value of derivatives. Share Based Payments The Company issues stock options, common stock, and equity interests as share-based compensation to employees and non-employees. The Company accounts for its share-based compensation to employees in accordance with FASB ASC 718 “Compensation – Stock Compensation.” Stock-based compensation cost is measured at the grant date, based on the estimated fair value of the award, and is recognized as expense over the requisite service period. The Company accounts for share-based compensation issued to non-employees and consultants in accordance with the provisions of FASB ASC 505-50 “ .” a b The Company values stock compensation based on the market price on the measurement date. As described above, for employees this is the date of grant, and for non-employees, this is the date of performance completion. The Company values stock options and warrants using the Black-Scholes option pricing model. Net Loss Per Share Basic net loss per share is computed by using the weighted-average number of common shares outstanding during the period. Diluted net loss per share is computed giving effect to all dilutive potential common shares that were outstanding during the period. Dilutive potential common shares consist of incremental common shares issuable upon exercise of stock options. No dilutive potential common shares were included in the computation of diluted net loss per share because their impact was anti-dilutive. As of September 30, 2018, the Company had a total of 33,984,605 options and 19,152,038 warrants outstanding. These shares were excluded from the computation of net loss per share because they are anti-dilutive. As of September 30, 2017, the Company had a total of 22,030,953 options and 24,461,413 warrants outstanding. These shares were excluded from the computation of net loss per share because they are anti-dilutive. Deferred Offering Costs Deferred offering costs consist principally of legal, accounting and underwriters’ fees incurred related to the contemplated underwritten public offering of the Company’s common stock. These deferred offering costs will be charged against the gross proceeds received or will be charged to expense if the offering is not completed. Recent Accounting Pronouncements In February 2016, the FASB issued Accounting Standards Update No. 2016-02 (ASU 2016-02), Leases (Topic 842). ASU 2016-02 requires a lessee to record a right-of-use asset and a corresponding lease liability, initially measured at the present value of the lease payments, on the balance sheet for all leases with terms longer than 12 months, as well as the disclosure of key information about leasing arrangements. ASU 2016-02 requires recognition in the statement of operations of a single lease cost, calculated so that the cost of the lease is allocated over the lease term, generally on a straight-line basis. ASU 2016-02 requires classification of all cash payments within operating activities in the statement of cash flows. Disclosures are required to provide the amount, timing and uncertainty of cash flows arising from leases. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early application is permitted. The Company has not yet evaluated the impact of the adoption of ASU 2016-02 on the Company’s financial statement presentation or disclosures. In July 2017, the FASB issued ASU No. 2017-11, “Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features; (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception” (“ASU 2017-11”). ASU 2017-11 allows companies to exclude a down round feature when determining whether a financial instrument (or embedded conversion feature) is considered indexed to the entity’s own stock. As a result, financial instruments (or embedded conversion features) with down round features may no longer be required to be accounted for as derivative liabilities. A company will recognize the value of a down round feature only when it is triggered, and the strike price has been adjusted downward. For equity-classified freestanding financial instruments, an entity will treat the value of the effect of the down round as a dividend and a reduction of income available to common stockholders in computing basic earnings per share. For convertible instruments with embedded conversion features containing down round provisions, entities will recognize the value of the down round as a beneficial conversion discount to be amortized to earnings. ASU 2017-11 is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted. The guidance in ASU 2017-11 can be applied using a full or modified retrospective approach. The Company is currently evaluating the impact of the adoption of ASU 2017-11 on the Company’s financial statement presentation or disclosures. Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s present or future consolidated financial statements. | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation The consolidated financial statements include the accounts of nFüsz, Inc., (formerly bBooth, Inc.) and Songstagram, Inc. (“Songstagram”) our wholly owned subsidiary. All intercompany transactions and balances have been eliminated in consolidation. Use of Estimates The preparation of financial statements in conformity with Generally Accepted Accounting Principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reported periods. Significant estimates include assumptions made in analysis of impairment of long term assets, realization of deferred tax assets, determining fair value of derivative liabilities, and value of equity instruments issued for services. Amounts could materially change in the future. Property and Equipment Property and equipment are recorded at historical cost and depreciated on a straight-line basis over their estimated useful lives of approximately five years once the individual assets are placed in service. Long-Lived Assets The Company evaluates long-lived assets for impairment whenever events or changes in circumstances indicate that their net book value may not be recoverable. When such factors and circumstances exist, the Company compares the projected undiscounted future cash flows associated with the related asset or group of assets over their estimated useful lives against their respective carrying amount. Impairment, if any, is based on the excess of the carrying amount over the fair value, based on market value when available, or discounted expected cash flows, of those assets and is recorded in the period in which the determination is made. No impairment of long-lived assets was required for the years ended December 31, 2017 and 2016. Income Taxes The Company accounts for income taxes under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 740 “Income Taxes.” Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recognized for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The deferred tax assets of the Company relate primarily to operating loss carry-forwards for federal income tax purposes. A full valuation allowance for deferred tax assets has been provided because the Company believes it is not more likely than not that the deferred tax asset will be realized. Realization of deferred tax assets is dependent on the Company generating sufficient taxable income in future periods. The Company periodically evaluates its tax positions to determine whether it is more likely than not that such positions would be sustained upon examination by a tax authority for all open tax years, as defined by the statute of limitations, based on their technical merits. The Company accrues interest and penalties, if incurred, on unrecognized tax benefits as components of the income tax provision in the accompanying consolidated statements of operations. As of December 31, 2017, and 2016, the Company has not established a liability for uncertain tax positions. Derivative Financial Instruments The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the consolidated statements of operations. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date. The Company uses Level 2 inputs for its valuation methodology for the derivative liabilities as their fair values were determined by using a probability weighted average Black-Scholes-Merton pricing model based on various assumptions. The Company’s derivative liabilities are adjusted to reflect fair value at each period end, with any increase or decrease in the fair value being recorded in results of operations as adjustments to fair value of derivatives. Share Based Payment The Company issues stock options, common stock, and equity interests as share-based compensation to employees and non-employees. The Company accounts for its share-based compensation to employees in accordance FASB ASC 718 “Compensation – Stock Compensation.” Stock-based compensation cost is measured at the grant date, based on the estimated fair value of the award, and is recognized as expense over the requisite service period. The Company accounts for share-based compensation issued to non-employees and consultants in accordance with the provisions of FASB ASC 505-50 “ .” a b The Company values stock compensation based on the market price on the measurement date. As described above, for employees this is the date of grant, and for non-employees, this is the date of performance completion. The Company values stock options using the Black-Scholes option pricing model. Assumptions used in the Black-Scholes model to value options issued during the years ended December 31, 2017 and 2016 are as follows: Year Ended Year Ended December 31, 2017 December 31, 2016 Expected life in years 2.5 to 5.0 2.5 to 5.0 Stock price volatility 84.36% - 173.92 % 84.36% - 153. 07 % Risk free interest rate 1.22% - 2.23 % 1.22% - 1.24 % Expected dividends 0 % 0 % Forfeiture rate 21 % 20 % The risk-free interest rate was based on rates established by the Federal Reserve Bank. The Company uses the historical volatility of its common stock to estimate the future volatility for its common stock. The expected life of the conversion feature of the notes was based on the remaining term of the notes. The expected dividend yield was based on the fact that the Company has not customarily paid dividends in the past and does not expect to pay dividends in the future. Research and Development Costs Research and development costs consist of expenditures for the research and development of new products and technology. These costs are primarily expenses to vendors contracted to perform research projects and develop technology for the Company’s notifiCRM cloud-based, Software-as-a-Service (SaaS) platform. Net Loss Per Share Basic net loss per share is computed by using the weighted-average number of common shares outstanding during the period. Diluted net loss per share is computed giving effect to all dilutive potential common shares that were outstanding during the period. Dilutive potential common shares consist of incremental common shares issuable upon exercise of stock options. No dilutive potential common shares were included in the computation of diluted net loss per share because their impact was anti-dilutive. As of December 31, 2017, and 2016, the Company had total outstanding options of 21,840,953 and 10,530,953, respectively and warrants of 28,436,413 and 18,455,264, respectively, which were excluded from the computation of net loss per share because they are anti-dilutive. Fair Value of Financial Instruments The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (U.S. GAAP), and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below: Level 1: Quoted market prices available in active markets for identical assets or liabilities as of the reporting date. Level 2: Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. Level 3: Pricing inputs that are generally observable inputs and not corroborated by market data. The carrying amount of the Compa n ’ f a a s i v a s r e s a y a b e a r o a v a r a r e v a f b a a r o a v a a r a b a r re v r k r a eve v a a o i v a iv a Concentrations During the year ended December 31, 2017, the Company had a single vendor that accounted for 20.7% of all purchases, and 18.1% of all purchases in the same period in the prior year. Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers. ASU 2014-09 is a comprehensive revenue recognition standard that will supersede nearly all existing revenue recognition guidance under current U.S. GAAP and replace it with a principle-based approach for determining revenue recognition. ASU 2014-09 will require that companies recognize revenue based on the value of transferred goods or services as they occur in the contract. The ASU also will require additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. ASU 2014-09 is effective for interim and annual periods beginning after December 15, 2017. Entities will be able to transition to the standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption. The Company is in the process of evaluating the impact of ASU 2014-09 on the Company’s financial statements and disclosures but does not believe adoption of such pronouncement will have a material effect, if any. In February 2016, the FASB issued Accounting Standards Update No. 2016-02 (ASU 2016-02), Leases (Topic 842). ASU 2016-02 requires a lessee to record a right-of-use asset and a corresponding lease liability, initially measured at the present value of the lease payments, on the balance sheet for all leases with terms longer than 12 months, as well as the disclosure of key information about leasing arrangements. ASU 2016-02 requires recognition in the statement of operations of a single lease cost, calculated so that the cost of the lease is allocated over the lease term, generally on a straight-line basis. ASU 2016-02 requires classification of all cash payments within operating activities in the statement of cash flows. Disclosures are required to provide the amount, timing and uncertainty of cash flows arising from leases. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early application is permitted. The Company has not yet evaluated the impact of the adoption of ASU 2016-02 on the Company’s financial statement presentation or disclosures. In July 2017, the FASB issued ASU No. 2017-11, “Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features; (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception” (“ASU 2017-11”). ASU 2017-11 allows companies to exclude a down round feature when determining whether a financial instrument (or embedded conversion feature) is considered indexed to the entity’s own stock. As a result, financial instruments (or embedded conversion features) with down round features may no longer be required to be accounted for as derivative liabilities. A company will recognize the value of a down round feature only when it is triggered, and the strike price has been adjusted downward. For equity-classified freestanding financial instruments, an entity will treat the value of the effect of the down round as a dividend and a reduction of income available to common stockholders in computing basic earnings per share. For convertible instruments with embedded conversion features containing down round provisions, entities will recognize the value of the down round as a beneficial conversion discount to be amortized to earnings. ASU 2017-11 is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted. The guidance in ASU 2017-11 can be applied using a full or modified retrospective approach. The Company is currently evaluating the impact of the adoption of ASU 2017-11 on the Company’s financial statement presentation or disclosures. Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s present or future consolidated financial statements. |
Property and Equipment
Property and Equipment | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018 | Dec. 31, 2017 | |
Property, Plant and Equipment [Abstract] | ||
Property and Equipment | 3. PROPERTY AND EQUIPMENT Property and equipment consisted of the following as of September 30, 2018 and December 31, 2017. September 30, 2018 December 31, 2017 (Unaudited) Furniture and fixtures $ 56,890 $ 56,890 Office equipment 50,669 50,669 107,559 107,559 Less: accumulated depreciation (92,828 ) (77,005 ) $ 14,731 $ 30,554 Depreciation expense amounted to $15,823 and $16,090 for nine months ended September 30, 2018 and 2017, respectively. | 3. PROPERTY AND EQUIPMENT Property and equipment consisted of the following as of December 31, 2017 and 2016. December 31, 2017 December 31, 2016 Furniture and fixtures $ 56,890 $ 56,890 Office equipment 50,670 50,670 107,560 107,560 Less: accumulated depreciation (77,006 ) (55,494 ) $ 30,554 $ 52,066 Depreciation expense amounted to $21,512 and $21,301 for the year ended December 31, 2017 and 2016, respectively. |
Note Payable
Note Payable | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018 | Dec. 31, 2017 | |
Debt Disclosure [Abstract] | ||
Note Payable | 4. NOTE PAYABLE On March 21, 2015, the Company entered into an agreement with DelMorgan Group LLC (“DelMorgan”), pursuant to which DelMorgan acted as the Company’s exclusive financial advisor. In connection with the agreement, the Company paid DelMorgan $125,000, which was advanced by a third-party lender in exchange for an unsecured note payable issued by the Company bearing interest at the rate of 12% per annum payable monthly beginning on April 20, 2015. Effective March 20, 2017, for no additional consideration the Company entered into an extension agreement with the third-party lender to extend the maturity date of the Note to March 21, 2018. All other terms of the Note remain unchanged. As of December 31, 2017, the balance due under the note was $125,000. On January 29, 2018, the Company settled the debt of $125,000 in exchange for 1,250,000 shares of its Common Stock. There was no gain or loss recognized as the fair value of the common shares issued approximates the note payable settled. | 4. NOTES PAYABLE The Company had the following outstanding notes payable as of December 31, 2017 and 2016: Note Note Date Maturity Date Interest Rate Original Borrowing Balance at December 31, 2017 Balance at December 31, 2016 Note payable (a) March 21, 2015 March 20, 2018 12 % $ 125,000 $ 125,000 $ 125,000 Note payable (b) December 15, 2016 June 15, 2017 5 % $ 101,300 — 101,300 Total notes payable 125,000 226,300 Debt discount — (48,942 ) Total notes payable, net $ 125,000 $ 177,358 (a) On March 21, 2015, the Company issued a note payable to a third-party lender for the benefit of DelMorgan Group LLC (“DelMorgan”), financial consultant. The note is unsecured, bears interest rate of 12% per annum payable monthly beginning on April 20, 2015 and matured in March 2017. As of December 31, 2016, outstanding balance of the note amounted to $125,000. On March 20, 2017, the Company entered into an extension agreement with the third-party lender to extend the maturity date of the Note to March 20, 2018. All other terms of the Note remained unchanged and there was no additional compensation or incentive given. As of December 31, 2017, outstanding balance of the note amounted to $125,000. In January 2018, the note was satisfied through the issuance of 1,250,000 shares of common stock. (b) On December 15, 2016, the Company issued a note payable to a third-party creditor amounting to $101,300 in exchange for cash of $80,000, original issue discount of $8,800 and guaranteed interest of $12,500. The note was unsecured, bore an effective interest rate of 5% per annum and matured in May 2017. In addition, the Company also granted a three-year warrant to acquire 176,000 shares of the Company’s common stock with an exercise price of $0.25 per share, and 240,000 shares of the Company’s common stock. As a result, the Company recorded a debt discount totaling $53,659 to account for the origin original issue discount of $8,800, guaranteed interest of $12,500, the relative fair value of the warrants of $10,759 and fair value of the common shares of $21,600. The debt discount was amortized over the term of the note. As of December 31, 2016, outstanding balance of the note amounted to $101,300 and unamortized debt discount of $48,942. During the year ended December 31, 2017, the Company settled the debt in exchange for 1,026,195 shares of its Common Stock (the “Shares”) with a fair value of $181,845. As a result of the note settlement, the Company recorded a loss on debt extinguishment of $80,544 to account the difference between the face value of the note payable settled and the fair value of the common shares issued. In addition, the Company recorded interest expense of $48,942 to amortize the remaining note discount. |
Notes Payable - Related Parties
Notes Payable - Related Parties | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018 | Dec. 31, 2017 | |
Debt Disclosure [Abstract] | ||
Notes Payable - Related Parties | 5. NOTES PAYABLE – RELATED PARTIES The Company has the following related parties notes payable as of September 30, 2018 and December 31, 2017: Note Issuance Date Maturity Date Interest Rate Original Borrowing Balance at September 30, 2018 Balance at December 31, 2017 (Unaudited) Note 1 (A) December 1, 2015 February 8, 2021 12.0 % $ 1,248,883 $ 824,218 $ 1,198,883 Note 2 (B) December 1, 2015 February 8, 2021 12.0 % 189,000 - 189,000 Note 3 (C) December 1, 2015 April 1, 2017 12.0 % 111,901 111,901 111,901 Note 4 (D) April 4, 2016 December 4, 2018 12.0 % 343,326 240,328 343,326 Note 5 (E) April 4, 2016 December 4, 2018 12.0 % 121,875 - 121,875 Total notes payable – related parties, net 1,176,447 1,964,985 Non-current (824,218 ) - Current $ 352,229 $ 1,964,985 (A) On December 1, 2015, the Company issued a convertible note payable to Mr. Rory J. Cutaia, the Company’s majority stockholder and Chief Executive Officer (CEO), to consolidate all loans and advances made by Mr. Cutaia to the Company as of that date. The note bears interest rate of 12% per annum, secured by the Company’s assets and matured on August 1, 2018, as amended. Per the terms of the agreement, at Mr. Cutaia’s discretion, he may convert up to $374,665 of outstanding principal, plus accrued interest thereon, into shares of common stock at a conversion rate of $0.07 per share. As of December 31, 2017, total outstanding balance of the note amounted to $1,198,883. On August 8, 2018, we entered into an extension agreement with Mr. Cutaia to extend the maturity date of the note to February 8, 2021. All other terms of the note remain unchanged. In connection with the extension, we granted to Mr. Cutaia a three-year warrant to purchase up to 2,446,700 shares of Common Stock at a price of $0.49 per share with a fair value of $1,074,602. We determined that the extension of the note’s maturity date resulted in a debt extinguishment for accounting purposes because the fair value of the warrants granted was more than 10% of the original value of the note. As result, we recorded the fair value of the “new” note, which approximates the then-current carrying value of $1,198,833 of the then-current note and expensed the entire fair value of the warrants granted of $1,074,602 as part of debt extinguishment. On September 30, 2018, Mr. Cutaia converted the principal balance that was convertible ($374,665) into 5,352,357 shares of Restricted Common Stock at $0.07 per share. As of September 30, 2018, outstanding balance of the note amounted to $824,218. (B) On December 1, 2015, the Company issued a convertible note with Mr. Cutaia in the amount of $189,000 representing a portion of Mr. Cutaia’s accrued salary for 2015. The note was unsecured, bears interest rate of 12% per annum, matured in August 1, 2018, as amended, and convertible to shares of common stock at a conversion price of $0.07 per share. As of December 31, 2017, outstanding balance of the note amounted to $189,000. On September 30, 2018, Mr. Cutaia converted the entire unpaid balance of $189,000 into 2,700,000 restricted shares of our Common Stock at $0.07 per share. (C) On December 1, 2015, the Company issued a note payable to a former member of the Company’s Board of Directors, in the amount of $111,901 representing unpaid consulting fees as of November 30, 2015. The note is unsecured, bears interest rate of 12% per annum and matured in April 2017. As of September 30, 2018, and the date of this report, the note is past due. The Company is currently in negotiations with the note holder to settle the note payable. (D) On April 4, 2016, the Company issued a convertible note to Mr. Cutaia, in the amount of $343,326, to consolidate all advances made by Mr. Cutaia to the Company from December 2015 through March 2016. The note bears interest rate of 12% per annum, secured by the Company’s assets and will mature on December 4, 2018, as amended. A total of 30% of the note principal or $102,998 can be converted to shares of common stock at a conversion price $0.07 per share. As of December 31, 2017, outstanding balance of the note amounted to $343,326 On September 30, 2018 Mr. Cutaia converted the 30% of the principal balance that was convertible ($102,998) into 1,471,397 restricted shares of our Common Stock at $0.07 per share. As of September 30, 2018, outstanding balance of the note amounted to $240,328. (E) On April 4, 2016, the Company issued a convertible note payable to Mr. Cutaia in the amount of $121,875, representing his unpaid salary from December 2015 through March 2016. The note was unsecured, bears interest at the rate of 12% per annum, matures on December 4, 2018, as amended, and convertible to common stock at a conversion price of $0.07 per share. As of December 31, 2017, outstanding balance of the note amounted to $121,8750. For the period ended September 30, 2018 Mr. Cutaia converted $121,875 of debt into 1,741,071 shares of Restricted Common Stock. Total interest expense for notes payable to related parties was $175,846 and $176,364 for nine months ended September 30, 2018 and 2017, respectively. | 5. NOTES PAYABLE – RELATED PARTIES The Company has the following related parties outstanding notes payable as of December 31, 2017 and 2016: Note Issuance Date Maturity Date Interest Rate Original Borrowing Balance at December 31, 2017 Balance at December 31, 2016 Note 1 December 1, 2015 August 1, 2018 12.0 % $ 1,203,242 $ 1,198,883 $ 1,198,883 Note 2 December 1, 2015 August 1, 2018 12.0 % 189,000 189,000 189,000 Note 3 December 1, 2015 April 1, 2017 12.0 % 111,901 111,901 111,901 Note 4 August 4, 2016 December 4, 2018 12.0 % 343,326 343,326 343,326 Note 5 August 4, 2016 December 4, 2018 12.0 % 121,875 121,875 121,875 Total notes payable – related parties $ 1,964,985 $ 1,964,985 (1) On December 1, 2015, the Company issued a convertible note payable to Mr. Rory J. Cutaia, the Company’s majority stockholder and Chief Executive Officer (CEO), to consolidate all loans and advances made by Mr. Cutaia to the Company as of that date. The note bears interest rate of 12% per annum, secured by the Company’s assets and matured on April 1, 2017. Per the terms of the agreement, at Mr. Cutaia’s discretion, he may convert up to $374,665 of outstanding principal, plus accrued interest thereon, into shares of common stock at a conversion rate of $0.07 per share. As of December 31, 2016, total outstanding balance of the note amounted to $1,198,883. On May 4, 2017, the Company entered into an extension agreement with Mr. Cutaia to extend the maturity date of the note from April 1, 2017 to August 1, 2018. In consideration, the Company issued Mr. Cutaia a three-year warrant to purchase 1,755,192 shares of common stock at a price of $0.355 per share with a fair value of $517,291. All other terms of the Note remain unchanged. The Company determined that the extension of the note’s maturity resulted in a debt extinguishment for accounting purposes since the fair value of the warrants granted was more than 10% of the original value of the convertible note. As result, Company recorded the fair value of the new note which approximates the original carrying value $1,198,833 and expensed the entire fair value of the warrants granted of $517,291 as part of loss on debt extinguishment. As of December 31, 2017, outstanding balance of the note amounted to $1,198,883. (2) On December 1, 2015, the Company issued a convertible note with Mr. Cutaia in the amount of $189,000 representing a portion of Mr. Cutaia’s accrued salary for 2015. The note is unsecured, bears interest rate of 12% per annum, matured in April 2017 and convertible to shares of common stock at a conversion price of $0.07 per share. As of December 31, 2016, outstanding balance of the note amounted to $189,000. On May 4, 2017, the Company entered into an extension agreement with Mr. Cutaia to extend the maturity date of the note from April 1, 2017 to August 1, 2018. All other terms of the Note remain unchanged and there were no additional compensation or incentive given. As of December 31, 2017, outstanding balance of the note amounted to $189,000. (3) On December 1, 2015, the Company issued a note payable to a former member of the Company’s Board of Directors, in the amount of $111,901 representing unpaid consulting fees as of November 30, 2015. The note is unsecured, bears interest rate of 12% per annum and matured in April 2017. As of December 31, 2016, outstanding balance of the note amounted to $111,901 and accrued interest of $14,569. As of December 31, 2017, outstanding balance of the note amounted to $111,901 and accrued interest of $27,997. As of December 31, 2017, and the date of this report, the note is past due. (4) On April 4, 2016, the Company issued a convertible note to Mr. Cutaia, in the amount of $343,326, to consolidate all advances made by Mr. Cutaia to the Company during the period December 2015 through March 2016. The note bears interest rate of 12% per annum, secured by the Company’s assets and matured on August 4, 2017. A total of 30% of the note principal can be converted to shares of common stock at a conversion price $0.07 per share. As of December 31, 2016, outstanding balance of the note amounted to $343,326 and accrued interest of $31,040. On August 4, 2017, the Company entered into an extension agreement with Mr. Cutaia to extend the maturity date of the note from August 4, 2017 to December 4, 2018. In consideration for extending the Note’s maturity, the Company issued Mr. Cutaia 1,329,157 warrants to purchase shares of common stock at a price of $0.15 per share with a fair value of $172,456. All other terms of the Note remain unchanged. The Company determined that the extension of the note’s maturity resulted in a debt extinguishment for accounting purposes since the fair value of the warrants granted was more than 10% of the recorded value of the original convertible note. As a result, Company recorded the fair value of the new note which approximates the original carrying value $343,326 and expensed the entire fair value of the warrants granted of $172,456 as part of loss on debt extinguishment. As of December 31, 2017, outstanding balance of the note amounted to $343,326 and accrued interest of $45,783. (5) On April 4, 2016, the Company issued a convertible note payable to Mr. Cutaia in the amount of $121,875, representing his unpaid salary from December 2015 through March 2016. The note is unsecured, bears interest at the rate of 12% per annum, compounded annually and matured on August 4, 2017. The note is also convertible into shares of the Company’s common stock at $0.07 per share. As of December 31, 2016, outstanding balance of the note amounted to $121,875 and accrued interest of $11,019. On August 4, 2017, the Company entered into an extension agreement with Mr. Cutaia to extend the maturity date of the note from August 4, 2017 to December 4, 2018. All other terms of the Note remain unchanged and there were no additional compensation or incentive given. As of December 31, 2017, outstanding balance of the note amounted to $121,875 and accrued interest of $25,644. During the year ended December 31, 2017, the Company recorded total interest expense totaling $232,192 pursuant to the terms of the notes and paid $196,607. |
Convertible Notes Payable
Convertible Notes Payable | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018 | Dec. 31, 2017 | |
Debt Disclosure [Abstract] | ||
Convertible Notes Payable | 6. CONVERTIBLE NOTES PAYABLE The Company has the following convertible notes payable as of September 30, 2018 and December 31, 2017: Note Note Date Maturity Date Interest Rate Original Borrowing Balance at September 30, 2018 Balance at December 31, 2017 (Unaudited) Note payable April 3, 2016 April 4, 2018 12 % $ 600,000 $ - $ 680,268 Note payable June and August 2017 February and March 2018 5 % $ 220,500 - 220,500 Note payable Various Various 5 % $ 320,000 - 320,000 Note payable December 8, 2017 December 8, 2018 8 % $ 370,000 - 370,000 Note payable December 13, 2017 September 20, 2018 8 % $ 105,000 - 105,000 Total notes payable - 1,695,768 Debt discount - (675,453 ) Total notes payable, net of debt discount $ - $ 1,020,315 During 2016 through 2017, the Company issued convertible notes payable to unrelated, third-party creditors/investors totaling $1,695,768. The notes bore an average interest rate of 8% per annum, secured by the Company’s assets, mature starting February 2018 through January 2019 and are convertible to shares of common stock based upon a discounted market price. As of December 31, 2017, outstanding balance of the notes payable and unamortized debt discount amounted to $1,695,768 and $675,453, respectively. During the period ended September 30, 2018, the Company issued similar convertible notes payable totaling $150,000 in exchange for cash of $130,000. The notes were secured by the Company’s assets, bore interest of 8% per annum, matures in January 2019 and convertible to common shares at a conversion price equal to 70% of the Company’s 10-day VWAP. The Company determined that since the conversion floor had no limit to the conversion price, that the Company could no longer determine if it had enough authorized shares to fulfill the conversion obligation. As such, pursuant to current accounting guidelines, the Company determined that the conversion feature of the notes created a derivative with a fair value of $252,778 at the date of issuance. The Company accounted for the fair value of the derivative up to the face amount of the note of $150,000 as a valuation discount to be amortized over the life of the note, and the excess of $102,778 being recorded as financing cost (see Note 7 for discussion of derivative liability). In addition, the Company also recorded the notes’ original issue discount of $20,000 as a financing cost. As part of the convertible note offering during the period ended September 30, 2018, the Company also granted a five-year warrant to acquire 1,000,000 shares of the Company’s common stock with an exercise price of $0.14 per share. A total of 500,000 warrants that were granted included a full ratchet reset provision in case of a future offering at a price below $0.14 per share and a fundamental transaction provision that could give rise to an obligation to pay cash to the warrant holder and a reset. As such, pursuant to current accounting guidelines, the Company determined that the warrant exercise price and fundamental transaction clause created a derivative with a fair value of $48,961 at the date of issuance. The Company accounted for the fair value of the derivative as financing cost. See Note 7 for discussion of derivative liability. During the period ended September 30, 2018, the Company settled outstanding debt of $845,000 through the payment of cash. In addition, Company issued 6,133,006 shares of common stock with fair value of $2,151,297 in settlement of outstanding convertible notes of $900,760 and accrued interest of $161,475 ($1,062,235 in the aggregate) The Company recorded a loss of $1,067,242 to account the difference in the fair value of the shares issued in excess of the aggregate amount of debt converted. Furthermore, upon settlement of the debt, the Company amortized the remaining debt discount of $747,623 to interest expense. As of September 30, 2018, all convertible notes payable and unpaid interest had been paid or settled. Total interest expense for convertible notes payable for the nine months ended September 30, 2018 and 2017 was $144,541 and $40,481, respectively. | 6. CONVERTIBLE NOTES PAYABLE The Company has the following outstanding convertible notes payable as of December 31, 2017 and 2016: Note Note Date Maturity Date Interest Rate Original Borrowing Balance at December 31, 2017 Balance at December 31, 2016 Note payable (a) April 3, 2016 April 4, 2018 12 % $ 600,000 $ 680,268 $ 680,268 Note payable (b) June and August 2017 February and March 2018 5 % $ 220,500 220,500 — Note payable (c) Various Various 5 % $ 320,000 320,000 — Note payable (d) December 8, 2017 December 8, 2018 8 % $ 370,000 370,000 — Note payable (e) December 13, 2017 September 20, 2018 8 % $ 105,000 105,000 — Total notes payable 1,695,768 680,268 Debt discount (675,453 ) — Total notes payable, net of debt discount $ 1,020,315 $ 680,268 (a) On April 3, 2016, the Company issued a convertible note payable to Oceanside, a third party-lender, in the amount of $680,268 to consolidate all notes payable and accrued interest due to Oceanside as of that date. This note superseded and replaced all previous notes and liabilities due to Oceanside from fiscals 2014 and 2015. The note is unsecured, bears interest at the rate of 12% per annum, compounded annually and matured on December 30, 2016. In consideration, the Company granted Oceanside the right to convert up to 30% of the amount of such note into shares of the Company’s common stock at $0.07 per share and issued 2,429,530 warrants to purchase share of common stock at $0.07 per share until April 4, 2019. The Company determined that the issuance of the warrants and the conversion feature that arose as part of the issuance of note, resulted in a debt extinguishment for accounting purposes since the fair value of the warrants granted amounted to $164,344, which was more than 10% of the original value of the convertible note. As a result, on April 3, 2016, Company recorded the fair value of the new note which approximates the original carrying value $680,268 and expensed the entire fair value of the warrants granted of $164,344 as part of loss on debt extinguishment. On December 30, 2016, the Company entered into an extension agreement with Oceanside to extend the maturity date of the Note from December 30, 2016 to August 4, 2017. All other terms of the Note remain unchanged. In consideration for Oceanside’s agreement to extend the maturity date to August 4, 2017, the Company issued Oceanside 2,429,530 share purchase warrants, exercisable at $0.08 per share until December 29, 2019 with a fair value of $159,491. The Company determined that the extension of the note’s maturity resulted in a debt extinguishment for accounting purposes since the fair value of the warrants granted was more than 10% of the recorded value of the original convertible note. As a result, Company recorded the fair value of the new note which approximates the original carrying value $680,260 and expensed the entire fair value of the warrants granted of $159,491 as part of loss on debt extinguishment. On August 4, 2017, the Company entered into an extension agreement with Oceanside to extend the maturity date of the Note to from August 4, 2017 to April 4, 2018. All other terms of the Note remain unchanged. In consideration for Oceanside’s agreement to extend the maturity date to August 4, 2018, the Company issued Oceanside 1,316,800 share purchase warrants, exercisable at $0.15 per share until August 3, 2022 with a fair value of $170,855. The Company determined that the extension of the note’s maturity resulted in a debt extinguishment for accounting purposes since the fair value of the warrants granted was more than 10% of the recorded value of the original convertible note. As a result, Company recorded the fair value of the new note which approximates the original carrying value $680,268 and expensed the entire fair value of the warrants granted of $170,855 as part of loss on debt extinguishment. In March 2018, the note was satisfied through the issuance of 4,589,506 shares of common stock. (b) In June and August of 2017, the Company issued unsecured convertible notes to Lucas Holdings in the amount of $220,500 in exchange cash of $200,000, original discount (OID) of $10,500 and prepaid interest of $10,000. The notes bear interest rate of 5% per annum, matures in February and March 2018, convertible to shares of common stock at a conversion price of $0.25 per share and $0.10 per share. As part of the issuance, the Company also issued warrants to purchase 330,000 shares of common stock at $0.30 per share and 50,000 shares of common stock with a fair value $12,500. As a result, the Company recorded a debt discount of $174,850 to account the OID and prepaid interest of $20,500 the relative fair value of the warrants of $40,180, the fair value of the common shares of $12,500 and the beneficial conversion feature of $101,670. The debt discount is being amortized to interest expense over the term of the note. As of December 31, 2017, outstanding balance of the note amounted to $220,500 and unamortized debt discount of $40,247. In March 2018, the entire notes were settled and converted to 1,543,000 shares of common stock. (c) On September 26, 2017, we entered into the Purchase Agreement, dated September 15, 2017, with Kodiak Capital Group, LLC (“Kodiak”). Under the Purchase Agreement, the Company may from time to time, in our discretion, sell shares of our common stock to Kodiak for aggregate gross proceeds of up to $2,000,000. Unless terminated earlier, Kodiak’s purchase commitment will automatically terminate on the earlier of the date on which Kodiak shall have purchased our shares pursuant to the Purchase Agreement for an aggregate purchase price of $2,000,000, or September 15, 2019. We have no obligation to sell any shares under the Purchase Agreement. From September 2017 through November 2017, the Company issued three convertible notes payable totaling $320,000 in exchange for cash of $200,000, original issue discount (OID) of $20,000 and settlement of financing expenses of $100,000 incurred by Kodiak pursuant to the agreement. The notes are unsecured, maturities starting in March 2018 through June 2018 and bear interest at a rate of 5% per annum. The notes are also convertible to shares of common stock at price of $0.25 per share or 70% of 10-day VWAP prior to conversion, whichever is lower. As part of the issuances, the Company also granted Kodiak a five year, fully vested warrants to purchase 2,000,000 shares of common stock exercisable at $0.15 and $0.20 per share. The Company determined that since the conversion floor of these notes had no limit to the conversion price, the Company could no longer determine if it had enough authorized shares to fulfil its conversion obligation. As such, pursuant to current accounting guidelines, the Company determined that the conversion feature of these three notes created a derivative with a fair value totaling $412,214 at the date of issuances. The Company accounted for the fair value of the derivative up to the face amount of the notes of $320,000 as a valuation discount to be amortized over the life of the note, and the excess of $92,214 being recorded as part of financing cost (see Note 8 further discussion). In addition, the Company also recorded the notes’ original issue discount totaling $20,000 and the $100,000 note payable issued to settle financing expenses related to Kodiak agreement as part of financing costs. As of December 31, 2017, outstanding balance of the note amounted to $320,000, accrued interest of $3,281 and unamortized debt discount of $191,740. (d) On December 8, 2017, the Company issued unsecured convertible notes to EMA Financial and Auctus Fund totaling $370,000 in exchange for cash of $323,000 and an original issue discount of $47,000. The notes bear interest rate of 8% per annum and will mature on December 8, 2018. The notes are also convertible to common shares at a conversion price equal to the lower of: (i) the closing sale price of the Common Stock on the Principal Market on the Trading Day immediately preceding the Closing Date, and (ii) 70% of either the lowest sale price for the Common Stock on the Principal Market during the ten (10) consecutive Trading Days including and immediately preceding the Conversion Date, or the closing bid price. The Company determined that since the conversion floor had no limit to the conversion price, that the Company could no longer determine if it had enough authorized shares to fulfil the conversion obligation. As such, pursuant to current accounting guidelines, the Company determined that the conversion feature of the note created a derivative with a fair value of $565,252 at the date of issuance. The Company accounted for the fair value of the derivative up to the face amount of the note of $370,000 as a valuation discount to be amortized over the life of the note, and the excess of $195,252 being recorded as part of financing cost. See Note 8 for discussion of derivative liability. In addition, the Company also recorded the notes’ original issue discount of $47,000 as part of financing costs. As part of the offering, the Company also granted EMA and Auctus a five-year warrant to acquire 2,400,000 shares of the Company’s common stock with an exercise price of $0.11 per share. A total of 1,200,000 of these warrants contained full ratchet reset provision in case a future offering at a price below $0.11 per share and included a fundamental transaction provision that could give rise to an obligation to pay cash to the warrant holder. As such, pursuant to current accounting guidelines, the Company determined that the warrant exercise price and fundamental transaction clause created a derivative with a fair value of $118,589 at the date of issuance. The Company accounted for the fair value of the derivative as part of finance cost. See Note 8 for discussion of derivative liability. As of December 31, 2017, outstanding balance of the notes amounted to $370,000, accrued interest of $1,866 and unamortized debt discount of $343,636. (e) On December 14, 2017, the Company issued an unsecured convertible note to PowerUp Lending in the amount of $105,000 in exchange for cash of $90,000 or an original issue discount of $15,000. The note matures on September 20, 2018 and bears interest rate of 8% per annum. The note is convertible to common shares at a conversion price equal to the Variable Conversion Price, which is 70% multiplied by the Market Price. “Market Price” means the lowest Trading Price (as defined below) for the Common Stock during the ten (10) Trading Day period ending on the latest complete Trading Day prior to the Conversion Date. The Company determined that since the conversion floor had no limit to the conversion price, that the Company could no longer determine if it had enough authorized shares to fulfil the conversion obligation. As such, pursuant to current accounting guidelines, the Company determined that the conversion feature of the note created a derivative with a fair value of $160,426 at the date of issuance. The Company accounted for the fair value of the derivative up to the face amount of the note of $105,000 as a valuation discount to be amortized over the life of the note, and the excess of $55,426 being recorded as part of financing cost. See Note 8 for discussion of derivative liability. In addition, the Company also recorded the note’s original issue discount of $15,000 as part of financing costs. As of December 31, 2017, outstanding balance of the note amounted to $105,000, accrued interest of $414 and unamortized debt discount of $99,822. During the year ended December 31, 2017, the Company amortized to interest expense a total of $294,397 related to the notes’ debt discount and accrued interest of $143,145 pursuant to the terms of the note agreement. |
Convertible Series A Preferred
Convertible Series A Preferred Stock | 12 Months Ended |
Dec. 31, 2017 | |
Equity [Abstract] | |
Convertible Series A Preferred Stock | 7. CONVERTIBLE SERIES A PREFERRED STOCK On February 14, 2017, the Company entered into a Securities Purchase Agreement, (the “Purchase Agreement”) with an unaffiliated, accredited investor (the “Purchaser”) for the sale and issuance of our Series A Preferred Stock (Series A PS). As part of the agreement, the investor agreed to purchase a total of 1,050,000 shares of Series A Preferred Stock valued at $1,050,000 in exchange for cash of $1,000,000 or a discount of $50,000 in various tranches. The Series A PS has the following rights and privileges: ● 25% redemption premium; ● Senior rights in terms preference as to dividends, distributions and payments upon the liquidation, dissolution and winding up of the Company; ● Accrues dividends at a rate of 5% per annum; ● Mandatorily redeemable at an installment basis starting August 13, 2017 in the amount of $63,000 plus accrued interest. The Company has the option to redeem the Series A shares in cash or in shares of common stock based upon the Company’s 5-day Volume Weighted Average Price (“VWAP”). The Company considered the guidance of ASC 480-10, Distinguishing Liabilities From Equity to determine the appropriate treatment of the Series A shares. Pursuant to ASC 480-10, the Company determined that the Series A shares was an obligation to be settled, at the option of the Company, in cash or in variable number of shares with a fixed monetary value that should be recorded as a liability under ASC 480-10. During the year ended December 31, 2017, the Company issued 630,000 Series A shares in exchange for cash of $555,000 and a discount of $75,000. Subsequent to the issuance of the Series A PS, the Company redeemed the entire Series A shares totaling $630,000 in exchange for 2,862,006 shares of common stock with a fair value of $303,641 and cash payments totaling $543,465 for a total redemption price of $847,106. As a result of this redemption, the Company recognized interest expenses of $217,106 to account for the 25% redemption premium of $157,500, excess of the fair value of the common shares issued over the Series A shares of $45,607 and the 5% interest due of $13,999. In addition, the Company also amortized the entire $75,000 discount to interest expense. As of December 31, 2017, the entire Series A was fully redeemed, and no shares remained outstanding. |
Derivative Liability
Derivative Liability | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018 | Dec. 31, 2017 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||
Derivative Liability | 7. DERIVATIVE LIABILITY Under authoritative guidance used by the FASB on determining whether an instrument (or embedded feature) is indexed to an entity’s own stock, instruments that do not have fixed settlement provisions are deemed to be derivative instruments. The Company has issued certain convertible notes whose conversion prices contains reset provisions based on a future offering price and/or whose conversion prices are based on future market prices. However, since the number of shares to be issued is not explicitly limited, the Company is unable to conclude that enough authorized and unissued shares are available to share settle the conversion option. In addition, the Company also granted certain warrants that included a fundamental transaction provision that could give rise to an obligation to pay cash to the warrant holder. As a result, the conversion option and warrants are classified as liabilities and are bifurcated from the debt host and accounted for as a derivative liability in accordance with ASC 815 and will be re-measured at the end of every reporting period with the change in value reported in the statement of operations. The derivative liabilities were valued using a probability weighted average Black-Scholes-Merton pricing model with the following average assumptions: September 30, 2018 Upon Issuance December 31, 2017 Stock Price $ 0.40 $ 0.10 $ 0.10 Exercise Price $ 0.13 $ 0.08 $ 0.06 Expected Life 4.23 2.33 1.26 Volatility 221 % 193 % 189 % Dividend Yield 0 % 0 % 0 % Risk-Free Interest Rate 1.89 % 1.18 % 1.72 % Fair Value $ 673,376 $ 301,739 $ 1,250,581 The expected life of the conversion feature of the notes and warrants was based on the remaining contractual term of the notes and warrants. The Company uses the historical volatility of its common stock to estimate the future volatility for its common stock. The expected dividend yield was based on the fact that the Company has not paid dividends in the past and does not expect to pay dividends in the future. The risk-free interest rate was based on rates established by the Federal Reserve Bank. As of December 31, 2017, the Company had recorded a derivative liability of $1,250,581. During the period ended September 30, 2018, the Company recorded an additional derivative liability totaling $301,739 as a result of the issuance of convertible notes and warrants. The Company also extinguished derivative liability of $1,718,816 upon the conversion and payment of outstanding convertible notes payable, which was recorded as part of gain on extinguishment of debt. In addition, the Company also recorded a change in fair value of $839,872 to account the change in fair value of these derivative liabilities up to the dates of the extinguishment and at September 30, 2018. At September 30, 2018, the fair value of the derivative liability amounted to $673,376. | 8. DERIVATIVE LIABILITY Under authoritative guidance used by the FASB on determining whether an instrument (or embedded feature) is indexed to an entity’s own stock, instruments which do not have fixed settlement provisions are deemed to be derivative instruments. The Company has issued certain convertible notes whose conversion price contains reset provisions based on a future offering price and/or whose conversion price is based on a future market price. However, since the number of shares to be issued is not explicitly limited, the Company is unable to conclude that enough authorized and unissued shares are available to share settle the conversion option. In addition, the Company also granted certain warrants whose exercise price is subject to reset based on a future market price. As a result, the conversion option and warrants are classified as a liability and bifurcated from the debt host and accounted for as a derivative liability in accordance with ASC 815 and will be re-measured at the end of every reporting period with the change in value reported in the statement of operations. Upon issuance and at December 31, 2017, the derivative liabilities were valued using a probability weighted average Black-Scholes-Merton pricing model with the following average assumptions: Upon Issuance December 31, 2017 Stock Price $ 0.09 $ 0.10 Exercise Price $ 0.06 $ 0.06 Expected Life 1.37 1.26 Volatility 183 % 189 % Dividend Yield 0 % 0 % Risk Free Interest Rate 1.56 % 1.72 % Fair Value $ 1,256,481 $ 1,250,581 The expected life of the conversion feature of the notes and warrants was based on the remaining contractual term of the notes and warrants. The Company uses the historical volatility of its common stock to estimate the future volatility for its common stock. The expected dividend yield was based on the fact that the Company has not paid dividends in the past and does not expect to pay dividends in the future. The risk-free interest rate was based on rates established by the Federal Reserve Bank. During the year ended, the Company recorded derivative liability totaling $1,256,481 as a result of the issuance of convertible notes and warrants. At December 31, 2017, the estimated fair value of the derivative liability amounted to $1,250,581, as such, the Company recognized a gain of $5,900 to account the change in fair value between the reporting periods. |
Equity Transactions
Equity Transactions | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018 | Dec. 31, 2017 | |
Equity [Abstract] | ||
Equity Transactions | 8. EQUITY TRANSACTIONS The Company’s common stock activity for the nine months ended September 30, 2018 is as follows: Common Stock Shares Issued from Stock Subscription Shares Issued for Services Shares Issued from Conversion of Note Payable Shares Issued for Accrued Salary Shares Issued Upon Exercise of Put Option Shares Repurchased Stock Options Effective October 16, 2014, the Company adopted the 2014 Stock Option Plan (the “Plan”) under the administration of the board of directors to retain the services of valued key employees and consultants of the Company. At its discretion, the Company grants share option awards to certain employees and non-employees, as defined by ASC 718, Compensation—Stock Compensation, under the 204 Stock Option Plan (the “Plan”) and accounts for its share-based compensation in accordance with ASC 718. A summary of option activity for the nine months ended September 30, 2018 is presented below. Shares Weighted Exercise Price Weighted Average Remaining Contractual Life (in Years) Aggregate Intrinsic Value Outstanding at December 31, 2017 21,840,953 $ 0.33 4.03 Granted 16,831,272 0.46 Exercised (487,620 ) 0.07 Forfeited or expired (4,200,000 ) 0.34 Outstanding at September 30, 2018 33,984,605 $ 0.26 3.06 $ 3,992,194 Exercisable at September 30, 2018 11,304,808 $ 0.35 $ 2,994,627 During the nine months ended September 30, 2018, the Company granted stock options to employees and consultants to purchase a total 16,831,272 shares of common stock for services rendered. The options have an average exercise price of $0.46 per share, expire in five years and vest on grant date or over a period of three years from grant date. Total fair value of these options at grant date was approximately $8,019,558 using the Black-Scholes Option Pricing model. During the period ended September 30, 2018, 487,620 options were exercised resulting in the issuance of 487,620 shares of common stock. The Company received cash of $34,133 upon exercise of the options. The total stock compensation expense recognized relating to vesting of stock options for the nine months ended September 30, 2018 amounted to $1,413,304. As of September 30, 2018, total unrecognized stock-based compensation expense was $5,944,834, which is expected to be recognized as part of operating expense through September 2021. The fair value of share option award is estimated using the Black-Scholes method based on the following weighted-average assumptions: Nine Months Ended September 30, 2018 2017 Risk-free interest rate 2.73% - 2.99 % 1.77% - 1.93 % Average expected term (years) 5 years 5 years Expected volatility 184% -190 % 157 %-171 % Expected dividend yield - - The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of measurement corresponding with the expected term of the share option award; the expected term represents the weighted-average period of time that share option awards granted are expected to be outstanding giving consideration to vesting schedules and historical participant exercise behavior; the expected volatility is based upon historical volatility of the Company’s common stock; and the expected dividend yield is based on the fact that the Company has not paid dividends in the past and does not expect to pay dividends in the future. Warrants The Company has the following warrants outstanding as of September 30, 2018 all of which are exercisable: Weighted- Weighted- Average Average Remaining Aggregate Exercise Contractual Intrinsic Warrants Price Life (Years) Value Outstanding at December 31, 2017 28,436,413 $ 0.13 2.79 $ - Granted 5,446,700 0.34 - - Forfeited (48,000 ) 0.10 - - Exercised (14,683,075 ) 0.09 - - Outstanding at September 30, 2018 19,152,038 $ 0.22 3.03 $ 3,827,516 Exercisable at September 30, 2018 19,152,038 $ 3,827,516 During the period ended September 30, 2018, 14,683,075 warrants were exercised resulting in the issuance of 11,917,705 shares of common stock. The Company received cash of $22,000 upon exercise of the warrants. During the nine months ended September 30, 2018, the Company granted warrants to note holders to purchase a total of 1,000,000 shares of common stock. The warrants are exercisable at an average price of $0.14 per share and will expire in January 2023. A total of 500,000 warrants that had been granted were accounted as derivative liability (see Note 6). On February 21, 2018, the Company granted 2,000,000 warrants as part of the exercise of our put option with Kodiak. The exercise price of the 2,000,000 warrants is $0.25 per share and they expire on February 20, 2023. On August 8, 2018 the Company granted 2,446,700 warrants to extend the maturity date of the $1,248,833 Secured note (see note 5). The fair market value of the warrants totaling $1,074,602 was accounted as part of debt extinguishment. During the nine months ended September 30, 2018, a total of 14,683,075 warrants were exercised in cash and cashless exercises for 11,917,705 shares of common stock at a weighted average exercise price of $0.09. As part of these exercises, the Company also received $22,000 upon the exercise of these warrants. | 9. COMMON STOCK The following were common stock transactions during the year ended December 31, 2017: Shares Issued from Stock Subscription Shares Issued for Services The Company granted its two officers and lead director a total of 4,500,000 common shares for services rendered since January 1, 2017 through the date of grant in March 2018. Approximately $441,000 has been recognized as part of stock compensation expense related to this award for the year ended December 31, 2017. Shares Issued for Preferred Stock Shares Issued for Conversion of Debt Shares Issued as Part of Put Notice The Company also agreed to grant Kodiak warrants to purchase shares of common stock up to 4 million shares at $0.25 per share. The warrants will only be granted to Kodiak in proportion to the proceeds received from the exercise of the Put Notice. In November 2017, the Company issued a Put Notice to Kodiak and issued 656,168 shares of common stock in exchange for cash of $50,000. In addition, the Company also issued Kodiak the prorated warrants to purchase 100,000 shares of common stock at $0.25 per share. Shares Issued for Accounts Payable Shares Issued with Note Payable The following were common stock transactions during the year ended December 31, 2016. Shares Issued with Note Payable Stock Repurchases Shares Issued from Stock Subscription Shares Issued for Services Shares Issued to Board of Directors |
Stock Options
Stock Options | 12 Months Ended |
Dec. 31, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock Options | 10. STOCK OPTIONS Effective October 16, 2014, the Company adopted the 2014 Stock Option Plan (the “Plan”) under the administration of the Board of Directors to retain the services of valued key employees and consultants of the Company. A summary of option activity for the years ended December 31, 2017 and 2016 are presented below. Options Weighted- Average Exercise Price Weighted- Average Remaining Contractual Life (Years) Aggregate Intrinsic Value Outstanding at December 31, 2015 7,656,250 $ 0.66 4.87 $ — Granted 5,860,000 0.09 — — Forfeited (2,985,297 ) 0.93 — — Exercised — — — — Outstanding at December 31, 2016 10,530,953 $ 0.33 4.03 $ — Granted 13,210,000 0.17 — — Forfeited (1,900,000 ) 0.16 — — Exercised — — — — Outstanding at December 31, 2017 21,840,953 $ 0.26 2.09 $ 137,403 Vested December 31, 2017 12,286,613 $ 0.28 $ 44,030 Exercisable at December 31, 2017 9,357,620 $ 0.36 $ 24,166 The following were stock options transactions during the year ended December 31, 2017: During the year ended December 31, 2017, the Company granted stock options to employees and consultants to purchase a total 13,210,000 shares of common stock for services rendered. The options have an average exercise price of $0.17 per share, expire in five years and vest over a period of three years from grant date. Total fair value of these options at grant date was approximately $1,781,000 using the Black-Scholes Option Pricing model with the following average assumptions: life of 4 years; risk free interest rate of 1.92%; volatility of 230% and dividend yield of 0%. The total stock compensation expense recognized relating to vesting of these stock options for the years ended December 31, 2017 amounted to $418,389. As of December 31, 2017, total unrecognized stock-based compensation expense was $837,120 which is expected to be recognized as an operating expense through August 2020. The following were stock options transactions during the year ended December 31, 2016: During the year ended December 31, 2016, the Company granted stock options to employees and consultants to purchase a total 5,860,000 shares of common stock for services rendered. The options have an average exercise price of $0.09 per share, expire in five years and vest over a period of three years from grant date. Total fair value of these options at grant date was approximately $462,000 using the Black-Scholes Option Pricing model with the following average assumptions: life of 5 years; risk free interest rate of 1.23%; volatility of 123% and dividend yield of 0%. The total stock compensation expense recognized relating to the vesting of these stock options for the years ended December 31, 2016 amounted to $457,881. |
Stock Warrants
Stock Warrants | 12 Months Ended |
Dec. 31, 2017 | |
Equity [Abstract] | |
Stock Warrants | 11. STOCK WARRANTS The Company has the following warrants as of December 31, 2017 and 2016: Warrants Weighted- Average Exercise Price Weighted- Average Remaining Contractual Life (Years) Aggregate Intrinsic Value Outstanding at December 31, 2015 10,967,879 $ 0.12 3.57 $ — Granted 7,487,385 0.08 — — Forfeited — — — Exercised — — — — Outstanding at December 31, 2016 18,455,264 $ 0.10 2.62 $ — Granted 9,981,149 0.19 — — Forfeited — — — — Exercised — — — — Outstanding at December 31, 2017 28,436,413 $ 0.13 2.79 $ 457,530 Vested December 31, 2017 28,436,413 $ 457,530 Exercisable at December 31, 2017 28,436,413 $ 457,530 The following were stock warrant transactions during the year ended December 31, 2017: On April 1, 2017, Company granted warrants to a consultant to purchase 375,000 shares of common stock at an exercise price of $0.12 per share. The warrants expire on March 31, 2019 and were fully vested on the grant date. The total share-based compensation expense recognized relating to these warrants for the year ended December 31, 2017 amounted to $26,696. On May 22, 2017, the Company issued warrants to purchase 100,000 shares of common stock as part of an equity offering (see Note 9). The exercise price of the 100,000 share purchase warrants is $0.40 per share, expire on May 21, 2019, and were fully vested on grant date. In May and August 2017, the Company entered into extension agreements with Mr. Cutaia to extend the maturity date of Secured Notes. In consideration for Mr. Cutaia’s agreement to extend the maturity dates, the Company granted Mr. Cutaia a total of 3,084,349 share purchase warrants, exercisable at $0.15 per share and $0.36 per share that will expire starting May 2020 (see Note 5). In August 2017, the Company entered into extension agreement with a noteholder to extend the maturity date of note payable. In consideration, the Company granted the note holder 1,316,800 share purchase warrants, exercisable at $0.15 per share that will expire in August 2020 (see Note 6). From June 2017 through December 2017, the Company issued warrants to note holders to purchase a total of 4,830,000 shares of common stock. The warrants are exercisable at an average price of $0.15 per share and will expire starting June 2020 up to December 2022. A total 1.2 million of these warrants were accounted as derivative liability (see Note 6 and 8). On September 16, 2017, the Company issued 275,000 share purchase warrants in full settlement and release of a disputed, unasserted claim. The exercise price of the 275,000 share purchase warrants is $0.08 per share and expire on March 15, 2018. The warrants were fully vested on grant date with a fair value of $10,057 which was recorded as part of loss on debt extinguishment. The total expense recognized relating to the vesting of these stock warrants for the year ended December 31, 2017 amounted to $26,696. The following were stock warrant transactions during the year ended December 31, 2016: On April 4, 2016, the Company issued a secured convertible note to Mr. Cutaia, in the amount of $343,326, which represents additional sums that the he advanced to the Company during the period from December 2015 through March 2016, and is addition to all pre-existing loans made by, and notes held by the CEO. In consideration for this agreement the Company issued 2,452,325 share purchase warrants, exercisable at $0.07 per share until April 4, 2019. On April 4, 2016, the Company issued an unsecured convertible note payable to Oceanside Strategies, Inc. (“Oceanside”) in the amount of $680,268. In consideration for Oceanside’s agreement to convert the prior notes from current demand notes and extend the maturity date to December 4, 2016, we granted Oceanside d 2,429,530 share purchase warrants, exercisable at $0.07 per share until April 4, 2019. On December 30, 2016, the Company entered into an extension agreement with Oceanside to extend the maturity date of the April 2016 Note to August 4, 2017. In consideration for Oceanside’s agreement to extend the maturity date to August 4, 2017 the Company issued Oceanside 2,429,530 share purchase warrants, exercisable at $0.08 per share until December 29, 2019. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 12. INCOME TAXES Significant components of the Company’s deferred tax assets and liabilities are as follows: December 31, 2017 December 31, 2016 Net operating loss carry-forwards $ 3,464,000 $ 4,149,000 Share based compensation (704,000 ) (518,000 ) Non-cash interest and financing expenses (833,000 ) (343,000 ) Other temporary differences (108,000 (55,000 ) Less: Valuation allowance (1,819,000 ) (3,233,000 ) Deferred tax assets, net $ — $ — The items accounting for the difference between income taxes computed at the federal statutory rate and the provision for income taxes were as follows: December 31, 2017 December 31, 2016 Statutory federal income tax rate (34.0 %) (34.0 %) State taxes, net of federal benefit (5.8 %) (5.8 %) Non-deductible items (0.1 %) (0.1 %) Effect of change in tax rate 12 % — Change in valuation allowance 27.9 % 39.9 % 0.0 % 0.0 % ASC 740 requires that the tax benefit of net operating losses carry forwards be recorded as an asset to the extent that management assesses that realization is “more likely than not.” Realization of the future tax benefits is dependent on the Company’s ability to generate sufficient taxable income within the carry forward period. Because of the Company’s recent history of operating losses, management believes that recognition of the deferred tax assets arising from the above-mentioned future tax benefits is currently not likely to be realized and, accordingly, has provided a 100% valuation allowance against the asset amounts. Any uncertain tax positions would be related to tax years that remain open and subject to examination by the relevant tax authorities. The Company has no liabilities related to uncertain tax positions or unrecognized benefits as of the year end December 31, 2017 or 2016. The Company has not accrued for interest or penalties associated with unrecognized tax liabilities. On December 22, 2017, the Tax Cuts and Jobs Act (the “TCJ Act”) was enacted into law. The TCJ Act provides for significant changes to the U.S. Internal Revenue Code of 1986, as amended (the “Code”), that impact corporate taxation requirements, such as the reduction of the federal tax rate for corporations from 35% to 21% and changes or limitations to certain tax deductions. The Company is currently assessing the extensive changes under the TCJ Act and its overall impact on the Company; however, based on its preliminary assessment of the reduction in the federal corporate tax rate from 35% to 21% to become effective on January 1, 2018, the Company currently expects that its effective tax rate for 2018 will be between 20% and 23%. Such estimated range is based on management’s current assumptions with respect to, among other things, the Company’s earnings, state income tax levels, and tax deductions. The Company’s actual effective tax rate in 2018 may differ from management’s estimate. As of December 31, 2017, the Company had federal and state net operating loss carry forwards of approximately $12.8 million, which may be available to offset future taxable income for tax purposes. These net operating losses carry forwards begin to expire in 2034. This carry forward may be limited upon the ownership change under IRC Section 382. |
Accrued Officers Salary
Accrued Officers Salary | 12 Months Ended |
Dec. 31, 2017 | |
Payables and Accruals [Abstract] | |
Accrued Officers Salary | 13. ACCRUED OFFICERS SALARY Accrued Officers Salary at December 31, 2017 and 2016 consist of unpaid salaries of $607,333 and $200,028, respectively to the Company’s Chief Executive Officer (CEO), who is also the owner of approximately 32% of the Company’s outstanding common shares, and the Company’s Chief Financial Officer. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018 | Dec. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Commitments and Contingencies | 9. COMMITMENTS AND CONTINGENCIES Litigation On April 24, 2018, EMA Financial, LLC, a New York limited liability company (“EMA”), commenced an action against us, styled EMA Financial, LLC, a New York limited liability company, Plaintiff, against nFUSZ, Inc., Defendant The circumstances giving rise to the dispute are as follows: On or about December 5, 2017, we issued a warrant to EMA as part of the consideration we were required to provide in connection with a contemporaneous convertible loan EMA made to us. The loan, which was evidenced by a convertible Note, was for a term of one year. Our refusal to honor the warrant exercise notice was due to our good faith belief that EMA’s interpretation of the cashless exercise provision of the warrant was, inter alia On July 20, 2018, we filed an Answer to the Complaint, along with certain Affirmative Defenses, as well as Counterclaims seeking, inter alia We know of no other material pending legal proceedings to which we or any of our subsidiaries is a party or to which any of our assets or properties, or the assets or properties of any of our subsidiaries, are subject and, to the best of our knowledge, no adverse legal activity is anticipated or threatened. In addition, we do not know of any such proceedings contemplated by any governmental authorities. Board of Directors The Company has committed an aggregate of $270,000 in annual compensation to its three independent board members commencing on the date the Company is listed on the NASDAQ. The members will serve on the board until the annual meeting for the year in which their term expires or until their successors have been elected and qualified. | 14. COMMITMENTS AND CONTINGENCIES Operating Leases The Company leased office space in West Hollywood, California under an operating lease which provided for monthly rent of $6,700 through July 31, 2016. In June 2016, the Company moved its offices to a new location in Los Angeles, California under a new operating lease which provides for monthly rent of $2,950 through June 25, 2017. In June 2017, the Company moved its offices to larger space within the same complex under a new operating lease which provides for monthly rent of $4,743 through April 30, 2018. The Company had total rent expense for the year ended December 31, 2017 and 2016 of $51,734 and $68,328, respectively which is recorded as part of General and Administrative expenses in the Statement of Operations. Employment Agreements On November 21, 2014, we entered into an executive employment agreement effective November 1, 2014 with Rory J. Cutaia, our president, chief executive officer, secretary and treasurer. Pursuant to the terms of the employment agreement, we have agreed to pay Mr. Cutaia an annual salary of $325,000, which will be increased each year by 10%, subject to the annual review and approval of our board of directors. Notwithstanding the foregoing, a mandatory increase of not less than $100,000 per annum will be implemented on our company achieving EBITDA break-even. In addition to the base salary, Mr. Cutaia will be eligible to receive an annual bonus in an amount up to $325,000, based upon the attainment of performance targets to be established by our board of directors, in its discretion. The initial term of the employment agreement is five years, and, upon expiration of the initial five-year term, it may be extended for additional one-year periods on ninety days prior notice. In the event that: (i) Mr. Cutaia’s employment is terminated without cause, (ii) Mr. Cutaia is unable to perform his duties due to a physical or mental condition for a period of 120 consecutive days or an aggregate of 180 days in any 12 month period; or (iii) Mr. Cutaia voluntarily terminates the employment agreement upon the occurrence of a material reduction in his salary or bonus, a reduction in his job title or position, or the required relocation of Mr. Cutaia to an office outside of a 30 mile radius of Los Angeles, California, Mr. Cutaia will: (a) receive monthly payments of $27,083, or such sum as is equal to Mr. Cutaia’s monthly base compensation at the time of such termination, whichever is higher, and (b) be reimbursed for COBRA health insurance costs, in each case for 36 months from the date of such termination or to the end of the term of the agreement, whichever is longer. In addition, Mr. Cutaia will have any and all of his unvested stock options immediately vest, with full registration rights; and any unearned and unpaid bonus compensation, expense reimbursement, and all accrued vacation, personal sick days, etc., be deemed earned, vested and paid immediately. As a condition to receiving the foregoing, Mr. Cutaia will be required to execute a release of claims, and a non-competition and non-solicitation agreement having a term which is the same as the term of the monthly severance payments described above. Litigation We do not have any pending litigation. On September 19, 2016 an action captioned Multicore Technologies, an Indian Corporation, plaintiff, v. Rocky Wright, an individual, bBooth, Inc., a Nevada corporation, and Blabeey, Inc., a Nevada corporation, defendants was filed in the United States District Court for the Central District of California, Case No. 2:16-cv-7026 DSF (AJWx). On September 15, 2017, the litigation was dismissed by plaintiff as against us in exchange for our guarantee of two payments to be made by another defendant in the action totaling $5,000, for which we have a right of off-set against any sums we may owe such party for services currently being rendered to us by such party. That defendant made the two payments and we have no further obligations, actual or contingent in this matter. We know of no material proceedings in which any of our directors, officers or affiliates, or any registered or beneficial stockholder is a party adverse to our company or any of our subsidiaries or has a material interest adverse to our company or any of our subsidiaries. |
Subsequent Events
Subsequent Events | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018 | Dec. 31, 2017 | |
Subsequent Events [Abstract] | ||
Subsequent Events | 10. SUBSEQUENT EVENTS Subsequent to September 30, 2018, a total of 4,600,000 warrants were exercised in cashless exercises for 4,206,111 shares of common stock at a weighted average exercise price of $0.21. Subsequent to September 30, 2018, the Company granted stock options to employees and consultants to purchase a total 2,125,000 shares of common stock for services rendered. The options have an average exercise price of $0.50 per share, expire in five years and vest on grant date or over a period of three years from grant date. Total fair value of these options at grant date was $1,021,764 using the Black-Scholes Option Pricing model. On October 19, 2018, we issued an unsecured convertible note (the “Note”) to an otherwise unaffiliated third-party entity in the aggregate principal amount of $1,500,000 in exchange for net proceeds of $1,241,500, after an Original Issue Discount of $150,000 and legal and financing expenses of $108,500. In addition, we issued 1,450,000 shares of our Common Stock. The Note is convertible into shares of our Common Stock only on or after the occurrence of an uncured “Event of Default.” Primarily, we will be in default if we do not repay the principal amount of the Note, as required. The other Events of Default are standard for the type of transaction represented by the related Securities Purchase Agreement and the Note. The conversion price in effect on any date on which some or all of the principal of the Note is to be converted shall be a price equal to 70% of the lowest VWAP during the ten trading days immediately preceding the date on which the third party provided its notice of conversion. Upon an Event of Default, we will owe the third party an amount equivalent to 110% of the then-outstanding principal amount of the Note in addition to of all other amounts, costs, expenses, and liquidated damages that might also be due in respect thereof. We have agreed that, on or after the occurrence of an Event of Default, we will reserve and keep available that number of shares of our Common Stock that is at least equal to 200% of the number of such shares that potentially would be issuable pursuant to the terms of the SPA and the Note (assuming conversion in full of the Note and on any date of determination). On October 30, 2018, we issued two unsecured convertible notes to one current investor and one otherwise unaffiliated third-party in the aggregate principal amount of $400,000 in exchange for net proceeds of $400,000. The notes bear interest at a rate of 5% per annum and will mature on April 29, 2019. These notes, upon the Company’s consummation of the contemplated underwritten public offering of the Company’s common stock, all, and not less than all, of (i) the principal and (ii) the accrued interest hereunder shall be converted into shares of the Company’s common stock that shall have been registered therein. The per-share conversion price shall be seventy-five percent (75%) of the offering price of the Common Stock, as reflected on the cover of the definitive prospectus that the Company shall file with the Securities and Exchange Commission upon its acceleration of effectiveness of the contemplated underwritten public offering of the Company’s common stock. As of the issue date, the notes were convertible into an aggregate of 1,523,809 shares of Common Stock. The Company determined that, because the conversion price is unknown, that the Company could not determine if it had enough authorized shares to fulfill the conversion obligation. As such, pursuant to current accounting guidelines, the Company determined that the conversion feature of the notes created a derivative with a fair value of $383,966 at the date of issuance. The Company accounted for the fair value of the derivative as a financing cost. On November 8, 2018, we, and our two wholly-owned merger subsidiaries, entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Sound Concepts, Inc., a Utah corporation, its shareholders, and a shareholders’ representative, pursuant to which we will acquire Sound Concepts through a two-step merger, consisting of merging one of our merger subsidiaries with and into Sound Concepts (with Sound Concepts surviving the “first step” of the merger) and, immediately thereafter, merging Sound Concepts with and into our other merger subsidiary (with that subsidiary surviving the “second step” of the merger). We will pay $25,000,000 of value to the shareholders of Sound Concepts, payable through a combination of a $15,000,000 cash payment by us and the issuance of shares of our common stock with a fair market value of $10,000,000. The purchase price is not subject to any closing working capital adjustment or post-closing working capital adjustment. Each of the parties to the Merger Agreement made customary representations, warranties, and indemnities subject to, in some cases, exceptions and qualifications as will be set forth in a disclosure schedule to the Merger Agreement. Each of the parties also agreed to certain covenants and other agreements, including, among others, (i) covenants requiring Sound Concepts and its shareholders to not solicit other acquisition bids or proposals and (ii) covenants regarding non-solicitation and non-competition. Completion of the acquisition is subject to the satisfaction or waiver of certain conditions. In addition to customary closing conditions, our obligation to complete the acquisition is conditioned upon the consummation of an underwritten public offering of our common stock and receipt by us of offering proceeds that will be used to pay for all or a portion of the cash portion of the merger consideration. Nothing herein shall constitute an offer to sell or the solicitation of an offer to buy any of the securities in our anticipated offering of shares of our Common Stock. Currently, we anticipate the closing of the Sound Concepts acquisition to occur in the first quarter of fiscal 2019; however, there can be no assurance that it will close in the first quarter of fiscal 2019, or at all. The Merger Agreement may be terminated under certain circumstances, including, but not limited to: (i) the mutual written consent of Sound Concepts and us; (ii) by us if there has been a breach, inaccuracy in, or failure to perform any representation, warranty, covenant, or agreement made by Sound Concepts or its shareholders pursuant to the Merger Agreement that would give rise to the failure of any of the closing conditions and such breach, inaccuracy, or failure has not been cured within 10 days of Sound Concepts’ receipt of written notification of such breach from us; provided, that, we (or our merger subsidiaries) are not then in material breach of any provision of the Merger Agreement; (iii) by us if our closing conditions have not been, or if it becomes apparent that any of such conditions will not be, fulfilled by February 14, 2019, unless such failure is due to our failure to perform or comply with any of the covenants, agreements, or conditions required to be performed or complied with by it prior to the closing of the acquisition; (iv) by Sound Concepts if there has been a breach, inaccuracy in, or failure to perform any representation, warranty, covenant, or agreement made by us (or our merger subsidiaries) pursuant to the Merger Agreement that would give rise to the failure of any of the closing conditions and such breach, inaccuracy, or failure has not been cured within 10 days of our receipt of written notice of such breach from Sound Concepts; provided, that neither Sound Concepts or its shareholders is then in material breach of any provision of the Merger Agreement; (v) by Sound Concepts if any of Sound Concepts’ or its shareholders’ closing conditions have not been, or if it becomes apparent that any of such conditions will not be, fulfilled by January 31, 2019, unless such failure is due to Sound Concepts’, or its shareholders’, failure to perform or comply with any of the covenants, agreements, or conditions to be performed or complied with by it or them prior to the Closing of the acquisition; and (vi) by Sound Concepts or us if (1) there is any law that makes consummation of the transactions contemplated by the Merger Agreement illegal or otherwise prohibited or (2) any governmental authority issued a governmental order restraining or enjoining the transactions contemplated by the Merger Agreement, and such governmental order has become final and non-appealable. | 15. SUBSEQUENT EVENTS (i) In January 2018, the Company issued unsecured convertible notes to Auctus Fund (Auctus) and EMA Financial (EMA) that total $150,000 in exchange for cash of $130,000 or an original issue discount of $20,000. The notes mature in January 2019 and bear interest at a rate of 8% per annum. The notes are also convertible to common shares at a conversion price equal to the lower of: (i) the closing sale price of the Common Stock on the Principal Market on the Trading Day immediately preceding the Closing Date, and (ii) 70% of either the lowest sale price for the Common Stock on the Principal Market during the ten (10) consecutive Trading Days including and immediately preceding the Conversion Date, or the closing bid price. As part of the offering, the Company also granted Auctus and EMA five-year warrants to acquire a total of 1,000,000 shares of the Company’s common stock with an exercise price of $0.14 per share. The Company determined that the conversion feature of the notes and the warrants issued are subject to derivative liability accounting with a fair value of $301,739 at the date of issuance. The Company will account the fair value of the derivative up to the face amount of the notes of $150,000 as a valuation discount to be amortized over the life of the note, and the excess of $151,739 being recorded as a finance cost. In addition, the Company will also record financing costs of $20,000 to account the original issue discount of the notes. (ii) From January 2018 through March 2018, the Company granted 106,847 shares of common stock and stock options to purchase 906,272 shares of common stock with a total fair value of $181,157. These equity instruments were granted to employees for services to be rendered and settlement of debt. The stock options granted vest over a period of 3 years with an average exercise price of $0.26 per share. (iii) From January 2018 through March 2018, the Company issued 7,383,006 shares of common stock and paid $976,120 in cash to settle outstanding notes payable totaling $1,870,769 and accrued interest of $147,097. As a result, the Company will record interest expense of $893,120 to expense the unamortized debt discount and prepayment interest, gain of $1,248,809 to extinguish the corresponding derivative liability related to these notes payable and loss on debt extinguishment of $1,090,057. (iv) From January 2018 through March 2018, the Company issued 20,469,028 shares of common stock in exchange for cash of $3,300,500 or an average selling price of $0.16 per share. As part of the sale, one investor and current note holder agreed to cancel a note payable amounting to $100,000 that was issued in November 2017. As a result, the Company will record a gain on extinguishment of $158,396 to account the extinguishment of derivative liability of $136,226 and unamortized debt discount of $77,830. In connection with certain of such sales of shares of common stock, the referenced cancellation of a note payable, and the above-referenced settlement in cash of certain outstanding notes, we may be in a dispute with such investor in respect of the applicability of that cash settlement, as distinguished from such investor’s desire to convert one or both of such settled notes into shares of common stock. In connection therewith, we have reserved 200,000 shares of common. (v) On March 28, 2018 the Company converted the CEO’s accrued salary of $582,333 into 407,226 restricted shares of common stock at a price of $1.43 per share, which represents the closing price of the Company’s shares as reported on OTC markets on March 28, 2018. (vi) Subsequent to December 31, 2017, 4,641,667 shares of common stock that were subject to vesting schedules and previously accounted for were issued. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018 | Dec. 31, 2017 | |
Accounting Policies [Abstract] | ||
Basis of Presentation | Basis of Presentation The accompanying condensed consolidated financial statements are unaudited. These unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Accordingly, these interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017 filed with the SEC. The condensed consolidated balance sheet as of December 31, 2017 included herein was derived from the audited consolidated financial statements as of that date. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments necessary to fairly present the Company’s financial position and results of operations for the interim periods reflected. Except as noted, all adjustments contained herein are of a normal recurring nature. Results of operations for the fiscal periods presented herein are not necessarily indicative of fiscal year-end results. | |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements include the accounts of nFüsz, Inc., (formerly bBooth, Inc.) and Songstagram, Inc., our wholly owned subsidiary. All intercompany transactions and balances have been eliminated in consolidation. | Principles of Consolidation The consolidated financial statements include the accounts of nFüsz, Inc., (formerly bBooth, Inc.) and Songstagram, Inc. (“Songstagram”) our wholly owned subsidiary. All intercompany transactions and balances have been eliminated in consolidation. |
Going Concern | Going Concern We have incurred operating losses since inception and have negative cash flows from operations. We had a stockholders’ deficit of $2,283,422 as of September 30, 2018 and incurred a net loss of $8,192,523 and utilized $2,801,405 of cash during the nine-month period then ended September 30, 2018. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent upon the Company’s ability to raise additional funds and implement its business plan. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. In addition, the Company’s independent registered public accounting firm, in its report on the Company’s December 31, 2017 consolidated financial statements, has raised substantial doubt about the Company’s ability to continue as a going concern. Our continuation as a going concern is dependent on our ability to obtain additional financing until we can generate sufficient cash flows from operations to meet our obligations. We intend to continue to seek additional debt or equity financing to continue our operations. There is no assurance that we will ever be profitable or that debt or equity financing will be available to us. The consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should we be unable to continue as a going concern. | |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reported periods. Significant estimates include assumptions made in valuing derivative liabilities, valuation of debt and equity instruments, share-based compensation arrangements and realization of deferred tax assets. Amounts could materially change in the future. | Use of Estimates The preparation of financial statements in conformity with Generally Accepted Accounting Principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reported periods. Significant estimates include assumptions made in analysis of impairment of long term assets, realization of deferred tax assets, determining fair value of derivative liabilities, and value of equity instruments issued for services. Amounts could materially change in the future. |
Revenue Recognition | Revenue Recognition We generate substantially all of our revenue from subscription services, which are comprised of subscription fees from customer accounts. Subscription service arrangements are generally non-cancelable and do not provide for refunds to customers in the event of cancellations or any other right of return. We record revenue net of sales or excise taxes. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), and (ASC 606). The underlying principle of ASC 606 is to recognize revenue to depict the transfer of goods or services to customers at the amount expected to be collected. ASC 606 creates a five-step model that requires entities to exercise judgment when considering the terms of contract(s), which includes (1) identifying the contract(s) or agreement(s) with a customer, (2) identifying our performance obligations in the contract or agreement, (3) determining the transaction price, (4) allocating the transaction price to the separate performance obligations, and (5) recognizing revenue as each performance obligation is satisfied. Under ASC 606, revenue is recognized when performance obligations under the terms of a contract are satisfied, which occurs for the Company upon shipment or delivery of products or services to our customers based on written sales terms, which is also when control is transferred. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring the products or services to a customer. The Company adopted the guidance of ASC 606 on January 1, 2018. The implementation of ASC 606 had no impact on the prior period financial statements and no cumulative effect adjustment was recognized. | |
Property and Equipment | Property and Equipment Property and equipment are recorded at historical cost and depreciated on a straight-line basis over their estimated useful lives of approximately five years once the individual assets are placed in service. | |
Long-Lived Assets | Long-Lived Assets The Company evaluates long-lived assets for impairment whenever events or changes in circumstances indicate that their net book value may not be recoverable. When such factors and circumstances exist, the Company compares the projected undiscounted future cash flows associated with the related asset or group of assets over their estimated useful lives against their respective carrying amount. Impairment, if any, is based on the excess of the carrying amount over the fair value, based on market value when available, or discounted expected cash flows, of those assets and is recorded in the period in which the determination is made. No impairment of long-lived assets was required for the years ended December 31, 2017 and 2016. | |
Income Taxes | Income Taxes The Company accounts for income taxes under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 740 “Income Taxes.” Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recognized for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The deferred tax assets of the Company relate primarily to operating loss carry-forwards for federal income tax purposes. A full valuation allowance for deferred tax assets has been provided because the Company believes it is not more likely than not that the deferred tax asset will be realized. Realization of deferred tax assets is dependent on the Company generating sufficient taxable income in future periods. The Company periodically evaluates its tax positions to determine whether it is more likely than not that such positions would be sustained upon examination by a tax authority for all open tax years, as defined by the statute of limitations, based on their technical merits. The Company accrues interest and penalties, if incurred, on unrecognized tax benefits as components of the income tax provision in the accompanying consolidated statements of operations. As of December 31, 2017, and 2016, the Company has not established a liability for uncertain tax positions. | |
Derivative Financial Instruments | Derivative Financial Instruments The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the consolidated statements of operations. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date. The Company uses Level 2 inputs for its valuation methodology for the derivative liabilities as their fair values were determined by using a probability weighted average Black-Scholes-Merton pricing model based on various assumptions. The Company’s derivative liabilities are adjusted to reflect fair value at each period end, with any increase or decrease in the fair value being recorded in results of operations as adjustments to fair value of derivatives. | Derivative Financial Instruments The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the consolidated statements of operations. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date. The Company uses Level 2 inputs for its valuation methodology for the derivative liabilities as their fair values were determined by using a probability weighted average Black-Scholes-Merton pricing model based on various assumptions. The Company’s derivative liabilities are adjusted to reflect fair value at each period end, with any increase or decrease in the fair value being recorded in results of operations as adjustments to fair value of derivatives. |
Share Based Payments | Share Based Payments The Company issues stock options, common stock, and equity interests as share-based compensation to employees and non-employees. The Company accounts for its share-based compensation to employees in accordance with FASB ASC 718 “Compensation – Stock Compensation.” Stock-based compensation cost is measured at the grant date, based on the estimated fair value of the award, and is recognized as expense over the requisite service period. The Company accounts for share-based compensation issued to non-employees and consultants in accordance with the provisions of FASB ASC 505-50 “ .” a b The Company values stock compensation based on the market price on the measurement date. As described above, for employees this is the date of grant, and for non-employees, this is the date of performance completion. The Company values stock options and warrants using the Black-Scholes option pricing model. | Share Based Payment The Company issues stock options, common stock, and equity interests as share-based compensation to employees and non-employees. The Company accounts for its share-based compensation to employees in accordance FASB ASC 718 “Compensation – Stock Compensation.” Stock-based compensation cost is measured at the grant date, based on the estimated fair value of the award, and is recognized as expense over the requisite service period. The Company accounts for share-based compensation issued to non-employees and consultants in accordance with the provisions of FASB ASC 505-50 “ .” a b The Company values stock compensation based on the market price on the measurement date. As described above, for employees this is the date of grant, and for non-employees, this is the date of performance completion. The Company values stock options using the Black-Scholes option pricing model. Assumptions used in the Black-Scholes model to value options issued during the years ended December 31, 2017 and 2016 are as follows: Year Ended Year Ended December 31, 2017 December 31, 2016 Expected life in years 2.5 to 5.0 2.5 to 5.0 Stock price volatility 84.36% - 173.92 % 84.36% - 153. 07 % Risk free interest rate 1.22% - 2.23 % 1.22% - 1.24 % Expected dividends 0 % 0 % Forfeiture rate 21 % 20 % The risk-free interest rate was based on rates established by the Federal Reserve Bank. The Company uses the historical volatility of its common stock to estimate the future volatility for its common stock. The expected life of the conversion feature of the notes was based on the remaining term of the notes. The expected dividend yield was based on the fact that the Company has not customarily paid dividends in the past and does not expect to pay dividends in the future. |
Research and Development Costs | Research and Development Costs Research and development costs consist of expenditures for the research and development of new products and technology. These costs are primarily expenses to vendors contracted to perform research projects and develop technology for the Company’s notifiCRM cloud-based, Software-as-a-Service (SaaS) platform. | |
Net Loss Per Share | Net Loss Per Share Basic net loss per share is computed by using the weighted-average number of common shares outstanding during the period. Diluted net loss per share is computed giving effect to all dilutive potential common shares that were outstanding during the period. Dilutive potential common shares consist of incremental common shares issuable upon exercise of stock options. No dilutive potential common shares were included in the computation of diluted net loss per share because their impact was anti-dilutive. As of September 30, 2018, the Company had a total of 33,984,605 options and 19,152,038 warrants outstanding. These shares were excluded from the computation of net loss per share because they are anti-dilutive. As of September 30, 2017, the Company had a total of 22,030,953 options and 24,461,413 warrants outstanding. These shares were excluded from the computation of net loss per share because they are anti-dilutive. | Net Loss Per Share Basic net loss per share is computed by using the weighted-average number of common shares outstanding during the period. Diluted net loss per share is computed giving effect to all dilutive potential common shares that were outstanding during the period. Dilutive potential common shares consist of incremental common shares issuable upon exercise of stock options. No dilutive potential common shares were included in the computation of diluted net loss per share because their impact was anti-dilutive. As of December 31, 2017, and 2016, the Company had total outstanding options of 21,840,953 and 10,530,953, respectively and warrants of 28,436,413 and 18,455,264, respectively, which were excluded from the computation of net loss per share because they are anti-dilutive. |
Deferred Offering Costs | Deferred Offering Costs Deferred offering costs consist principally of legal, accounting and underwriters’ fees incurred related to the contemplated underwritten public offering of the Company’s common stock. These deferred offering costs will be charged against the gross proceeds received or will be charged to expense if the offering is not completed. | |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (U.S. GAAP), and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below: Level 1: Quoted market prices available in active markets for identical assets or liabilities as of the reporting date. Level 2: Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. Level 3: Pricing inputs that are generally observable inputs and not corroborated by market data. The carrying amount of the Compa n ’ f a a s i v a s r e s a y a b e a r o a v a r a r e v a f b a a r o a v a a r a b a r re v r k r a eve v a a o i v a iv a | |
Concentrations | Concentrations During the year ended December 31, 2017, the Company had a single vendor that accounted for 20.7% of all purchases, and 18.1% of all purchases in the same period in the prior year. | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In February 2016, the FASB issued Accounting Standards Update No. 2016-02 (ASU 2016-02), Leases (Topic 842). ASU 2016-02 requires a lessee to record a right-of-use asset and a corresponding lease liability, initially measured at the present value of the lease payments, on the balance sheet for all leases with terms longer than 12 months, as well as the disclosure of key information about leasing arrangements. ASU 2016-02 requires recognition in the statement of operations of a single lease cost, calculated so that the cost of the lease is allocated over the lease term, generally on a straight-line basis. ASU 2016-02 requires classification of all cash payments within operating activities in the statement of cash flows. Disclosures are required to provide the amount, timing and uncertainty of cash flows arising from leases. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early application is permitted. The Company has not yet evaluated the impact of the adoption of ASU 2016-02 on the Company’s financial statement presentation or disclosures. In July 2017, the FASB issued ASU No. 2017-11, “Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features; (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception” (“ASU 2017-11”). ASU 2017-11 allows companies to exclude a down round feature when determining whether a financial instrument (or embedded conversion feature) is considered indexed to the entity’s own stock. As a result, financial instruments (or embedded conversion features) with down round features may no longer be required to be accounted for as derivative liabilities. A company will recognize the value of a down round feature only when it is triggered, and the strike price has been adjusted downward. For equity-classified freestanding financial instruments, an entity will treat the value of the effect of the down round as a dividend and a reduction of income available to common stockholders in computing basic earnings per share. For convertible instruments with embedded conversion features containing down round provisions, entities will recognize the value of the down round as a beneficial conversion discount to be amortized to earnings. ASU 2017-11 is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted. The guidance in ASU 2017-11 can be applied using a full or modified retrospective approach. The Company is currently evaluating the impact of the adoption of ASU 2017-11 on the Company’s financial statement presentation or disclosures. Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s present or future consolidated financial statements. | Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers. ASU 2014-09 is a comprehensive revenue recognition standard that will supersede nearly all existing revenue recognition guidance under current U.S. GAAP and replace it with a principle-based approach for determining revenue recognition. ASU 2014-09 will require that companies recognize revenue based on the value of transferred goods or services as they occur in the contract. The ASU also will require additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. ASU 2014-09 is effective for interim and annual periods beginning after December 15, 2017. Entities will be able to transition to the standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption. The Company is in the process of evaluating the impact of ASU 2014-09 on the Company’s financial statements and disclosures but does not believe adoption of such pronouncement will have a material effect, if any. In February 2016, the FASB issued Accounting Standards Update No. 2016-02 (ASU 2016-02), Leases (Topic 842). ASU 2016-02 requires a lessee to record a right-of-use asset and a corresponding lease liability, initially measured at the present value of the lease payments, on the balance sheet for all leases with terms longer than 12 months, as well as the disclosure of key information about leasing arrangements. ASU 2016-02 requires recognition in the statement of operations of a single lease cost, calculated so that the cost of the lease is allocated over the lease term, generally on a straight-line basis. ASU 2016-02 requires classification of all cash payments within operating activities in the statement of cash flows. Disclosures are required to provide the amount, timing and uncertainty of cash flows arising from leases. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early application is permitted. The Company has not yet evaluated the impact of the adoption of ASU 2016-02 on the Company’s financial statement presentation or disclosures. In July 2017, the FASB issued ASU No. 2017-11, “Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features; (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception” (“ASU 2017-11”). ASU 2017-11 allows companies to exclude a down round feature when determining whether a financial instrument (or embedded conversion feature) is considered indexed to the entity’s own stock. As a result, financial instruments (or embedded conversion features) with down round features may no longer be required to be accounted for as derivative liabilities. A company will recognize the value of a down round feature only when it is triggered, and the strike price has been adjusted downward. For equity-classified freestanding financial instruments, an entity will treat the value of the effect of the down round as a dividend and a reduction of income available to common stockholders in computing basic earnings per share. For convertible instruments with embedded conversion features containing down round provisions, entities will recognize the value of the down round as a beneficial conversion discount to be amortized to earnings. ASU 2017-11 is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted. The guidance in ASU 2017-11 can be applied using a full or modified retrospective approach. The Company is currently evaluating the impact of the adoption of ASU 2017-11 on the Company’s financial statement presentation or disclosures. Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s present or future consolidated financial statements. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Schedule of Assumptions Used in Black-Scholes Model to Options Issued | The Company values stock options using the Black-Scholes option pricing model. Assumptions used in the Black-Scholes model to value options issued during the years ended December 31, 2017 and 2016 are as follows: Year Ended Year Ended December 31, 2017 December 31, 2016 Expected life in years 2.5 to 5.0 2.5 to 5.0 Stock price volatility 84.36% - 173.92 % 84.36% - 153. 07 % Risk free interest rate 1.22% - 2.23 % 1.22% - 1.24 % Expected dividends 0 % 0 % Forfeiture rate 21 % 20 % |
Property and Equipment (Tables)
Property and Equipment (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018 | Dec. 31, 2017 | |
Property, Plant and Equipment [Abstract] | ||
Schedule of Property and Equipment | Property and equipment consisted of the following as of September 30, 2018 and December 31, 2017. September 30, 2018 December 31, 2017 (Unaudited) Furniture and fixtures $ 56,890 $ 56,890 Office equipment 50,669 50,669 107,559 107,559 Less: accumulated depreciation (92,828 ) (77,005 ) $ 14,731 $ 30,554 | Property and equipment consisted of the following as of December 31, 2017 and 2016. December 31, 2017 December 31, 2016 Furniture and fixtures $ 56,890 $ 56,890 Office equipment 50,670 50,670 107,560 107,560 Less: accumulated depreciation (77,006 ) (55,494 ) $ 30,554 $ 52,066 |
Note Payable (Tables)
Note Payable (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
Schedule of Notes Payable | The Company had the following outstanding notes payable as of December 31, 2017 and 2016: Note Note Date Maturity Date Interest Rate Original Borrowing Balance at December 31, 2017 Balance at December 31, 2016 Note payable (a) March 21, 2015 March 20, 2018 12 % $ 125,000 $ 125,000 $ 125,000 Note payable (b) December 15, 2016 June 15, 2017 5 % $ 101,300 — 101,300 Total notes payable 125,000 226,300 Debt discount — (48,942 ) Total notes payable, net $ 125,000 $ 177,358 (a) On March 21, 2015, the Company issued a note payable to a third-party lender for the benefit of DelMorgan Group LLC (“DelMorgan”), financial consultant. The note is unsecured, bears interest rate of 12% per annum payable monthly beginning on April 20, 2015 and matured in March 2017. As of December 31, 2016, outstanding balance of the note amounted to $125,000. On March 20, 2017, the Company entered into an extension agreement with the third-party lender to extend the maturity date of the Note to March 20, 2018. All other terms of the Note remained unchanged and there was no additional compensation or incentive given. As of December 31, 2017, outstanding balance of the note amounted to $125,000. In January 2018, the note was satisfied through the issuance of 1,250,000 shares of common stock. (b) On December 15, 2016, the Company issued a note payable to a third-party creditor amounting to $101,300 in exchange for cash of $80,000, original issue discount of $8,800 and guaranteed interest of $12,500. The note was unsecured, bore an effective interest rate of 5% per annum and matured in May 2017. In addition, the Company also granted a three-year warrant to acquire 176,000 shares of the Company’s common stock with an exercise price of $0.25 per share, and 240,000 shares of the Company’s common stock. As a result, the Company recorded a debt discount totaling $53,659 to account for the origin original issue discount of $8,800, guaranteed interest of $12,500, the relative fair value of the warrants of $10,759 and fair value of the common shares of $21,600. The debt discount was amortized over the term of the note. As of December 31, 2016, outstanding balance of the note amounted to $101,300 and unamortized debt discount of $48,942. During the year ended December 31, 2017, the Company settled the debt in exchange for 1,026,195 shares of its Common Stock (the “Shares”) with a fair value of $181,845. As a result of the note settlement, the Company recorded a loss on debt extinguishment of $80,544 to account the difference between the face value of the note payable settled and the fair value of the common shares issued. In addition, the Company recorded interest expense of $48,942 to amortize the remaining note discount. |
Notes Payable - Related Parti_2
Notes Payable - Related Parties (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018 | Dec. 31, 2017 | |
Debt Disclosure [Abstract] | ||
Schedule of Notes Payable to Related Parties | The Company has the following related parties notes payable as of September 30, 2018 and December 31, 2017: Note Issuance Date Maturity Date Interest Rate Original Borrowing Balance at September 30, 2018 Balance at December 31, 2017 (Unaudited) Note 1 (A) December 1, 2015 February 8, 2021 12.0 % $ 1,248,883 $ 824,218 $ 1,198,883 Note 2 (B) December 1, 2015 February 8, 2021 12.0 % 189,000 - 189,000 Note 3 (C) December 1, 2015 April 1, 2017 12.0 % 111,901 111,901 111,901 Note 4 (D) April 4, 2016 December 4, 2018 12.0 % 343,326 240,328 343,326 Note 5 (E) April 4, 2016 December 4, 2018 12.0 % 121,875 - 121,875 Total notes payable – related parties, net 1,176,447 1,964,985 Non-current (824,218 ) - Current $ 352,229 $ 1,964,985 (A) On December 1, 2015, the Company issued a convertible note payable to Mr. Rory J. Cutaia, the Company’s majority stockholder and Chief Executive Officer (CEO), to consolidate all loans and advances made by Mr. Cutaia to the Company as of that date. The note bears interest rate of 12% per annum, secured by the Company’s assets and matured on August 1, 2018, as amended. Per the terms of the agreement, at Mr. Cutaia’s discretion, he may convert up to $374,665 of outstanding principal, plus accrued interest thereon, into shares of common stock at a conversion rate of $0.07 per share. As of December 31, 2017, total outstanding balance of the note amounted to $1,198,883. On August 8, 2018, we entered into an extension agreement with Mr. Cutaia to extend the maturity date of the note to February 8, 2021. All other terms of the note remain unchanged. In connection with the extension, we granted to Mr. Cutaia a three-year warrant to purchase up to 2,446,700 shares of Common Stock at a price of $0.49 per share with a fair value of $1,074,602. We determined that the extension of the note’s maturity date resulted in a debt extinguishment for accounting purposes because the fair value of the warrants granted was more than 10% of the original value of the note. As result, we recorded the fair value of the “new” note, which approximates the then-current carrying value of $1,198,833 of the then-current note and expensed the entire fair value of the warrants granted of $1,074,602 as part of debt extinguishment. On September 30, 2018, Mr. Cutaia converted the principal balance that was convertible ($374,665) into 5,352,357 shares of Restricted Common Stock at $0.07 per share. As of September 30, 2018, outstanding balance of the note amounted to $824,218. (B) On December 1, 2015, the Company issued a convertible note with Mr. Cutaia in the amount of $189,000 representing a portion of Mr. Cutaia’s accrued salary for 2015. The note was unsecured, bears interest rate of 12% per annum, matured in August 1, 2018, as amended, and convertible to shares of common stock at a conversion price of $0.07 per share. As of December 31, 2017, outstanding balance of the note amounted to $189,000. On September 30, 2018, Mr. Cutaia converted the entire unpaid balance of $189,000 into 2,700,000 restricted shares of our Common Stock at $0.07 per share. (C) On December 1, 2015, the Company issued a note payable to a former member of the Company’s Board of Directors, in the amount of $111,901 representing unpaid consulting fees as of November 30, 2015. The note is unsecured, bears interest rate of 12% per annum and matured in April 2017. As of September 30, 2018, and the date of this report, the note is past due. The Company is currently in negotiations with the note holder to settle the note payable. (D) On April 4, 2016, the Company issued a convertible note to Mr. Cutaia, in the amount of $343,326, to consolidate all advances made by Mr. Cutaia to the Company from December 2015 through March 2016. The note bears interest rate of 12% per annum, secured by the Company’s assets and will mature on December 4, 2018, as amended. A total of 30% of the note principal or $102,998 can be converted to shares of common stock at a conversion price $0.07 per share. As of December 31, 2017, outstanding balance of the note amounted to $343,326 On September 30, 2018 Mr. Cutaia converted the 30% of the principal balance that was convertible ($102,998) into 1,471,397 restricted shares of our Common Stock at $0.07 per share. As of September 30, 2018, outstanding balance of the note amounted to $240,328. (E) On April 4, 2016, the Company issued a convertible note payable to Mr. Cutaia in the amount of $121,875, representing his unpaid salary from December 2015 through March 2016. The note was unsecured, bears interest at the rate of 12% per annum, matures on December 4, 2018, as amended, and convertible to common stock at a conversion price of $0.07 per share. As of December 31, 2017, outstanding balance of the note amounted to $121,8750. For the period ended September 30, 2018 Mr. Cutaia converted $121,875 of debt into 1,741,071 shares of Restricted Common Stock. | The Company has the following related parties outstanding notes payable as of December 31, 2017 and 2016: Note Issuance Date Maturity Date Interest Rate Original Borrowing Balance at December 31, 2017 Balance at December 31, 2016 Note 1 December 1, 2015 August 1, 2018 12.0 % $ 1,203,242 $ 1,198,883 $ 1,198,883 Note 2 December 1, 2015 August 1, 2018 12.0 % 189,000 189,000 189,000 Note 3 December 1, 2015 April 1, 2017 12.0 % 111,901 111,901 111,901 Note 4 August 4, 2016 December 4, 2018 12.0 % 343,326 343,326 343,326 Note 5 August 4, 2016 December 4, 2018 12.0 % 121,875 121,875 121,875 Total notes payable – related parties $ 1,964,985 $ 1,964,985 |
Convertible Notes Payable (Tabl
Convertible Notes Payable (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018 | Dec. 31, 2017 | |
Debt Disclosure [Abstract] | ||
Schedule of Convertible Notes Payable | The Company has the following convertible notes payable as of September 30, 2018 and December 31, 2017: Note Note Date Maturity Date Interest Rate Original Borrowing Balance at September 30, 2018 Balance at December 31, 2017 (Unaudited) Note payable April 3, 2016 April 4, 2018 12 % $ 600,000 $ - $ 680,268 Note payable June and August 2017 February and March 2018 5 % $ 220,500 - 220,500 Note payable Various Various 5 % $ 320,000 - 320,000 Note payable December 8, 2017 December 8, 2018 8 % $ 370,000 - 370,000 Note payable December 13, 2017 September 20, 2018 8 % $ 105,000 - 105,000 Total notes payable - 1,695,768 Debt discount - (675,453 ) Total notes payable, net of debt discount $ - $ 1,020,315 | The Company has the following outstanding convertible notes payable as of December 31, 2017 and 2016: Note Note Date Maturity Date Interest Rate Original Borrowing Balance at December 31, 2017 Balance at December 31, 2016 Note payable (a) April 3, 2016 April 4, 2018 12 % $ 600,000 $ 680,268 $ 680,268 Note payable (b) June and August 2017 February and March 2018 5 % $ 220,500 220,500 — Note payable (c) Various Various 5 % $ 320,000 320,000 — Note payable (d) December 8, 2017 December 8, 2018 8 % $ 370,000 370,000 — Note payable (e) December 13, 2017 September 20, 2018 8 % $ 105,000 105,000 — Total notes payable 1,695,768 680,268 Debt discount (675,453 ) — Total notes payable, net of debt discount $ 1,020,315 $ 680,268 (a) On April 3, 2016, the Company issued a convertible note payable to Oceanside, a third party-lender, in the amount of $680,268 to consolidate all notes payable and accrued interest due to Oceanside as of that date. This note superseded and replaced all previous notes and liabilities due to Oceanside from fiscals 2014 and 2015. The note is unsecured, bears interest at the rate of 12% per annum, compounded annually and matured on December 30, 2016. In consideration, the Company granted Oceanside the right to convert up to 30% of the amount of such note into shares of the Company’s common stock at $0.07 per share and issued 2,429,530 warrants to purchase share of common stock at $0.07 per share until April 4, 2019. The Company determined that the issuance of the warrants and the conversion feature that arose as part of the issuance of note, resulted in a debt extinguishment for accounting purposes since the fair value of the warrants granted amounted to $164,344, which was more than 10% of the original value of the convertible note. As a result, on April 3, 2016, Company recorded the fair value of the new note which approximates the original carrying value $680,268 and expensed the entire fair value of the warrants granted of $164,344 as part of loss on debt extinguishment. On December 30, 2016, the Company entered into an extension agreement with Oceanside to extend the maturity date of the Note from December 30, 2016 to August 4, 2017. All other terms of the Note remain unchanged. In consideration for Oceanside’s agreement to extend the maturity date to August 4, 2017, the Company issued Oceanside 2,429,530 share purchase warrants, exercisable at $0.08 per share until December 29, 2019 with a fair value of $159,491. The Company determined that the extension of the note’s maturity resulted in a debt extinguishment for accounting purposes since the fair value of the warrants granted was more than 10% of the recorded value of the original convertible note. As a result, Company recorded the fair value of the new note which approximates the original carrying value $680,260 and expensed the entire fair value of the warrants granted of $159,491 as part of loss on debt extinguishment. On August 4, 2017, the Company entered into an extension agreement with Oceanside to extend the maturity date of the Note to from August 4, 2017 to April 4, 2018. All other terms of the Note remain unchanged. In consideration for Oceanside’s agreement to extend the maturity date to August 4, 2018, the Company issued Oceanside 1,316,800 share purchase warrants, exercisable at $0.15 per share until August 3, 2022 with a fair value of $170,855. The Company determined that the extension of the note’s maturity resulted in a debt extinguishment for accounting purposes since the fair value of the warrants granted was more than 10% of the recorded value of the original convertible note. As a result, Company recorded the fair value of the new note which approximates the original carrying value $680,268 and expensed the entire fair value of the warrants granted of $170,855 as part of loss on debt extinguishment. In March 2018, the note was satisfied through the issuance of 4,589,506 shares of common stock. (b) In June and August of 2017, the Company issued unsecured convertible notes to Lucas Holdings in the amount of $220,500 in exchange cash of $200,000, original discount (OID) of $10,500 and prepaid interest of $10,000. The notes bear interest rate of 5% per annum, matures in February and March 2018, convertible to shares of common stock at a conversion price of $0.25 per share and $0.10 per share. As part of the issuance, the Company also issued warrants to purchase 330,000 shares of common stock at $0.30 per share and 50,000 shares of common stock with a fair value $12,500. As a result, the Company recorded a debt discount of $174,850 to account the OID and prepaid interest of $20,500 the relative fair value of the warrants of $40,180, the fair value of the common shares of $12,500 and the beneficial conversion feature of $101,670. The debt discount is being amortized to interest expense over the term of the note. As of December 31, 2017, outstanding balance of the note amounted to $220,500 and unamortized debt discount of $40,247. In March 2018, the entire notes were settled and converted to 1,543,000 shares of common stock. (c) On September 26, 2017, we entered into the Purchase Agreement, dated September 15, 2017, with Kodiak Capital Group, LLC (“Kodiak”). Under the Purchase Agreement, the Company may from time to time, in our discretion, sell shares of our common stock to Kodiak for aggregate gross proceeds of up to $2,000,000. Unless terminated earlier, Kodiak’s purchase commitment will automatically terminate on the earlier of the date on which Kodiak shall have purchased our shares pursuant to the Purchase Agreement for an aggregate purchase price of $2,000,000, or September 15, 2019. We have no obligation to sell any shares under the Purchase Agreement. From September 2017 through November 2017, the Company issued three convertible notes payable totaling $320,000 in exchange for cash of $200,000, original issue discount (OID) of $20,000 and settlement of financing expenses of $100,000 incurred by Kodiak pursuant to the agreement. The notes are unsecured, maturities starting in March 2018 through June 2018 and bear interest at a rate of 5% per annum. The notes are also convertible to shares of common stock at price of $0.25 per share or 70% of 10-day VWAP prior to conversion, whichever is lower. As part of the issuances, the Company also granted Kodiak a five year, fully vested warrants to purchase 2,000,000 shares of common stock exercisable at $0.15 and $0.20 per share. The Company determined that since the conversion floor of these notes had no limit to the conversion price, the Company could no longer determine if it had enough authorized shares to fulfil its conversion obligation. As such, pursuant to current accounting guidelines, the Company determined that the conversion feature of these three notes created a derivative with a fair value totaling $412,214 at the date of issuances. The Company accounted for the fair value of the derivative up to the face amount of the notes of $320,000 as a valuation discount to be amortized over the life of the note, and the excess of $92,214 being recorded as part of financing cost (see Note 8 further discussion). In addition, the Company also recorded the notes’ original issue discount totaling $20,000 and the $100,000 note payable issued to settle financing expenses related to Kodiak agreement as part of financing costs. As of December 31, 2017, outstanding balance of the note amounted to $320,000, accrued interest of $3,281 and unamortized debt discount of $191,740. (d) On December 8, 2017, the Company issued unsecured convertible notes to EMA Financial and Auctus Fund totaling $370,000 in exchange for cash of $323,000 and an original issue discount of $47,000. The notes bear interest rate of 8% per annum and will mature on December 8, 2018. The notes are also convertible to common shares at a conversion price equal to the lower of: (i) the closing sale price of the Common Stock on the Principal Market on the Trading Day immediately preceding the Closing Date, and (ii) 70% of either the lowest sale price for the Common Stock on the Principal Market during the ten (10) consecutive Trading Days including and immediately preceding the Conversion Date, or the closing bid price. The Company determined that since the conversion floor had no limit to the conversion price, that the Company could no longer determine if it had enough authorized shares to fulfil the conversion obligation. As such, pursuant to current accounting guidelines, the Company determined that the conversion feature of the note created a derivative with a fair value of $565,252 at the date of issuance. The Company accounted for the fair value of the derivative up to the face amount of the note of $370,000 as a valuation discount to be amortized over the life of the note, and the excess of $195,252 being recorded as part of financing cost. See Note 8 for discussion of derivative liability. In addition, the Company also recorded the notes’ original issue discount of $47,000 as part of financing costs. As part of the offering, the Company also granted EMA and Auctus a five-year warrant to acquire 2,400,000 shares of the Company’s common stock with an exercise price of $0.11 per share. A total of 1,200,000 of these warrants contained full ratchet reset provision in case a future offering at a price below $0.11 per share and included a fundamental transaction provision that could give rise to an obligation to pay cash to the warrant holder. As such, pursuant to current accounting guidelines, the Company determined that the warrant exercise price and fundamental transaction clause created a derivative with a fair value of $118,589 at the date of issuance. The Company accounted for the fair value of the derivative as part of finance cost. See Note 8 for discussion of derivative liability. As of December 31, 2017, outstanding balance of the notes amounted to $370,000, accrued interest of $1,866 and unamortized debt discount of $343,636. (e) On December 14, 2017, the Company issued an unsecured convertible note to PowerUp Lending in the amount of $105,000 in exchange for cash of $90,000 or an original issue discount of $15,000. The note matures on September 20, 2018 and bears interest rate of 8% per annum. The note is convertible to common shares at a conversion price equal to the Variable Conversion Price, which is 70% multiplied by the Market Price. “Market Price” means the lowest Trading Price (as defined below) for the Common Stock during the ten (10) Trading Day period ending on the latest complete Trading Day prior to the Conversion Date. The Company determined that since the conversion floor had no limit to the conversion price, that the Company could no longer determine if it had enough authorized shares to fulfil the conversion obligation. As such, pursuant to current accounting guidelines, the Company determined that the conversion feature of the note created a derivative with a fair value of $160,426 at the date of issuance. The Company accounted for the fair value of the derivative up to the face amount of the note of $105,000 as a valuation discount to be amortized over the life of the note, and the excess of $55,426 being recorded as part of financing cost. See Note 8 for discussion of derivative liability. In addition, the Company also recorded the note’s original issue discount of $15,000 as part of financing costs. As of December 31, 2017, outstanding balance of the note amounted to $105,000, accrued interest of $414 and unamortized debt discount of $99,822. |
Derivative Liability (Tables)
Derivative Liability (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018 | Dec. 31, 2017 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||
Schedule of Derivative Liability Using Weighted Average Black-Scholes-Merton Pricing Model | The derivative liabilities were valued using a probability weighted average Black-Scholes-Merton pricing model with the following average assumptions: September 30, 2018 Upon Issuance December 31, 2017 Stock Price $ 0.40 $ 0.10 $ 0.10 Exercise Price $ 0.13 $ 0.08 $ 0.06 Expected Life 4.23 2.33 1.26 Volatility 221 % 193 % 189 % Dividend Yield 0 % 0 % 0 % Risk-Free Interest Rate 1.89 % 1.18 % 1.72 % Fair Value $ 673,376 $ 301,739 $ 1,250,581 | Upon issuance and at December 31, 2017, the derivative liabilities were valued using a probability weighted average Black-Scholes-Merton pricing model with the following average assumptions: Upon Issuance December 31, 2017 Stock Price $ 0.09 $ 0.10 Exercise Price $ 0.06 $ 0.06 Expected Life 1.37 1.26 Volatility 183 % 189 % Dividend Yield 0 % 0 % Risk Free Interest Rate 1.56 % 1.72 % Fair Value $ 1,256,481 $ 1,250,581 |
Equity Transactions (Tables)
Equity Transactions (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018 | Dec. 31, 2017 | |
Equity [Abstract] | ||
Schedule of Stock Option Activity | A summary of option activity for the nine months ended September 30, 2018 is presented below. Shares Weighted Exercise Price Weighted Average Remaining Contractual Life (in Years) Aggregate Intrinsic Value Outstanding at December 31, 2017 21,840,953 $ 0.33 4.03 Granted 16,831,272 0.46 Exercised (487,620 ) 0.07 Forfeited or expired (4,200,000 ) 0.34 Outstanding at September 30, 2018 33,984,605 $ 0.26 3.06 $ 3,992,194 Exercisable at September 30, 2018 11,304,808 $ 0.35 $ 2,994,627 | A summary of option activity for the years ended December 31, 2017 and 2016 are presented below. Options Weighted- Average Exercise Price Weighted- Average Remaining Contractual Life (Years) Aggregate Intrinsic Value Outstanding at December 31, 2015 7,656,250 $ 0.66 4.87 $ — Granted 5,860,000 0.09 — — Forfeited (2,985,297 ) 0.93 — — Exercised — — — — Outstanding at December 31, 2016 10,530,953 $ 0.33 4.03 $ — Granted 13,210,000 0.17 — — Forfeited (1,900,000 ) 0.16 — — Exercised — — — — Outstanding at December 31, 2017 21,840,953 $ 0.26 2.09 $ 137,403 Vested December 31, 2017 12,286,613 $ 0.28 $ 44,030 Exercisable at December 31, 2017 9,357,620 $ 0.36 $ 24,166 |
Schedule of Fair Value Assumptions Using Black-Scholes Method | The fair value of share option award is estimated using the Black-Scholes method based on the following weighted-average assumptions: Nine Months Ended September 30, 2018 2017 Risk-free interest rate 2.73% - 2.99 % 1.77% - 1.93 % Average expected term (years) 5 years 5 years Expected volatility 184% -190 % 157 %-171 % Expected dividend yield - - | |
Schedule of Warrants Outstanding | The Company has the following warrants outstanding as of September 30, 2018 all of which are exercisable: Weighted- Weighted- Average Average Remaining Aggregate Exercise Contractual Intrinsic Warrants Price Life (Years) Value Outstanding at December 31, 2017 28,436,413 $ 0.13 2.79 $ - Granted 5,446,700 0.34 - - Forfeited (48,000 ) 0.10 - - Exercised (14,683,075 ) 0.09 - - Outstanding at September 30, 2018 19,152,038 $ 0.22 3.03 $ 3,827,516 Exercisable at September 30, 2018 19,152,038 $ 3,827,516 |
Stock Options (Tables)
Stock Options (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018 | Dec. 31, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||
Schedule of Stock Option Activity | A summary of option activity for the nine months ended September 30, 2018 is presented below. Shares Weighted Exercise Price Weighted Average Remaining Contractual Life (in Years) Aggregate Intrinsic Value Outstanding at December 31, 2017 21,840,953 $ 0.33 4.03 Granted 16,831,272 0.46 Exercised (487,620 ) 0.07 Forfeited or expired (4,200,000 ) 0.34 Outstanding at September 30, 2018 33,984,605 $ 0.26 3.06 $ 3,992,194 Exercisable at September 30, 2018 11,304,808 $ 0.35 $ 2,994,627 | A summary of option activity for the years ended December 31, 2017 and 2016 are presented below. Options Weighted- Average Exercise Price Weighted- Average Remaining Contractual Life (Years) Aggregate Intrinsic Value Outstanding at December 31, 2015 7,656,250 $ 0.66 4.87 $ — Granted 5,860,000 0.09 — — Forfeited (2,985,297 ) 0.93 — — Exercised — — — — Outstanding at December 31, 2016 10,530,953 $ 0.33 4.03 $ — Granted 13,210,000 0.17 — — Forfeited (1,900,000 ) 0.16 — — Exercised — — — — Outstanding at December 31, 2017 21,840,953 $ 0.26 2.09 $ 137,403 Vested December 31, 2017 12,286,613 $ 0.28 $ 44,030 Exercisable at December 31, 2017 9,357,620 $ 0.36 $ 24,166 |
Stock Warrants (Tables)
Stock Warrants (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Equity [Abstract] | |
Summary of Warrants | The Company has the following warrants as of December 31, 2017 and 2016: Warrants Weighted- Average Exercise Price Weighted- Average Remaining Contractual Life (Years) Aggregate Intrinsic Value Outstanding at December 31, 2015 10,967,879 $ 0.12 3.57 $ — Granted 7,487,385 0.08 — — Forfeited — — — Exercised — — — — Outstanding at December 31, 2016 18,455,264 $ 0.10 2.62 $ — Granted 9,981,149 0.19 — — Forfeited — — — — Exercised — — — — Outstanding at December 31, 2017 28,436,413 $ 0.13 2.79 $ 457,530 Vested December 31, 2017 28,436,413 $ 457,530 Exercisable at December 31, 2017 28,436,413 $ 457,530 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Schedule of Components of Deferred Tax Assets and Liabilities | Significant components of the Company’s deferred tax assets and liabilities are as follows: December 31, 2017 December 31, 2016 Net operating loss carry-forwards $ 3,464,000 $ 4,149,000 Share based compensation (704,000 ) (518,000 ) Non-cash interest and financing expenses (833,000 ) (343,000 ) Other temporary differences (108,000 (55,000 ) Less: Valuation allowance (1,819,000 ) (3,233,000 ) Deferred tax assets, net $ — $ — |
Schedule of Provision of Income Taxes | The items accounting for the difference between income taxes computed at the federal statutory rate and the provision for income taxes were as follows: December 31, 2017 December 31, 2016 Statutory federal income tax rate (34.0 %) (34.0 %) State taxes, net of federal benefit (5.8 %) (5.8 %) Non-deductible items (0.1 %) (0.1 %) Effect of change in tax rate 12 % — Change in valuation allowance 27.9 % 39.9 % 0.0 % 0.0 % |
Description of Business (Detail
Description of Business (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Net loss | $ 1,469,992 | $ 1,880,889 | $ 8,192,523 | $ 4,849,474 | $ 7,266,553 | $ 4,274,105 | |
Net cash used in operations | 2,801,405 | $ 1,174,534 | 1,676,737 | 1,604,013 | |||
Stockholders' deficit | 2,283,422 | 2,283,422 | 5,789,037 | $ 3,468,223 | $ 2,342,390 | ||
Cash | $ 2,801,405 | $ 2,801,405 | 10,560 | ||||
January 2018 Through March 2018 [Member] | |||||||
Proceeds from sale of debt and equity securities | $ 3,400,000 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details Narrative) 10Q - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Stockholders' deficit | $ 2,283,422 | $ 2,283,422 | $ 5,789,037 | $ 3,468,223 | $ 2,342,390 | ||
Net loss | 1,469,992 | $ 1,880,889 | 8,192,523 | $ 4,849,474 | 7,266,553 | $ 4,274,105 | |
Cash | $ 2,801,405 | $ 2,801,405 | $ 10,560 | ||||
Outstanding Options [Member] | |||||||
Antidilutive securities | 33,984,605 | 22,030,953 | 21,840,953 | 1,053,053 | |||
Outstanding Warrants [Member] | |||||||
Antidilutive securities | 19,152,038 | 24,461,413 | 28,436,413 | 18,455,264 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
Property and equipment of useful life | 5 years | |||
Impairment charges | ||||
Single Vendor [Member] | ||||
Concentration risk percentage | 20.70% | 18.10% | ||
Outstanding Options [Member] | ||||
Antidilutive securities | 33,984,605 | 22,030,953 | 21,840,953 | 1,053,053 |
Outstanding Warrants [Member] | ||||
Antidilutive securities | 19,152,038 | 24,461,413 | 28,436,413 | 18,455,264 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Schedule of Assumptions Used in Black-scholes Model to Options Issued (Details) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Summary Of Significant Accounting Policies [Line Items] | ||
Expected life in years | 4 years | 5 years |
Stock price volatility | 230.00% | 123.00% |
Risk free interest rate | 1.92% | 1.23% |
Expected dividends | 0.00% | 0.00% |
Forfeiture rate | 21.00% | 20.00% |
Minimum [Member] | ||
Summary Of Significant Accounting Policies [Line Items] | ||
Expected life in years | 2 years 6 months | 2 years 6 months |
Stock price volatility | 84.36% | 84.36% |
Risk free interest rate | 1.22% | 1.22% |
Maximum [Member] | ||
Summary Of Significant Accounting Policies [Line Items] | ||
Expected life in years | 5 years | 5 years |
Stock price volatility | 173.92% | 153.07% |
Risk free interest rate | 2.23% | 1.24% |
Property and Equipment (Details
Property and Equipment (Details Narrative) - USD ($) | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
Property, Plant and Equipment [Abstract] | ||||
Depreciation expense | $ 15,823 | $ 16,090 | $ 21,512 | $ 21,301 |
Property and Equipment - Schedu
Property and Equipment - Schedule of Property and Equipment (Details) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | $ 107,559 | $ 107,559 | $ 107,560 |
Less: accumulated depreciation | (92,828) | (77,005) | (55,494) |
Property and equipment, net | 14,731 | 30,554 | 52,066 |
Furniture and Fixtures [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | 56,890 | 56,890 | 56,890 |
Office Equipment [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | $ 50,669 | $ 50,669 | $ 50,670 |
Note Payable (Details Narrative
Note Payable (Details Narrative) 10Q - USD ($) | Jan. 29, 2018 | Mar. 20, 2017 | Mar. 21, 2015 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 |
Payment advanced by related party | $ 10,000 | ||||||
Notes payable | $ 845,000 | 125,000 | $ 226,300 | ||||
Fair value of common shares issued | $ 125,000 | $ 3,065,837 | $ 181,845 | ||||
Number of common stock shares issued upon conversion | 1,250,000 | 1,026,195 | |||||
DelMorgan Group LLC [Member] | |||||||
Payment advanced by related party | $ 125,000 | ||||||
Interest rate | 12.00% | ||||||
Third - Party Lender [Member] | Extension Agreement [Member] | |||||||
Maturity date | Mar. 21, 2018 |
Notes Payable (Details Narrativ
Notes Payable (Details Narrative) - USD ($) | Jan. 29, 2018 | Sep. 16, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 |
Debt Disclosure [Abstract] | ||||||||
Number of common stock shares issued upon conversion | 1,250,000 | 1,026,195 | ||||||
Fair value of common shares issued | $ 125,000 | $ 3,065,837 | $ 181,845 | |||||
Debt extinguishment | $ 10,057 | $ (1,074,602) | $ (424,331) | $ (423,028) | $ (977,201) | (977,203) | $ (455,975) | |
Debt discount amortized as interest expense | $ 48,942 |
Notes Payable - Schedule of Not
Notes Payable - Schedule of Notes Payable (Details) - USD ($) | Dec. 15, 2016 | Dec. 31, 2017 | Sep. 30, 2018 | Dec. 31, 2016 | ||
Total notes payable | $ 125,000 | $ 845,000 | $ 226,300 | |||
Debt discount | (48,942) | |||||
Total note payable, net | $ 125,000 | 177,358 | ||||
Note Payable 1 [Member] | ||||||
Note date | [1] | Mar. 21, 2015 | ||||
Maturity date | [1] | Mar. 20, 2018 | ||||
Interest rate | [1] | 12.00% | ||||
Original borrowing | [1] | $ 125,000 | ||||
Total notes payable | [1] | $ 125,000 | 125,000 | |||
Note Payable 2 [Member] | ||||||
Note date | [2] | Dec. 15, 2016 | ||||
Maturity date | May 31, 2017 | Jun. 15, 2017 | [2] | |||
Interest rate | [2] | 5.00% | ||||
Original borrowing | [2] | $ 101,300 | ||||
Total notes payable | [2] | $ 101,300 | ||||
[1] | On March 21, 2015, the Company issued a note payable to a third-party lender for the benefit of DelMorgan Group LLC ("DelMorgan"), financial consultant. The note is unsecured, bears interest rate of 12% per annum payable monthly beginning on April 20, 2015 and matured in March 2017. As of December 31, 2016, outstanding balance of the note amounted to $125,000. On March 20, 2017, the Company entered into an extension agreement with the third-party lender to extend the maturity date of the Note to March 20, 2018. All other terms of the Note remained unchanged and there was no additional compensation or incentive given. As of December 31, 2017, outstanding balance of the note amounted to $125,000. In January 2018, the note was satisfied through the issuance of 1,250,000 shares of common stock. | |||||
[2] | On December 15, 2016, the Company issued a note payable to a third-party creditor amounting to $101,300 in exchange for cash of $80,000, original issue discount of $8,800 and guaranteed interest of $12,500. The note was unsecured, bore an effective interest rate of 5% per annum and matured in May 2017. In addition, the Company also granted a three-year warrant to acquire 176,000 shares of the Company’s common stock with an exercise price of $0.25 per share, and 240,000 shares of the Company’s common stock. As a result, the Company recorded a debt discount totaling $53,659 to account for the origin original issue discount of $8,800, guaranteed interest of $12,500, the relative fair value of the warrants of $10,759 and fair value of the common shares of $21,600. The debt discount was amortized over the term of the note. As of December 31, 2016, outstanding balance of the note amounted to $101,300 and unamortized debt discount of $48,942. |
Notes Payable - Schedule of N_2
Notes Payable - Schedule of Notes Payable (Details) (Parenthetical) - USD ($) | Aug. 08, 2018 | Jan. 29, 2018 | Mar. 20, 2017 | Dec. 15, 2016 | Sep. 30, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Feb. 21, 2018 | Sep. 16, 2017 | May 22, 2017 | Mar. 21, 2015 | ||
Notes payable | $ 845,000 | $ 125,000 | $ 226,300 | ||||||||||
Number of common stock shares issued upon conversion | 1,250,000 | 1,026,195 | |||||||||||
Unamortized debt discount | $ 0 | 48,942 | |||||||||||
Number of warrant purchase shares | 500,000 | 2,000,000 | 275,000 | 100,000 | |||||||||
Warrant exercise price | $ 0.14 | $ 0.25 | $ 0.08 | $ 0.40 | |||||||||
Fair value of warrants | $ 1,074,602 | $ 1,074,602 | 455,975 | ||||||||||
Common Stock [Member] | |||||||||||||
Number of common stock shares issued upon conversion | 18,647,831 | 1,026,195 | |||||||||||
Warrant term | 5 years | ||||||||||||
Number of warrant purchase shares | 1,000,000 | ||||||||||||
Warrant exercise price | $ 0.14 | ||||||||||||
Fair value of warrants | |||||||||||||
DelMorgan Group LLC [Member] | |||||||||||||
Interest rate | 12.00% | ||||||||||||
Note Payable 1 [Member] | |||||||||||||
Interest rate | [1] | 12.00% | |||||||||||
Notes payable | [1] | $ 125,000 | 125,000 | ||||||||||
Maturity date | [1] | Mar. 20, 2018 | |||||||||||
Note Payable 1 [Member] | Extension Agreement [Member] | |||||||||||||
Notes payable | $ 125,000 | ||||||||||||
Maturity date | Mar. 20, 2018 | ||||||||||||
Note Payable 1 [Member] | Extension Agreement [Member] | January 2018 [Member] | |||||||||||||
Number of common stock shares issued upon conversion | 1,250,000 | ||||||||||||
Note Payable 1 [Member] | DelMorgan Group LLC [Member] | |||||||||||||
Interest rate | 12.00% | ||||||||||||
Notes payable | 125,000 | ||||||||||||
Note Payable 2 [Member] | |||||||||||||
Interest rate | [2] | 5.00% | |||||||||||
Notes payable | [2] | 101,300 | |||||||||||
Maturity date | May 31, 2017 | Jun. 15, 2017 | [2] | ||||||||||
Debt instrument note amount | $ 101,300 | ||||||||||||
Exchange for cash | 80,000 | ||||||||||||
Unamortized debt discount | 8,800 | $ 53,659 | $ 48,942 | ||||||||||
Accrued interest | $ 12,500 | 12,500 | |||||||||||
Effective interest rate | 5.00% | ||||||||||||
Warrant term | 3 years | ||||||||||||
Number of warrant purchase shares | 176,000 | ||||||||||||
Warrant exercise price | $ 0.25 | ||||||||||||
Fair value of warrants | 10,759 | ||||||||||||
Fair value of common stock | $ 21,600 | ||||||||||||
Note Payable 2 [Member] | Common Stock [Member] | |||||||||||||
Number of warrant purchase shares | 240,000 | ||||||||||||
[1] | On March 21, 2015, the Company issued a note payable to a third-party lender for the benefit of DelMorgan Group LLC ("DelMorgan"), financial consultant. The note is unsecured, bears interest rate of 12% per annum payable monthly beginning on April 20, 2015 and matured in March 2017. As of December 31, 2016, outstanding balance of the note amounted to $125,000. On March 20, 2017, the Company entered into an extension agreement with the third-party lender to extend the maturity date of the Note to March 20, 2018. All other terms of the Note remained unchanged and there was no additional compensation or incentive given. As of December 31, 2017, outstanding balance of the note amounted to $125,000. In January 2018, the note was satisfied through the issuance of 1,250,000 shares of common stock. | ||||||||||||
[2] | On December 15, 2016, the Company issued a note payable to a third-party creditor amounting to $101,300 in exchange for cash of $80,000, original issue discount of $8,800 and guaranteed interest of $12,500. The note was unsecured, bore an effective interest rate of 5% per annum and matured in May 2017. In addition, the Company also granted a three-year warrant to acquire 176,000 shares of the Company’s common stock with an exercise price of $0.25 per share, and 240,000 shares of the Company’s common stock. As a result, the Company recorded a debt discount totaling $53,659 to account for the origin original issue discount of $8,800, guaranteed interest of $12,500, the relative fair value of the warrants of $10,759 and fair value of the common shares of $21,600. The debt discount was amortized over the term of the note. As of December 31, 2016, outstanding balance of the note amounted to $101,300 and unamortized debt discount of $48,942. |
Notes Payable - Related Parti_3
Notes Payable - Related Parties (Details Narrative) 10Q - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
Interest expense, related parties | $ 58,916 | $ 59,434 | $ 175,846 | $ 176,364 | $ 235,798 | $ 232,076 |
Notes Payable [Member] | ||||||
Interest expense, related parties | $ 175,846 | $ 176,364 |
Notes Payable - Related Parti_4
Notes Payable - Related Parties - Schedule of Notes Payable to Related Parties (Details) 10Q - USD ($) | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | ||
Notes payable - related parties, net | $ 1,176,447 | $ 1,964,985 | $ 1,964,985 | |
Non-current | (824,218) | |||
Current | $ 352,229 | $ 1,964,985 | 1,964,985 | |
Note 1 [Member] | ||||
Issuance Date | Dec. 1, 2015 | [1] | Dec. 1, 2015 | |
Maturity Date | Feb. 8, 2021 | [1] | Aug. 1, 2018 | |
Interest Rate | 12.00% | [1] | 12.00% | |
Original Borrowing | $ 1,248,883 | [1] | $ 1,203,242 | |
Notes payable - related parties, net | $ 824,218 | $ 1,198,883 | 1,198,883 | |
Note 2 [Member] | ||||
Issuance Date | Dec. 1, 2015 | [2] | Dec. 1, 2015 | |
Maturity Date | Feb. 8, 2021 | [2] | Aug. 1, 2018 | |
Interest Rate | 12.00% | [2] | 12.00% | |
Original Borrowing | $ 189,000 | [2] | $ 189,000 | |
Notes payable - related parties, net | $ 189,000 | 189,000 | ||
Note 3 [Member] | ||||
Issuance Date | Dec. 1, 2015 | [3] | Dec. 1, 2015 | |
Maturity Date | Apr. 1, 2017 | [3] | Apr. 1, 2017 | |
Interest Rate | 12.00% | [3] | 12.00% | |
Original Borrowing | $ 111,901 | [3] | $ 111,901 | |
Notes payable - related parties, net | $ 111,901 | $ 111,901 | 111,901 | |
Note 4 [Member] | ||||
Issuance Date | Apr. 4, 2016 | [4] | Aug. 4, 2016 | |
Maturity Date | Dec. 4, 2018 | [4] | Dec. 4, 2018 | |
Interest Rate | 12.00% | [4] | 12.00% | |
Original Borrowing | $ 343,326 | [4] | $ 343,326 | |
Notes payable - related parties, net | $ 240,328 | $ 343,326 | 343,326 | |
Note 5 [Member] | ||||
Issuance Date | Apr. 4, 2016 | [5] | Aug. 4, 2016 | |
Maturity Date | Dec. 4, 2018 | [5] | Dec. 4, 2018 | |
Interest Rate | 12.00% | [5] | 12.00% | |
Original Borrowing | $ 121,875 | [5] | $ 121,875 | |
Notes payable - related parties, net | $ 121,875 | $ 121,875 | ||
[1] | On December 1, 2015, the Company issued a convertible note payable to Mr. Rory J. Cutaia, the Company’s majority stockholder and Chief Executive Officer (CEO), to consolidate all loans and advances made by Mr. Cutaia to the Company as of that date. The note bears interest rate of 12% per annum, secured by the Company’s assets and matured on August 1, 2018, as amended. Per the terms of the agreement, at Mr. Cutaia’s discretion, he may convert up to $374,665 of outstanding principal, plus accrued interest thereon, into shares of common stock at a conversion rate of $0.07 per share. As of December 31, 2017, total outstanding balance of the note amounted to $1,198,883. On August 8, 2018, we entered into an extension agreement with Mr. Cutaia to extend the maturity date of the note to February 8, 2021. All other terms of the note remain unchanged. In connection with the extension, we granted to Mr. Cutaia a three-year warrant to purchase up to 2,446,700 shares of Common Stock at a price of $0.49 per share with a fair value of $1,074,602. We determined that the extension of the note’s maturity date resulted in a debt extinguishment for accounting purposes because the fair value of the warrants granted was more than 10% of the original value of the note. As result, we recorded the fair value of the “new” note, which approximates the then-current carrying value of $1,198,833 of the then-current note and expensed the entire fair value of the warrants granted of $1,074,602 as part of debt extinguishment. On September 30, 2018, Mr. Cutaia converted the principal balance that was convertible ($374,665) into 5,352,357 shares of Restricted Common Stock at $0.07 per share. As of September 30, 2018, outstanding balance of the note amounted to $824,218. | |||
[2] | On December 1, 2015, the Company issued a convertible note with Mr. Cutaia in the amount of $189,000 representing a portion of Mr. Cutaia’s accrued salary for 2015. The note was unsecured, bears interest rate of 12% per annum, matured in August 1, 2018, as amended, and convertible to shares of common stock at a conversion price of $0.07 per share. As of December 31, 2017, outstanding balance of the note amounted to $189,000. On September 30, 2018, Mr. Cutaia converted the entire unpaid balance of $189,000 into 2,700,000 restricted shares of our Common Stock at $0.07 per share. | |||
[3] | On December 1, 2015, the Company issued a note payable to a former member of the Company’s Board of Directors, in the amount of $111,901 representing unpaid consulting fees as of November 30, 2015. The note is unsecured, bears interest rate of 12% per annum and matured in April 2017. As of September 30, 2018, and the date of this report, the note is past due. The Company is currently in negotiations with the note holder to settle the note payable. | |||
[4] | On April 4, 2016, the Company issued a convertible note to Mr. Cutaia, in the amount of $343,326, to consolidate all advances made by Mr. Cutaia to the Company from December 2015 through March 2016. The note bears interest rate of 12% per annum, secured by the Company’s assets and will mature on December 4, 2018, as amended. A total of 30% of the note principal or $102,998 can be converted to shares of common stock at a conversion price $0.07 per share. As of December 31, 2017, outstanding balance of the note amounted to $343,326. On September 30, 2018 Mr. Cutaia converted the 30% of the principal balance that was convertible ($102,998) into 1,471,397 restricted shares of our Common Stock at $0.07 per share. As of September 30, 2018, outstanding balance of the note amounted to $240,328. | |||
[5] | On April 4, 2016, the Company issued a convertible note payable to Mr. Cutaia in the amount of $121,875, representing his unpaid salary from December 2015 through March 2016. The note was unsecured, bears interest at the rate of 12% per annum, matures on December 4, 2018, as amended, and convertible to common stock at a conversion price of $0.07 per share. As of December 31, 2017, outstanding balance of the note amounted to $121,8750. For the period ended September 30, 2018 Mr. Cutaia converted $121,875 of debt into 1,741,071 shares of Restricted Common Stock. Total interest expense for notes payable to related parties was $175,846 and $176,364 for nine months ended September 30, 2018 and 2017, respectively. |
Notes Payable - Related Parti_5
Notes Payable - Related Parties - Schedule of Notes Payable to Related Parties (Details) 10Q (Parenthetical) - USD ($) | Aug. 08, 2018 | Jan. 29, 2018 | Mar. 20, 2017 | Dec. 15, 2016 | Apr. 04, 2016 | Dec. 01, 2015 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |||
Fair value of common shares issued | $ 125,000 | $ 3,065,837 | $ 181,845 | ||||||||||
Notes payable related party | $ 352,229 | $ 1,964,985 | $ 1,964,985 | ||||||||||
Common stock price per share | $ 0.50 | ||||||||||||
Fair value of warrants | $ 1,074,602 | $ 1,074,602 | $ 455,975 | ||||||||||
Debt converted into shares | 1,250,000 | 1,026,195 | |||||||||||
Outstanding amount | $ 824,218 | ||||||||||||
Note 1 [Member] | |||||||||||||
Debt interest rate | 12.00% | [1] | 12.00% | ||||||||||
Debt instruments maturity date | Feb. 8, 2021 | [1] | Aug. 1, 2018 | ||||||||||
Note 1 [Member] | Extension Agreement [Member] | |||||||||||||
Warrants issued | $ 2,446,700 | ||||||||||||
Common stock price per share | $ 0.49 | ||||||||||||
Fair value of warrants | $ 1,074,602 | ||||||||||||
Warrant granted percentage | 10.00% | ||||||||||||
Outstanding balance | $ 1,198,833 | ||||||||||||
Debt extinguishment | $ 1,074,602 | ||||||||||||
Note 1 [Member] | Extension Agreement [Member] | Restricted Common Stock [Member] | |||||||||||||
Debt conversion price per share | $ 0.07 | ||||||||||||
Debt converted into shares | 5,352,357 | ||||||||||||
Note 2 [Member] | |||||||||||||
Debt interest rate | 12.00% | [2] | 12.00% | ||||||||||
Outstanding balance | $ 189,000 | ||||||||||||
Debt instruments maturity date | Feb. 8, 2021 | [2] | Aug. 1, 2018 | ||||||||||
Note Payable 1 [Member] | |||||||||||||
Debt interest rate | [3] | 12.00% | |||||||||||
Debt instruments maturity date | [3] | Mar. 20, 2018 | |||||||||||
Note Payable 1 [Member] | Extension Agreement [Member] | |||||||||||||
Debt instruments maturity date | Mar. 20, 2018 | ||||||||||||
Note 3 [Member] | |||||||||||||
Debt interest rate | 12.00% | [4] | 12.00% | ||||||||||
Outstanding balance | $ 240,328 | ||||||||||||
Debt instruments maturity date | Apr. 1, 2017 | [4] | Apr. 1, 2017 | ||||||||||
Note Payable 2 [Member] | |||||||||||||
Debt interest rate | [5] | 5.00% | |||||||||||
Fair value of warrants | $ 10,759 | ||||||||||||
Debt instruments maturity date | May 31, 2017 | Jun. 15, 2017 | [5] | ||||||||||
Mr. Cutaia [Member] | Note 1 [Member] | |||||||||||||
Debt instrument, conversion percentage | 12.00% | ||||||||||||
Fair value of common shares issued | $ 374,665 | ||||||||||||
Debt conversion price per share | $ 0.07 | ||||||||||||
Notes payable related party | $ 1,198,883 | ||||||||||||
Mr. Cutaia [Member] | Note 2 [Member] | |||||||||||||
Debt conversion price per share | $ 0.07 | ||||||||||||
Debt interest rate | 12.00% | ||||||||||||
Outstanding balance | $ 189,000 | ||||||||||||
Mr. Cutaia [Member] | Note 2 [Member] | Restricted Common Stock [Member] | |||||||||||||
Common stock price per share | $ 0.07 | ||||||||||||
Outstanding balance | $ 189,000 | ||||||||||||
Debt converted into shares | 2,700,000 | ||||||||||||
Mr. Cutaia [Member] | Note 3 [Member] | |||||||||||||
Debt instrument, conversion percentage | 30.00% | 30.00% | |||||||||||
Fair value of common shares issued | $ 102,998 | ||||||||||||
Debt conversion price per share | $ 0.07 | ||||||||||||
Notes payable related party | $ 102,998 | ||||||||||||
Debt interest rate | 12.00% | ||||||||||||
Outstanding balance | $ 343,326 | $ 343,326 | |||||||||||
Debt instruments maturity date | Dec. 4, 2018 | ||||||||||||
Mr. Cutaia [Member] | Note 3 [Member] | Restricted Common Stock [Member] | |||||||||||||
Common stock price per share | $ 0.07 | ||||||||||||
Debt converted into shares | 1,471,397 | ||||||||||||
Mr. Cutaia [Member] | Note Payable 2 [Member] | |||||||||||||
Fair value of common shares issued | $ 121,875 | ||||||||||||
Debt conversion price per share | $ 0.07 | ||||||||||||
Notes payable related party | $ 121,875 | ||||||||||||
Debt interest rate | 12.00% | ||||||||||||
Outstanding balance | $ 1,218,750 | ||||||||||||
Debt converted into shares | 1,741,071 | ||||||||||||
Debt instruments maturity date | Dec. 4, 2018 | ||||||||||||
Former [Member] | Note Payable 1 [Member] | |||||||||||||
Debt interest rate | 12.00% | ||||||||||||
Outstanding balance | $ 111,901 | ||||||||||||
[1] | On December 1, 2015, the Company issued a convertible note payable to Mr. Rory J. Cutaia, the Company’s majority stockholder and Chief Executive Officer (CEO), to consolidate all loans and advances made by Mr. Cutaia to the Company as of that date. The note bears interest rate of 12% per annum, secured by the Company’s assets and matured on August 1, 2018, as amended. Per the terms of the agreement, at Mr. Cutaia’s discretion, he may convert up to $374,665 of outstanding principal, plus accrued interest thereon, into shares of common stock at a conversion rate of $0.07 per share. As of December 31, 2017, total outstanding balance of the note amounted to $1,198,883. On August 8, 2018, we entered into an extension agreement with Mr. Cutaia to extend the maturity date of the note to February 8, 2021. All other terms of the note remain unchanged. In connection with the extension, we granted to Mr. Cutaia a three-year warrant to purchase up to 2,446,700 shares of Common Stock at a price of $0.49 per share with a fair value of $1,074,602. We determined that the extension of the note’s maturity date resulted in a debt extinguishment for accounting purposes because the fair value of the warrants granted was more than 10% of the original value of the note. As result, we recorded the fair value of the “new” note, which approximates the then-current carrying value of $1,198,833 of the then-current note and expensed the entire fair value of the warrants granted of $1,074,602 as part of debt extinguishment. On September 30, 2018, Mr. Cutaia converted the principal balance that was convertible ($374,665) into 5,352,357 shares of Restricted Common Stock at $0.07 per share. As of September 30, 2018, outstanding balance of the note amounted to $824,218. | ||||||||||||
[2] | On December 1, 2015, the Company issued a convertible note with Mr. Cutaia in the amount of $189,000 representing a portion of Mr. Cutaia’s accrued salary for 2015. The note was unsecured, bears interest rate of 12% per annum, matured in August 1, 2018, as amended, and convertible to shares of common stock at a conversion price of $0.07 per share. As of December 31, 2017, outstanding balance of the note amounted to $189,000. On September 30, 2018, Mr. Cutaia converted the entire unpaid balance of $189,000 into 2,700,000 restricted shares of our Common Stock at $0.07 per share. | ||||||||||||
[3] | On March 21, 2015, the Company issued a note payable to a third-party lender for the benefit of DelMorgan Group LLC ("DelMorgan"), financial consultant. The note is unsecured, bears interest rate of 12% per annum payable monthly beginning on April 20, 2015 and matured in March 2017. As of December 31, 2016, outstanding balance of the note amounted to $125,000. On March 20, 2017, the Company entered into an extension agreement with the third-party lender to extend the maturity date of the Note to March 20, 2018. All other terms of the Note remained unchanged and there was no additional compensation or incentive given. As of December 31, 2017, outstanding balance of the note amounted to $125,000. In January 2018, the note was satisfied through the issuance of 1,250,000 shares of common stock. | ||||||||||||
[4] | On December 1, 2015, the Company issued a note payable to a former member of the Company’s Board of Directors, in the amount of $111,901 representing unpaid consulting fees as of November 30, 2015. The note is unsecured, bears interest rate of 12% per annum and matured in April 2017. As of September 30, 2018, and the date of this report, the note is past due. The Company is currently in negotiations with the note holder to settle the note payable. | ||||||||||||
[5] | On December 15, 2016, the Company issued a note payable to a third-party creditor amounting to $101,300 in exchange for cash of $80,000, original issue discount of $8,800 and guaranteed interest of $12,500. The note was unsecured, bore an effective interest rate of 5% per annum and matured in May 2017. In addition, the Company also granted a three-year warrant to acquire 176,000 shares of the Company’s common stock with an exercise price of $0.25 per share, and 240,000 shares of the Company’s common stock. As a result, the Company recorded a debt discount totaling $53,659 to account for the origin original issue discount of $8,800, guaranteed interest of $12,500, the relative fair value of the warrants of $10,759 and fair value of the common shares of $21,600. The debt discount was amortized over the term of the note. As of December 31, 2016, outstanding balance of the note amounted to $101,300 and unamortized debt discount of $48,942. |
Notes Payable - Related Parti_6
Notes Payable - Related Parties (Details Narrative) - USD ($) | Aug. 08, 2018 | Jan. 29, 2018 | Sep. 16, 2017 | Aug. 04, 2017 | May 04, 2017 | Apr. 04, 2016 | Dec. 02, 2015 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Feb. 21, 2018 | Aug. 31, 2017 | May 31, 2017 | May 22, 2017 |
Fair value of common shares issued | $ 125,000 | $ 3,065,837 | $ 181,845 | ||||||||||||||
Number of warrant purchase shares | 275,000 | 500,000 | 500,000 | 2,000,000 | 100,000 | ||||||||||||
Warrant exercise price | $ 0.08 | $ 0.14 | $ 0.14 | $ 0.25 | $ 0.40 | ||||||||||||
Note payable | 125,000 | $ 177,358 | |||||||||||||||
Fair value of warrants | $ 1,074,602 | 1,074,602 | 455,975 | ||||||||||||||
Additional borrowing | 80,000 | ||||||||||||||||
Debt extinguishment | $ 10,057 | (1,074,602) | $ (424,331) | (423,028) | (977,201) | (977,203) | (455,975) | ||||||||||
Interest expense for note | 58,916 | $ 205,038 | 321,637 | $ 375,862 | 555,094 | 340,580 | |||||||||||
Interest payable | $ 38,041 | $ 38,041 | 248,120 | 118,137 | |||||||||||||
Rory Cutaia [Member] | |||||||||||||||||
Number of warrant purchase shares | 2,452,325 | ||||||||||||||||
Warrant exercise price | $ 0.07 | ||||||||||||||||
Rory Cutaia [Member] | Extension Agreement [Member] | |||||||||||||||||
Interest rate | 10.00% | ||||||||||||||||
Notes payable - related parties, outstanding principal | $ 1,198,883 | 343,326 | |||||||||||||||
Maturity date description | August 4, 2017 to December 4, 2018 | April 1, 2017 to August 1, 2018 | |||||||||||||||
Warrant life of year | 3 years | ||||||||||||||||
Number of warrant purchase shares | 1,755,192 | 3,084,349 | 3,084,349 | ||||||||||||||
Warrant exercise price | $ 0.15 | $ 0.355 | $ 0.36 | $ 0.15 | |||||||||||||
Note payable | $ 343,326 | 1,198,883 | |||||||||||||||
Fair value of warrants | $ 172,456 | $ 517,291 | |||||||||||||||
Accrued interest | 45,783 | ||||||||||||||||
Number of warrants issued | 1,329,157 | ||||||||||||||||
Warrant percentage | 10.00% | ||||||||||||||||
Debt extinguishment | $ 172,456 | ||||||||||||||||
Convertible Note Payable [Member] | |||||||||||||||||
Interest rate | 8.00% | 8.00% | |||||||||||||||
Maturity date | Jan. 31, 2019 | ||||||||||||||||
Notes payable - related parties, outstanding principal | $ 150,000 | $ 150,000 | |||||||||||||||
Maturity date description | February 2018 through January 2019 | ||||||||||||||||
Accrued interest | $ 161,475 | $ 161,475 | |||||||||||||||
Debt extinguishment | $ 1,067,242 | ||||||||||||||||
Convertible Note Payable [Member] | Rory Cutaia [Member] | |||||||||||||||||
Interest rate | 12.00% | ||||||||||||||||
Maturity date | Apr. 1, 2017 | ||||||||||||||||
Fair value of common shares issued | $ 374,665 | ||||||||||||||||
Debt conversion price per share | $ 0.07 | ||||||||||||||||
Notes payable - related parties, outstanding principal | 1,198,883 | ||||||||||||||||
Convertible Note [Member] | Rory Cutaia [Member] | |||||||||||||||||
Interest rate | 12.00% | 12.00% | |||||||||||||||
Maturity date | Aug. 4, 2017 | Apr. 30, 2017 | |||||||||||||||
Debt conversion price per share | $ 0.07 | $ 0.07 | |||||||||||||||
Notes payable - related parties, outstanding principal | $ 189,000 | 189,000 | 189,000 | ||||||||||||||
Additional borrowing | $ 343,326 | ||||||||||||||||
Debt instrument, conversion percentage | 30.00% | ||||||||||||||||
Unsecured Note [Member] | Board of Directors [Member] | |||||||||||||||||
Interest rate | 12.00% | ||||||||||||||||
Maturity date | Apr. 30, 2017 | ||||||||||||||||
Notes payable - related parties, outstanding principal | 111,901 | 111,901 | |||||||||||||||
Unpaid fees earned | $ 111,901 | ||||||||||||||||
Accrued interest | 27,997 | 14,569 | |||||||||||||||
Convertible Note One [Member] | Rory Cutaia [Member] | |||||||||||||||||
Notes payable - related parties, outstanding principal | 343,326 | 343,326 | |||||||||||||||
Accrued interest | 45,783 | 31,040 | |||||||||||||||
Unsecured Convertible Note Payable [Member] | Rory Cutaia [Member] | |||||||||||||||||
Interest rate | 12.00% | ||||||||||||||||
Maturity date | Aug. 4, 2017 | ||||||||||||||||
Debt conversion price per share | $ 0.07 | ||||||||||||||||
Notes payable - related parties, outstanding principal | $ 121,875 | 121,875 | 121,875 | ||||||||||||||
Accrued interest | 25,644 | $ 11,019 | |||||||||||||||
Note Payable [Member] | |||||||||||||||||
Interest expense for note | 232,192 | ||||||||||||||||
Interest payable | $ 196,607 |
Notes Payable - Related Parti_7
Notes Payable - Related Parties - Schedule of Notes Payable to Related Parties (Details) - USD ($) | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | ||
Notes payable - related parties, net | $ 1,176,447 | $ 1,964,985 | $ 1,964,985 | |
Note 1 [Member] | ||||
Issuance Date | Dec. 1, 2015 | [1] | Dec. 1, 2015 | |
Maturity Date | Feb. 8, 2021 | [1] | Aug. 1, 2018 | |
Interest Rate | 12.00% | [1] | 12.00% | |
Original Borrowing | $ 1,248,883 | [1] | $ 1,203,242 | |
Notes payable - related parties, net | $ 824,218 | $ 1,198,883 | 1,198,883 | |
Note 2 [Member] | ||||
Issuance Date | Dec. 1, 2015 | [2] | Dec. 1, 2015 | |
Maturity Date | Feb. 8, 2021 | [2] | Aug. 1, 2018 | |
Interest Rate | 12.00% | [2] | 12.00% | |
Original Borrowing | $ 189,000 | [2] | $ 189,000 | |
Notes payable - related parties, net | $ 189,000 | 189,000 | ||
Note 3 [Member] | ||||
Issuance Date | Dec. 1, 2015 | [3] | Dec. 1, 2015 | |
Maturity Date | Apr. 1, 2017 | [3] | Apr. 1, 2017 | |
Interest Rate | 12.00% | [3] | 12.00% | |
Original Borrowing | $ 111,901 | [3] | $ 111,901 | |
Notes payable - related parties, net | $ 111,901 | $ 111,901 | 111,901 | |
Note 4 [Member] | ||||
Issuance Date | Apr. 4, 2016 | [4] | Aug. 4, 2016 | |
Maturity Date | Dec. 4, 2018 | [4] | Dec. 4, 2018 | |
Interest Rate | 12.00% | [4] | 12.00% | |
Original Borrowing | $ 343,326 | [4] | $ 343,326 | |
Notes payable - related parties, net | $ 240,328 | $ 343,326 | 343,326 | |
Note 5 [Member] | ||||
Issuance Date | Apr. 4, 2016 | [5] | Aug. 4, 2016 | |
Maturity Date | Dec. 4, 2018 | [5] | Dec. 4, 2018 | |
Interest Rate | 12.00% | [5] | 12.00% | |
Original Borrowing | $ 121,875 | [5] | $ 121,875 | |
Notes payable - related parties, net | $ 121,875 | $ 121,875 | ||
[1] | On December 1, 2015, the Company issued a convertible note payable to Mr. Rory J. Cutaia, the Company’s majority stockholder and Chief Executive Officer (CEO), to consolidate all loans and advances made by Mr. Cutaia to the Company as of that date. The note bears interest rate of 12% per annum, secured by the Company’s assets and matured on August 1, 2018, as amended. Per the terms of the agreement, at Mr. Cutaia’s discretion, he may convert up to $374,665 of outstanding principal, plus accrued interest thereon, into shares of common stock at a conversion rate of $0.07 per share. As of December 31, 2017, total outstanding balance of the note amounted to $1,198,883. On August 8, 2018, we entered into an extension agreement with Mr. Cutaia to extend the maturity date of the note to February 8, 2021. All other terms of the note remain unchanged. In connection with the extension, we granted to Mr. Cutaia a three-year warrant to purchase up to 2,446,700 shares of Common Stock at a price of $0.49 per share with a fair value of $1,074,602. We determined that the extension of the note’s maturity date resulted in a debt extinguishment for accounting purposes because the fair value of the warrants granted was more than 10% of the original value of the note. As result, we recorded the fair value of the “new” note, which approximates the then-current carrying value of $1,198,833 of the then-current note and expensed the entire fair value of the warrants granted of $1,074,602 as part of debt extinguishment. On September 30, 2018, Mr. Cutaia converted the principal balance that was convertible ($374,665) into 5,352,357 shares of Restricted Common Stock at $0.07 per share. As of September 30, 2018, outstanding balance of the note amounted to $824,218. | |||
[2] | On December 1, 2015, the Company issued a convertible note with Mr. Cutaia in the amount of $189,000 representing a portion of Mr. Cutaia’s accrued salary for 2015. The note was unsecured, bears interest rate of 12% per annum, matured in August 1, 2018, as amended, and convertible to shares of common stock at a conversion price of $0.07 per share. As of December 31, 2017, outstanding balance of the note amounted to $189,000. On September 30, 2018, Mr. Cutaia converted the entire unpaid balance of $189,000 into 2,700,000 restricted shares of our Common Stock at $0.07 per share. | |||
[3] | On December 1, 2015, the Company issued a note payable to a former member of the Company’s Board of Directors, in the amount of $111,901 representing unpaid consulting fees as of November 30, 2015. The note is unsecured, bears interest rate of 12% per annum and matured in April 2017. As of September 30, 2018, and the date of this report, the note is past due. The Company is currently in negotiations with the note holder to settle the note payable. | |||
[4] | On April 4, 2016, the Company issued a convertible note to Mr. Cutaia, in the amount of $343,326, to consolidate all advances made by Mr. Cutaia to the Company from December 2015 through March 2016. The note bears interest rate of 12% per annum, secured by the Company’s assets and will mature on December 4, 2018, as amended. A total of 30% of the note principal or $102,998 can be converted to shares of common stock at a conversion price $0.07 per share. As of December 31, 2017, outstanding balance of the note amounted to $343,326. On September 30, 2018 Mr. Cutaia converted the 30% of the principal balance that was convertible ($102,998) into 1,471,397 restricted shares of our Common Stock at $0.07 per share. As of September 30, 2018, outstanding balance of the note amounted to $240,328. | |||
[5] | On April 4, 2016, the Company issued a convertible note payable to Mr. Cutaia in the amount of $121,875, representing his unpaid salary from December 2015 through March 2016. The note was unsecured, bears interest at the rate of 12% per annum, matures on December 4, 2018, as amended, and convertible to common stock at a conversion price of $0.07 per share. As of December 31, 2017, outstanding balance of the note amounted to $121,8750. For the period ended September 30, 2018 Mr. Cutaia converted $121,875 of debt into 1,741,071 shares of Restricted Common Stock. Total interest expense for notes payable to related parties was $175,846 and $176,364 for nine months ended September 30, 2018 and 2017, respectively. |
Convertible Notes Payable (Deta
Convertible Notes Payable (Details Narrative) 10Q | Sep. 16, 2017USD ($)$ / sharesshares | Sep. 30, 2018USD ($)$ / sharesshares | Sep. 30, 2017USD ($) | Sep. 30, 2018USD ($)Number / Integer$ / sharesshares | Sep. 30, 2017USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Feb. 21, 2018$ / sharesshares | May 22, 2017$ / sharesshares |
Notes payable | $ 845,000 | $ 845,000 | $ 125,000 | $ 226,300 | |||||
Unamortized debt discount | 48,942 | ||||||||
Fair value of derivatives | 48,961 | 48,961 | |||||||
Financing costs | $ 171,739 | 643,481 | |||||||
Number of warrant purchase shares | shares | 275,000 | 500,000 | 500,000 | 2,000,000 | 100,000 | ||||
Exercise price of warrants | $ / shares | $ 0.08 | $ 0.14 | $ 0.14 | $ 0.25 | $ 0.40 | ||||
Loss on debt extinguishment | $ 10,057 | $ (1,074,602) | $ (424,331) | $ (423,028) | (977,201) | (977,203) | (455,975) | ||
Interest expenses | $ 747,623 | ||||||||
Common Stock [Member] | |||||||||
Warrant term | 5 years | ||||||||
Number of warrant purchase shares | shares | 1,000,000 | 1,000,000 | |||||||
Exercise price of warrants | $ / shares | $ 0.14 | $ 0.14 | |||||||
Convertible Note Payable [Member] | |||||||||
Outstanding balance of debt | $ 150,000 | $ 150,000 | $ 1,695,768 | $ 1,695,768 | |||||
Interest rate | 8.00% | 8.00% | |||||||
Maturity date, description | February 2018 through January 2019 | ||||||||
Notes payable | $ 1,695,768 | $ 1,695,768 | |||||||
Unamortized debt discount | 675,453 | 675,453 | |||||||
Exchange for cash | 130,000 | $ 130,000 | |||||||
Maturity date | Jan. 31, 2019 | ||||||||
Debt conversion rate | 70.00% | ||||||||
Debt instrument trading day | Number / Integer | 10 | ||||||||
Fair value of derivatives | 252,778 | $ 252,778 | |||||||
Debt instrument face amount | 150,000 | 150,000 | |||||||
Financing costs | 102,778 | ||||||||
Original issue discount | 20,000 | ||||||||
Payment of cash for settled outstanding debt | $ 845,000 | ||||||||
Number of common stock issued to settle remaining convertible notes payable | shares | 6,133,006 | ||||||||
Number of common stock issued to settle remaining convertible notes payable, value | $ 2,151,297 | ||||||||
Settlement of outstanding convertible notes | 900,760 | 900,760 | |||||||
Accrued interest | 161,475 | 161,475 | |||||||
Aggregate value of accrued interest | $ 1,062,235 | 1,062,235 | |||||||
Loss on debt extinguishment | 1,067,242 | ||||||||
Interest expenses | $ 144,541 | $ 40,481 |
Convertible Notes Payable - Sch
Convertible Notes Payable - Schedule of Convertible Notes Payable (Details) 10Q - USD ($) | 6 Months Ended | 9 Months Ended | 12 Months Ended | ||||
Jun. 30, 2018 | Sep. 30, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | ||||
Debt discount | $ (48,942) | ||||||
Note 1 [Member] | |||||||
Note Date | Dec. 1, 2015 | [1] | Dec. 1, 2015 | ||||
Maturity Date | Feb. 8, 2021 | [1] | Aug. 1, 2018 | ||||
Interest Rate | 12.00% | [1] | 12.00% | ||||
Original Borrowing | $ 1,248,883 | [1] | $ 1,203,242 | ||||
Note 2 [Member] | |||||||
Note Date | Dec. 1, 2015 | [2] | Dec. 1, 2015 | ||||
Maturity Date | Feb. 8, 2021 | [2] | Aug. 1, 2018 | ||||
Interest Rate | 12.00% | [2] | 12.00% | ||||
Original Borrowing | $ 189,000 | [2] | $ 189,000 | ||||
Note 3 [Member] | |||||||
Note Date | Dec. 1, 2015 | [3] | Dec. 1, 2015 | ||||
Maturity Date | Apr. 1, 2017 | [3] | Apr. 1, 2017 | ||||
Interest Rate | 12.00% | [3] | 12.00% | ||||
Original Borrowing | $ 111,901 | [3] | $ 111,901 | ||||
Note 4 [Member] | |||||||
Note Date | Apr. 4, 2016 | [4] | Aug. 4, 2016 | ||||
Maturity Date | Dec. 4, 2018 | [4] | Dec. 4, 2018 | ||||
Interest Rate | 12.00% | [4] | 12.00% | ||||
Original Borrowing | $ 343,326 | [4] | $ 343,326 | ||||
Note 5 [Member] | |||||||
Note Date | Apr. 4, 2016 | [5] | Aug. 4, 2016 | ||||
Maturity Date | Dec. 4, 2018 | [5] | Dec. 4, 2018 | ||||
Interest Rate | 12.00% | [5] | 12.00% | ||||
Original Borrowing | $ 121,875 | [5] | $ 121,875 | ||||
Convertible Notes Payable [Member] | |||||||
Total notes payable | 1,695,768 | ||||||
Debt discount | (675,453) | ||||||
Total notes payable, net of debt discount | $ 1,020,315 | ||||||
Convertible Notes Payable [Member] | Note 1 [Member] | |||||||
Note Date | Apr. 3, 2016 | Apr. 3, 2016 | Apr. 3, 2016 | [6] | |||
Maturity Date | Apr. 4, 2018 | Apr. 4, 2018 | Apr. 4, 2018 | [6] | |||
Interest Rate | 12.00% | 12.00% | 12.00% | [6] | |||
Original Borrowing | $ 600,000 | $ 600,000 | $ 600,000 | [6] | |||
Total notes payable | $ 680,268 | [6] | 680,268 | [6] | |||
Convertible Notes Payable [Member] | Note 2 [Member] | |||||||
Note Date Description | June and August 2017 | June and August 2017 | June and August 2017 | [7] | |||
Interest Rate | 5.00% | 5.00% | 5.00% | [7] | |||
Original Borrowing | $ 220,500 | $ 220,500 | $ 220,500 | [7] | |||
Maturity Date, Description | February and March 2018 | February and March 2018 | February and March 2018 | [7] | |||
Total notes payable | $ 220,500 | [7] | [7] | ||||
Convertible Notes Payable [Member] | Note 3 [Member] | |||||||
Note Date Description | Various | Various | Various | [8] | |||
Interest Rate | 5.00% | 5.00% | 5.00% | [8] | |||
Original Borrowing | $ 320,000 | $ 320,000 | $ 320,000 | [8] | |||
Maturity Date, Description | Various | Various | Various | [8] | |||
Total notes payable | $ 320,000 | [8] | [8] | ||||
Convertible Notes Payable [Member] | Note 4 [Member] | |||||||
Note Date | Dec. 8, 2017 | Dec. 8, 2017 | Dec. 8, 2017 | [9],[10] | |||
Maturity Date | Dec. 8, 2018 | Dec. 8, 2018 | Dec. 8, 2018 | [9],[10] | |||
Interest Rate | 8.00% | 8.00% | 8.00% | [9],[10] | |||
Original Borrowing | $ 370,000 | $ 370,000 | $ 370,000 | [9],[10] | |||
Total notes payable | $ 370,000 | [9],[10] | [10] | ||||
Convertible Notes Payable [Member] | Note 5 [Member] | |||||||
Note Date | Dec. 13, 2017 | Dec. 13, 2017 | Dec. 13, 2017 | [11] | |||
Maturity Date | Sep. 20, 2018 | Sep. 20, 2018 | Sep. 20, 2018 | [11] | |||
Interest Rate | 8.00% | 8.00% | 8.00% | [11] | |||
Original Borrowing | $ 105,000 | $ 105,000 | $ 105,000 | [11] | |||
Total notes payable | $ 105,000 | [11] | [11] | ||||
[1] | On December 1, 2015, the Company issued a convertible note payable to Mr. Rory J. Cutaia, the Company’s majority stockholder and Chief Executive Officer (CEO), to consolidate all loans and advances made by Mr. Cutaia to the Company as of that date. The note bears interest rate of 12% per annum, secured by the Company’s assets and matured on August 1, 2018, as amended. Per the terms of the agreement, at Mr. Cutaia’s discretion, he may convert up to $374,665 of outstanding principal, plus accrued interest thereon, into shares of common stock at a conversion rate of $0.07 per share. As of December 31, 2017, total outstanding balance of the note amounted to $1,198,883. On August 8, 2018, we entered into an extension agreement with Mr. Cutaia to extend the maturity date of the note to February 8, 2021. All other terms of the note remain unchanged. In connection with the extension, we granted to Mr. Cutaia a three-year warrant to purchase up to 2,446,700 shares of Common Stock at a price of $0.49 per share with a fair value of $1,074,602. We determined that the extension of the note’s maturity date resulted in a debt extinguishment for accounting purposes because the fair value of the warrants granted was more than 10% of the original value of the note. As result, we recorded the fair value of the “new” note, which approximates the then-current carrying value of $1,198,833 of the then-current note and expensed the entire fair value of the warrants granted of $1,074,602 as part of debt extinguishment. On September 30, 2018, Mr. Cutaia converted the principal balance that was convertible ($374,665) into 5,352,357 shares of Restricted Common Stock at $0.07 per share. As of September 30, 2018, outstanding balance of the note amounted to $824,218. | ||||||
[2] | On December 1, 2015, the Company issued a convertible note with Mr. Cutaia in the amount of $189,000 representing a portion of Mr. Cutaia’s accrued salary for 2015. The note was unsecured, bears interest rate of 12% per annum, matured in August 1, 2018, as amended, and convertible to shares of common stock at a conversion price of $0.07 per share. As of December 31, 2017, outstanding balance of the note amounted to $189,000. On September 30, 2018, Mr. Cutaia converted the entire unpaid balance of $189,000 into 2,700,000 restricted shares of our Common Stock at $0.07 per share. | ||||||
[3] | On December 1, 2015, the Company issued a note payable to a former member of the Company’s Board of Directors, in the amount of $111,901 representing unpaid consulting fees as of November 30, 2015. The note is unsecured, bears interest rate of 12% per annum and matured in April 2017. As of September 30, 2018, and the date of this report, the note is past due. The Company is currently in negotiations with the note holder to settle the note payable. | ||||||
[4] | On April 4, 2016, the Company issued a convertible note to Mr. Cutaia, in the amount of $343,326, to consolidate all advances made by Mr. Cutaia to the Company from December 2015 through March 2016. The note bears interest rate of 12% per annum, secured by the Company’s assets and will mature on December 4, 2018, as amended. A total of 30% of the note principal or $102,998 can be converted to shares of common stock at a conversion price $0.07 per share. As of December 31, 2017, outstanding balance of the note amounted to $343,326. On September 30, 2018 Mr. Cutaia converted the 30% of the principal balance that was convertible ($102,998) into 1,471,397 restricted shares of our Common Stock at $0.07 per share. As of September 30, 2018, outstanding balance of the note amounted to $240,328. | ||||||
[5] | On April 4, 2016, the Company issued a convertible note payable to Mr. Cutaia in the amount of $121,875, representing his unpaid salary from December 2015 through March 2016. The note was unsecured, bears interest at the rate of 12% per annum, matures on December 4, 2018, as amended, and convertible to common stock at a conversion price of $0.07 per share. As of December 31, 2017, outstanding balance of the note amounted to $121,8750. For the period ended September 30, 2018 Mr. Cutaia converted $121,875 of debt into 1,741,071 shares of Restricted Common Stock. Total interest expense for notes payable to related parties was $175,846 and $176,364 for nine months ended September 30, 2018 and 2017, respectively. | ||||||
[6] | On April 3, 2016, the Company issued a convertible note payable to Oceanside, a third party-lender, in the amount of $680,268 to consolidate all notes payable and accrued interest due to Oceanside as of that date. This note superseded and replaced all previous notes and liabilities due to Oceanside from fiscals 2014 and 2015. The note is unsecured, bears interest at the rate of 12% per annum, compounded annually and matured on December 30, 2016. In consideration, the Company granted Oceanside the right to convert up to 30% of the amount of such note into shares of the Company’s common stock at $0.07 per share and issued 2,429,530 warrants to purchase share of common stock at $0.07 per share until April 4, 2019. The Company determined that the issuance of the warrants and the conversion feature that arose as part of the issuance of note, resulted in a debt extinguishment for accounting purposes since the fair value of the warrants granted amounted to $164,344, which was more than 10% of the original value of the convertible note. As a result, on April 3, 2016, Company recorded the fair value of the new note which approximates the original carrying value $680,268 and expensed the entire fair value of the warrants granted of $164,344 as part of loss on debt extinguishment. On December 30, 2016, the Company entered into an extension agreement with Oceanside to extend the maturity date of the Note from December 30, 2016 to August 4, 2017. All other terms of the Note remain unchanged. In consideration for Oceanside’s agreement to extend the maturity date to August 4, 2017, the Company issued Oceanside 2,429,530 share purchase warrants, exercisable at $0.08 per share until December 29, 2019 with a fair value of $159,491. The Company determined that the extension of the note’s maturity resulted in a debt extinguishment for accounting purposes since the fair value of the warrants granted was more than 10% of the recorded value of the original convertible note. As a result, Company recorded the fair value of the new note which approximates the original carrying value $680,260 and expensed the entire fair value of the warrants granted of $159,491 as part of loss on debt extinguishment. On August 4, 2017, the Company entered into an extension agreement with Oceanside to extend the maturity date of the Note to from August 4, 2017 to April 4, 2018. All other terms of the Note remain unchanged. In consideration for Oceanside’s agreement to extend the maturity date to August 4, 2018, the Company issued Oceanside 1,316,800 share purchase warrants, exercisable at $0.15 per share until August 3, 2022 with a fair value of $170,855. The Company determined that the extension of the note’s maturity resulted in a debt extinguishment for accounting purposes since the fair value of the warrants granted was more than 10% of the recorded value of the original convertible note. As a result, Company recorded the fair value of the new note which approximates the original carrying value $680,268 and expensed the entire fair value of the warrants granted of $170,855 as part of loss on debt extinguishment. In March 2018, the note was satisfied through the issuance of 4,589,506 shares of common stock. | ||||||
[7] | In June and August of 2017, the Company issued unsecured convertible notes to Lucas Holdings in the amount of $220,500 in exchange cash of $200,000, original discount (OID) of $10,500 and prepaid interest of $10,000. The notes bear interest rate of 5% per annum, matures in February and March 2018, convertible to shares of common stock at a conversion price of $0.25 per share and $0.10 per share. As part of the issuance, the Company also issued warrants to purchase 330,000 shares of common stock at $0.30 per share and 50,000 shares of common stock with a fair value $12,500. As a result, the Company recorded a debt discount of $174,850 to account the OID and prepaid interest of $20,500 the relative fair value of the warrants of $40,180, the fair value of the common shares of $12,500 and the beneficial conversion feature of $101,670. The debt discount is being amortized to interest expense over the term of the note. As of December 31, 2017, outstanding balance of the note amounted to $220,500 and unamortized debt discount of $40,247. In March 2018, the entire notes were settled and converted to 1,543,000 shares of common stock. | ||||||
[8] | On September 26, 2017, we entered into the Purchase Agreement, dated September 15, 2017, with Kodiak Capital Group, LLC (“Kodiak”). Under the Purchase Agreement, the Company may from time to time, in our discretion, sell shares of our common stock to Kodiak for aggregate gross proceeds of up to $2,000,000. Unless terminated earlier, Kodiak’s purchase commitment will automatically terminate on the earlier of the date on which Kodiak shall have purchased our shares pursuant to the Purchase Agreement for an aggregate purchase price of $2,000,000, or September 15, 2019. We have no obligation to sell any shares under the Purchase Agreement. From September 2017 through November 2017, the Company issued three convertible notes payable totaling $320,000 in exchange for cash of $200,000, original issue discount (OID) of $20,000 and settlement of financing expenses of $100,000 incurred by Kodiak pursuant to the agreement. The notes are unsecured, maturities starting in March 2018 through June 2018 and bear interest at a rate of 5% per annum. The notes are also convertible to shares of common stock at price of $0.25 per share or 70% of 10-day VWAP prior to conversion, whichever is lower. As part of the issuances, the Company also granted Kodiak a five year, fully vested warrants to purchase 2,000,000 shares of common stock exercisable at $0.15 and $0.20 per share. The Company determined that since the conversion floor of these notes had no limit to the conversion price, the Company could no longer determine if it had enough authorized shares to fulfil its conversion obligation. As such, pursuant to current accounting guidelines, the Company determined that the conversion feature of these three notes created a derivative with a fair value totaling $412,214 at the date of issuances. The Company accounted for the fair value of the derivative up to the face amount of the notes of $320,000 as a valuation discount to be amortized over the life of the note, and the excess of $92,214 being recorded as part of financing cost (see Note 8 further discussion). In addition, the Company also recorded the notes’ original issue discount totaling $20,000 and the $100,000 note payable issued to settle financing expenses related to Kodiak agreement as part of financing costs. As of December 31, 2017, outstanding balance of the note amounted to $320,000, accrued interest of $3,281 and unamortized debt discount of $191,740. | ||||||
[9] | On December 8, 2017, the Company issued unsecured convertible notes to EMA Financial and Auctus Fund totaling $370,000 in exchange for cash of $323,000 and an original issue discount of $47,000. The notes bear interest rate of 8% per annum and will mature on December 8, 2018. The notes are also convertible to common shares at a conversion price equal to the lower of: (i) the closing sale price of the Common Stock on the Principal Market on the Trading Day immediately preceding the Closing Date, and (ii) 70% of either the lowest sale price for the Common Stock on the Principal Market during the ten (10) consecutive Trading Days including and immediately preceding the Conversion Date, or the closing bid price. The Company determined that since the conversion floor had no limit to the conversion price, that the Company could no longer determine if it had enough authorized shares to fulfil the conversion obligation. As such, pursuant to current accounting guidelines, the Company determined that the conversion feature of the note created a derivative with a fair value of $565,252 at the date of issuance. The Company accounted for the fair value of the derivative up to the face amount of the note of $370,000 as a valuation discount to be amortized over the life of the note, and the excess of $195,252 being recorded as part of financing cost. See Note 8 for discussion of derivative liability. In addition, the Company also recorded the notes original issue discount of $47,000 as part of financing costs. As part of the offering, the Company also granted EMA and Auctus a five-year warrant to acquire 2,400,000 shares of the Company's common stock with an exercise price of $0.11 per share. A total of 1,200,000 of these warrants contained full ratchet reset provision in case a future offering at a price below $0.11 per share and included a fundamental transaction provision that could give rise to an obligation to pay cash to the warrant holder. As such, pursuant to current accounting guidelines, the Company determined that the warrant exercise price and fundamental transaction clause created a derivative with a fair value of $118,589 at the date of issuance. The Company accounted for the fair value of the derivative as part of finance cost. See Note 8 for discussion of derivative liability. As of December 31, 2017, outstanding balance of the notes amounted to $370,000, accrued interest of $1,866 and unamortized debt discount of $343,636. | ||||||
[10] | On March 21, 2015, the Company issued a note payable to a third-party lender for the benefit of DelMorgan Group LLC ("DelMorgan"), financial consultant. The note is unsecured, bears interest rate of 12% per annum payable monthly beginning on April 20, 2015 and matured in March 2017. As of December 31, 2016, outstanding balance of the note amounted to $125,000. On March 20, 2017, the Company entered into an extension agreement with the third-party lender to extend the maturity date of the Note to March 20, 2018. All other terms of the Note remained unchanged and there was no additional compensation or incentive given. As of December 31, 2017, outstanding balance of the note amounted to $125,000. In January 2018, the note was satisfied through the issuance of 1,250,000 shares of common stock. | ||||||
[11] | On December 14, 2017, the Company issued an unsecured convertible note to PowerUp Lending in the amount of $105,000 in exchange for cash of $90,000 or an original issue discount of $15,000. The note matures on September 20, 2018 and bears interest rate of 8% per annum. The note is convertible to common shares at a conversion price equal to the Variable Conversion Price, which is 70% multiplied by the Market Price. "Market Price" means the lowest Trading Price (as defined below) for the Common Stock during the ten (10) Trading Day period ending on the latest complete Trading Day prior to the Conversion Date. The Company determined that since the conversion floor had no limit to the conversion price, that the Company could no longer determine if it had enough authorized shares to fulfil the conversion obligation. As such, pursuant to current accounting guidelines, the Company determined that the conversion feature of the note created a derivative with a fair value of $160,426 at the date of issuance. The Company accounted for the fair value of the derivative up to the face amount of the note of $105,000 as a valuation discount to be amortized over the life of the note, and the excess of $55,426 being recorded as part of financing cost. See Note 8 for discussion of derivative liability. In addition, the Company also recorded the note's original issue discount of $15,000 as part of financing costs. As of December 31, 2017, outstanding balance of the note amounted to $105,000, accrued interest of $414 and unamortized debt discount of $99,822. During the year ended December 31, 2017, the Company amortized to interest expense a total of $294,397 related to the notes' debt discount and accrued interest of $143,145 pursuant to the terms of the note agreement. |
Convertible Notes Payable - S_2
Convertible Notes Payable - Schedule of Convertible Notes Payable (Details) - USD ($) | 6 Months Ended | 9 Months Ended | 12 Months Ended | ||||
Jun. 30, 2018 | Sep. 30, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | ||||
Debt discount | $ (48,942) | ||||||
Note 1 [Member] | |||||||
Note Date | Dec. 1, 2015 | [1] | Dec. 1, 2015 | ||||
Maturity Date | Feb. 8, 2021 | [1] | Aug. 1, 2018 | ||||
Interest Rate | 12.00% | [1] | 12.00% | ||||
Original Borrowing | $ 1,248,883 | [1] | $ 1,203,242 | ||||
Note 2 [Member] | |||||||
Note Date | Dec. 1, 2015 | [2] | Dec. 1, 2015 | ||||
Maturity Date | Feb. 8, 2021 | [2] | Aug. 1, 2018 | ||||
Interest Rate | 12.00% | [2] | 12.00% | ||||
Original Borrowing | $ 189,000 | [2] | $ 189,000 | ||||
Note 3 [Member] | |||||||
Note Date | Dec. 1, 2015 | [3] | Dec. 1, 2015 | ||||
Maturity Date | Apr. 1, 2017 | [3] | Apr. 1, 2017 | ||||
Interest Rate | 12.00% | [3] | 12.00% | ||||
Original Borrowing | $ 111,901 | [3] | $ 111,901 | ||||
Note 4 [Member] | |||||||
Note Date | Apr. 4, 2016 | [4] | Aug. 4, 2016 | ||||
Maturity Date | Dec. 4, 2018 | [4] | Dec. 4, 2018 | ||||
Interest Rate | 12.00% | [4] | 12.00% | ||||
Original Borrowing | $ 343,326 | [4] | $ 343,326 | ||||
Note 5 [Member] | |||||||
Note Date | Apr. 4, 2016 | [5] | Aug. 4, 2016 | ||||
Maturity Date | Dec. 4, 2018 | [5] | Dec. 4, 2018 | ||||
Interest Rate | 12.00% | [5] | 12.00% | ||||
Original Borrowing | $ 121,875 | [5] | $ 121,875 | ||||
Convertible Notes Payable [Member] | |||||||
Total notes payable | 1,695,768 | ||||||
Debt discount | (675,453) | ||||||
Total notes payable, net of debt discount | $ 1,020,315 | ||||||
Convertible Notes Payable [Member] | Note 1 [Member] | |||||||
Note Date | Apr. 3, 2016 | Apr. 3, 2016 | Apr. 3, 2016 | [6] | |||
Maturity Date | Apr. 4, 2018 | Apr. 4, 2018 | Apr. 4, 2018 | [6] | |||
Interest Rate | 12.00% | 12.00% | 12.00% | [6] | |||
Original Borrowing | $ 600,000 | $ 600,000 | $ 600,000 | [6] | |||
Total notes payable | $ 680,268 | [6] | 680,268 | [6] | |||
Convertible Notes Payable [Member] | Note 2 [Member] | |||||||
Note Date Description | June and August 2017 | June and August 2017 | June and August 2017 | [7] | |||
Maturity Date, Description | February and March 2018 | February and March 2018 | February and March 2018 | [7] | |||
Interest Rate | 5.00% | 5.00% | 5.00% | [7] | |||
Original Borrowing | $ 220,500 | $ 220,500 | $ 220,500 | [7] | |||
Total notes payable | $ 220,500 | [7] | [7] | ||||
Convertible Notes Payable [Member] | Note 3 [Member] | |||||||
Note Date Description | Various | Various | Various | [8] | |||
Maturity Date, Description | Various | Various | Various | [8] | |||
Interest Rate | 5.00% | 5.00% | 5.00% | [8] | |||
Original Borrowing | $ 320,000 | $ 320,000 | $ 320,000 | [8] | |||
Total notes payable | $ 320,000 | [8] | [8] | ||||
Convertible Notes Payable [Member] | Note 4 [Member] | |||||||
Note Date | Dec. 8, 2017 | Dec. 8, 2017 | Dec. 8, 2017 | [9],[10] | |||
Maturity Date | Dec. 8, 2018 | Dec. 8, 2018 | Dec. 8, 2018 | [9],[10] | |||
Interest Rate | 8.00% | 8.00% | 8.00% | [9],[10] | |||
Original Borrowing | $ 370,000 | $ 370,000 | $ 370,000 | [9],[10] | |||
Total notes payable | $ 370,000 | [9],[10] | [10] | ||||
Convertible Notes Payable [Member] | Note 5 [Member] | |||||||
Note Date | Dec. 13, 2017 | Dec. 13, 2017 | Dec. 13, 2017 | [11] | |||
Maturity Date | Sep. 20, 2018 | Sep. 20, 2018 | Sep. 20, 2018 | [11] | |||
Interest Rate | 8.00% | 8.00% | 8.00% | [11] | |||
Original Borrowing | $ 105,000 | $ 105,000 | $ 105,000 | [11] | |||
Total notes payable | $ 105,000 | [11] | [11] | ||||
[1] | On December 1, 2015, the Company issued a convertible note payable to Mr. Rory J. Cutaia, the Company’s majority stockholder and Chief Executive Officer (CEO), to consolidate all loans and advances made by Mr. Cutaia to the Company as of that date. The note bears interest rate of 12% per annum, secured by the Company’s assets and matured on August 1, 2018, as amended. Per the terms of the agreement, at Mr. Cutaia’s discretion, he may convert up to $374,665 of outstanding principal, plus accrued interest thereon, into shares of common stock at a conversion rate of $0.07 per share. As of December 31, 2017, total outstanding balance of the note amounted to $1,198,883. On August 8, 2018, we entered into an extension agreement with Mr. Cutaia to extend the maturity date of the note to February 8, 2021. All other terms of the note remain unchanged. In connection with the extension, we granted to Mr. Cutaia a three-year warrant to purchase up to 2,446,700 shares of Common Stock at a price of $0.49 per share with a fair value of $1,074,602. We determined that the extension of the note’s maturity date resulted in a debt extinguishment for accounting purposes because the fair value of the warrants granted was more than 10% of the original value of the note. As result, we recorded the fair value of the “new” note, which approximates the then-current carrying value of $1,198,833 of the then-current note and expensed the entire fair value of the warrants granted of $1,074,602 as part of debt extinguishment. On September 30, 2018, Mr. Cutaia converted the principal balance that was convertible ($374,665) into 5,352,357 shares of Restricted Common Stock at $0.07 per share. As of September 30, 2018, outstanding balance of the note amounted to $824,218. | ||||||
[2] | On December 1, 2015, the Company issued a convertible note with Mr. Cutaia in the amount of $189,000 representing a portion of Mr. Cutaia’s accrued salary for 2015. The note was unsecured, bears interest rate of 12% per annum, matured in August 1, 2018, as amended, and convertible to shares of common stock at a conversion price of $0.07 per share. As of December 31, 2017, outstanding balance of the note amounted to $189,000. On September 30, 2018, Mr. Cutaia converted the entire unpaid balance of $189,000 into 2,700,000 restricted shares of our Common Stock at $0.07 per share. | ||||||
[3] | On December 1, 2015, the Company issued a note payable to a former member of the Company’s Board of Directors, in the amount of $111,901 representing unpaid consulting fees as of November 30, 2015. The note is unsecured, bears interest rate of 12% per annum and matured in April 2017. As of September 30, 2018, and the date of this report, the note is past due. The Company is currently in negotiations with the note holder to settle the note payable. | ||||||
[4] | On April 4, 2016, the Company issued a convertible note to Mr. Cutaia, in the amount of $343,326, to consolidate all advances made by Mr. Cutaia to the Company from December 2015 through March 2016. The note bears interest rate of 12% per annum, secured by the Company’s assets and will mature on December 4, 2018, as amended. A total of 30% of the note principal or $102,998 can be converted to shares of common stock at a conversion price $0.07 per share. As of December 31, 2017, outstanding balance of the note amounted to $343,326. On September 30, 2018 Mr. Cutaia converted the 30% of the principal balance that was convertible ($102,998) into 1,471,397 restricted shares of our Common Stock at $0.07 per share. As of September 30, 2018, outstanding balance of the note amounted to $240,328. | ||||||
[5] | On April 4, 2016, the Company issued a convertible note payable to Mr. Cutaia in the amount of $121,875, representing his unpaid salary from December 2015 through March 2016. The note was unsecured, bears interest at the rate of 12% per annum, matures on December 4, 2018, as amended, and convertible to common stock at a conversion price of $0.07 per share. As of December 31, 2017, outstanding balance of the note amounted to $121,8750. For the period ended September 30, 2018 Mr. Cutaia converted $121,875 of debt into 1,741,071 shares of Restricted Common Stock. Total interest expense for notes payable to related parties was $175,846 and $176,364 for nine months ended September 30, 2018 and 2017, respectively. | ||||||
[6] | On April 3, 2016, the Company issued a convertible note payable to Oceanside, a third party-lender, in the amount of $680,268 to consolidate all notes payable and accrued interest due to Oceanside as of that date. This note superseded and replaced all previous notes and liabilities due to Oceanside from fiscals 2014 and 2015. The note is unsecured, bears interest at the rate of 12% per annum, compounded annually and matured on December 30, 2016. In consideration, the Company granted Oceanside the right to convert up to 30% of the amount of such note into shares of the Company’s common stock at $0.07 per share and issued 2,429,530 warrants to purchase share of common stock at $0.07 per share until April 4, 2019. The Company determined that the issuance of the warrants and the conversion feature that arose as part of the issuance of note, resulted in a debt extinguishment for accounting purposes since the fair value of the warrants granted amounted to $164,344, which was more than 10% of the original value of the convertible note. As a result, on April 3, 2016, Company recorded the fair value of the new note which approximates the original carrying value $680,268 and expensed the entire fair value of the warrants granted of $164,344 as part of loss on debt extinguishment. On December 30, 2016, the Company entered into an extension agreement with Oceanside to extend the maturity date of the Note from December 30, 2016 to August 4, 2017. All other terms of the Note remain unchanged. In consideration for Oceanside’s agreement to extend the maturity date to August 4, 2017, the Company issued Oceanside 2,429,530 share purchase warrants, exercisable at $0.08 per share until December 29, 2019 with a fair value of $159,491. The Company determined that the extension of the note’s maturity resulted in a debt extinguishment for accounting purposes since the fair value of the warrants granted was more than 10% of the recorded value of the original convertible note. As a result, Company recorded the fair value of the new note which approximates the original carrying value $680,260 and expensed the entire fair value of the warrants granted of $159,491 as part of loss on debt extinguishment. On August 4, 2017, the Company entered into an extension agreement with Oceanside to extend the maturity date of the Note to from August 4, 2017 to April 4, 2018. All other terms of the Note remain unchanged. In consideration for Oceanside’s agreement to extend the maturity date to August 4, 2018, the Company issued Oceanside 1,316,800 share purchase warrants, exercisable at $0.15 per share until August 3, 2022 with a fair value of $170,855. The Company determined that the extension of the note’s maturity resulted in a debt extinguishment for accounting purposes since the fair value of the warrants granted was more than 10% of the recorded value of the original convertible note. As a result, Company recorded the fair value of the new note which approximates the original carrying value $680,268 and expensed the entire fair value of the warrants granted of $170,855 as part of loss on debt extinguishment. In March 2018, the note was satisfied through the issuance of 4,589,506 shares of common stock. | ||||||
[7] | In June and August of 2017, the Company issued unsecured convertible notes to Lucas Holdings in the amount of $220,500 in exchange cash of $200,000, original discount (OID) of $10,500 and prepaid interest of $10,000. The notes bear interest rate of 5% per annum, matures in February and March 2018, convertible to shares of common stock at a conversion price of $0.25 per share and $0.10 per share. As part of the issuance, the Company also issued warrants to purchase 330,000 shares of common stock at $0.30 per share and 50,000 shares of common stock with a fair value $12,500. As a result, the Company recorded a debt discount of $174,850 to account the OID and prepaid interest of $20,500 the relative fair value of the warrants of $40,180, the fair value of the common shares of $12,500 and the beneficial conversion feature of $101,670. The debt discount is being amortized to interest expense over the term of the note. As of December 31, 2017, outstanding balance of the note amounted to $220,500 and unamortized debt discount of $40,247. In March 2018, the entire notes were settled and converted to 1,543,000 shares of common stock. | ||||||
[8] | On September 26, 2017, we entered into the Purchase Agreement, dated September 15, 2017, with Kodiak Capital Group, LLC (“Kodiak”). Under the Purchase Agreement, the Company may from time to time, in our discretion, sell shares of our common stock to Kodiak for aggregate gross proceeds of up to $2,000,000. Unless terminated earlier, Kodiak’s purchase commitment will automatically terminate on the earlier of the date on which Kodiak shall have purchased our shares pursuant to the Purchase Agreement for an aggregate purchase price of $2,000,000, or September 15, 2019. We have no obligation to sell any shares under the Purchase Agreement. From September 2017 through November 2017, the Company issued three convertible notes payable totaling $320,000 in exchange for cash of $200,000, original issue discount (OID) of $20,000 and settlement of financing expenses of $100,000 incurred by Kodiak pursuant to the agreement. The notes are unsecured, maturities starting in March 2018 through June 2018 and bear interest at a rate of 5% per annum. The notes are also convertible to shares of common stock at price of $0.25 per share or 70% of 10-day VWAP prior to conversion, whichever is lower. As part of the issuances, the Company also granted Kodiak a five year, fully vested warrants to purchase 2,000,000 shares of common stock exercisable at $0.15 and $0.20 per share. The Company determined that since the conversion floor of these notes had no limit to the conversion price, the Company could no longer determine if it had enough authorized shares to fulfil its conversion obligation. As such, pursuant to current accounting guidelines, the Company determined that the conversion feature of these three notes created a derivative with a fair value totaling $412,214 at the date of issuances. The Company accounted for the fair value of the derivative up to the face amount of the notes of $320,000 as a valuation discount to be amortized over the life of the note, and the excess of $92,214 being recorded as part of financing cost (see Note 8 further discussion). In addition, the Company also recorded the notes’ original issue discount totaling $20,000 and the $100,000 note payable issued to settle financing expenses related to Kodiak agreement as part of financing costs. As of December 31, 2017, outstanding balance of the note amounted to $320,000, accrued interest of $3,281 and unamortized debt discount of $191,740. | ||||||
[9] | On December 8, 2017, the Company issued unsecured convertible notes to EMA Financial and Auctus Fund totaling $370,000 in exchange for cash of $323,000 and an original issue discount of $47,000. The notes bear interest rate of 8% per annum and will mature on December 8, 2018. The notes are also convertible to common shares at a conversion price equal to the lower of: (i) the closing sale price of the Common Stock on the Principal Market on the Trading Day immediately preceding the Closing Date, and (ii) 70% of either the lowest sale price for the Common Stock on the Principal Market during the ten (10) consecutive Trading Days including and immediately preceding the Conversion Date, or the closing bid price. The Company determined that since the conversion floor had no limit to the conversion price, that the Company could no longer determine if it had enough authorized shares to fulfil the conversion obligation. As such, pursuant to current accounting guidelines, the Company determined that the conversion feature of the note created a derivative with a fair value of $565,252 at the date of issuance. The Company accounted for the fair value of the derivative up to the face amount of the note of $370,000 as a valuation discount to be amortized over the life of the note, and the excess of $195,252 being recorded as part of financing cost. See Note 8 for discussion of derivative liability. In addition, the Company also recorded the notes original issue discount of $47,000 as part of financing costs. As part of the offering, the Company also granted EMA and Auctus a five-year warrant to acquire 2,400,000 shares of the Company's common stock with an exercise price of $0.11 per share. A total of 1,200,000 of these warrants contained full ratchet reset provision in case a future offering at a price below $0.11 per share and included a fundamental transaction provision that could give rise to an obligation to pay cash to the warrant holder. As such, pursuant to current accounting guidelines, the Company determined that the warrant exercise price and fundamental transaction clause created a derivative with a fair value of $118,589 at the date of issuance. The Company accounted for the fair value of the derivative as part of finance cost. See Note 8 for discussion of derivative liability. As of December 31, 2017, outstanding balance of the notes amounted to $370,000, accrued interest of $1,866 and unamortized debt discount of $343,636. | ||||||
[10] | On March 21, 2015, the Company issued a note payable to a third-party lender for the benefit of DelMorgan Group LLC ("DelMorgan"), financial consultant. The note is unsecured, bears interest rate of 12% per annum payable monthly beginning on April 20, 2015 and matured in March 2017. As of December 31, 2016, outstanding balance of the note amounted to $125,000. On March 20, 2017, the Company entered into an extension agreement with the third-party lender to extend the maturity date of the Note to March 20, 2018. All other terms of the Note remained unchanged and there was no additional compensation or incentive given. As of December 31, 2017, outstanding balance of the note amounted to $125,000. In January 2018, the note was satisfied through the issuance of 1,250,000 shares of common stock. | ||||||
[11] | On December 14, 2017, the Company issued an unsecured convertible note to PowerUp Lending in the amount of $105,000 in exchange for cash of $90,000 or an original issue discount of $15,000. The note matures on September 20, 2018 and bears interest rate of 8% per annum. The note is convertible to common shares at a conversion price equal to the Variable Conversion Price, which is 70% multiplied by the Market Price. "Market Price" means the lowest Trading Price (as defined below) for the Common Stock during the ten (10) Trading Day period ending on the latest complete Trading Day prior to the Conversion Date. The Company determined that since the conversion floor had no limit to the conversion price, that the Company could no longer determine if it had enough authorized shares to fulfil the conversion obligation. As such, pursuant to current accounting guidelines, the Company determined that the conversion feature of the note created a derivative with a fair value of $160,426 at the date of issuance. The Company accounted for the fair value of the derivative up to the face amount of the note of $105,000 as a valuation discount to be amortized over the life of the note, and the excess of $55,426 being recorded as part of financing cost. See Note 8 for discussion of derivative liability. In addition, the Company also recorded the note's original issue discount of $15,000 as part of financing costs. As of December 31, 2017, outstanding balance of the note amounted to $105,000, accrued interest of $414 and unamortized debt discount of $99,822. During the year ended December 31, 2017, the Company amortized to interest expense a total of $294,397 related to the notes' debt discount and accrued interest of $143,145 pursuant to the terms of the note agreement. |
Convertible Notes Payable - S_3
Convertible Notes Payable - Schedule of Convertible Notes Payable (Details) (Parenthetical) - USD ($) | Aug. 08, 2018 | Jan. 29, 2018 | Dec. 14, 2017 | Dec. 08, 2017 | Sep. 26, 2017 | Sep. 16, 2017 | Aug. 04, 2017 | Dec. 30, 2016 | Apr. 03, 2016 | Sep. 30, 2017 | Aug. 31, 2017 | Jun. 30, 2017 | Sep. 30, 2018 | Nov. 30, 2017 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Feb. 21, 2018 | May 22, 2017 |
Number of warrant purchase shares | 275,000 | 500,000 | 500,000 | 2,000,000 | 100,000 | ||||||||||||||||
Fair value of warrants | $ 1,074,602 | $ 1,074,602 | $ 455,975 | ||||||||||||||||||
Debt extinguishment | $ 10,057 | $ (1,074,602) | $ (424,331) | $ (423,028) | $ (977,201) | $ (977,203) | (455,975) | ||||||||||||||
Warrant exercise price per share | $ 0.08 | $ 0.14 | $ 0.14 | $ 0.25 | $ 0.40 | ||||||||||||||||
Number of common stock shares issued upon conversion | 1,250,000 | 1,026,195 | |||||||||||||||||||
Amortization of debt discount | $ 48,942 | ||||||||||||||||||||
Proceeds from sale of common stock | $ 2,978,500 | 470,000 | 796,000 | 1,524,030 | |||||||||||||||||
Fair value of derivatives | $ 48,961 | 48,961 | |||||||||||||||||||
Financing costs | 171,739 | 643,481 | |||||||||||||||||||
Amortization of interest expenses | $ 81,959 | 747,623 | $ 174,981 | 418,339 | 398,594 | ||||||||||||||||
Convertible Note Payable [Member] | |||||||||||||||||||||
Outstanding balance of debt | $ 150,000 | $ 150,000 | $ 1,695,768 | $ 1,695,768 | |||||||||||||||||
Interest rate | 8.00% | 8.00% | |||||||||||||||||||
Maturity date | Jan. 31, 2019 | ||||||||||||||||||||
Debt extinguishment | $ 1,067,242 | ||||||||||||||||||||
Maturity date, description | February 2018 through January 2019 | ||||||||||||||||||||
Exchange for cash | $ 130,000 | $ 130,000 | |||||||||||||||||||
Original issue discount | 20,000 | ||||||||||||||||||||
Fair value of derivatives | 252,778 | 252,778 | |||||||||||||||||||
Financing costs | 102,778 | ||||||||||||||||||||
Accrued interest | $ 161,475 | $ 161,475 | |||||||||||||||||||
Oceanside Strategies, Inc [Member] | Extension Agreement [Member] | |||||||||||||||||||||
Outstanding balance of debt | $ 680,268 | $ 680,260 | |||||||||||||||||||
Maturity date | Aug. 4, 2018 | Aug. 4, 2017 | |||||||||||||||||||
Number of warrant purchase shares | 1,316,800 | 2,429,530 | |||||||||||||||||||
Fair value of warrants | $ 170,855 | $ 159,491 | |||||||||||||||||||
Debt extinguishment | $ 170,855 | $ 159,491 | |||||||||||||||||||
Maturity date, description | August 4, 2017 to April 4, 2018 | December 30, 2016 to August 4, 2017 | |||||||||||||||||||
Warrant exercise price per share | $ 0.15 | $ 0.08 | |||||||||||||||||||
Oceanside Strategies, Inc [Member] | Extension Agreement [Member] | March 2018 [Member] | |||||||||||||||||||||
Number of common stock shares issued upon conversion | 4,589,506 | ||||||||||||||||||||
Oceanside Strategies, Inc [Member] | Convertible Note Payable [Member] | |||||||||||||||||||||
Outstanding balance of debt | $ 680,268 | ||||||||||||||||||||
Interest rate | 12.00% | ||||||||||||||||||||
Maturity date | Dec. 30, 2016 | ||||||||||||||||||||
Debt conversion percentage of amount | 30.00% | ||||||||||||||||||||
Debt conversion price per share | $ 0.07 | ||||||||||||||||||||
Number of warrant purchase shares | 2,429,530 | ||||||||||||||||||||
Fair value of warrants | $ 164,344 | ||||||||||||||||||||
Debt extinguishment | $ 164,344 | ||||||||||||||||||||
Lucas Holdings [Member] | Convertible Note [Member] | |||||||||||||||||||||
Outstanding balance of debt | $ 220,500 | $ 220,500 | $ 220,500 | ||||||||||||||||||
Interest rate | 5.00% | 5.00% | |||||||||||||||||||
Debt conversion price per share | $ 0.10 | $ 0.25 | |||||||||||||||||||
Number of warrant purchase shares | 50,000 | 330,000 | |||||||||||||||||||
Fair value of warrants | $ 12,500 | 40,180 | |||||||||||||||||||
Maturity date, description | February and March 2018 | February and March 2018 | |||||||||||||||||||
Warrant exercise price per share | $ 0.30 | ||||||||||||||||||||
Exchange for cash | $ 200,000 | $ 200,000 | |||||||||||||||||||
Original issue discount | 10,500 | 10,500 | |||||||||||||||||||
Prepaid interest | $ 10,000 | $ 10,000 | 20,500 | ||||||||||||||||||
Amortization of debt discount | 174,850 | ||||||||||||||||||||
Fair value of common shares | 12,500 | ||||||||||||||||||||
Beneficial conversion feature | 101,670 | ||||||||||||||||||||
Unamortized balance | $ 40,247 | ||||||||||||||||||||
Lucas Holdings [Member] | Convertible Note [Member] | March 2018 [Member] | |||||||||||||||||||||
Number of common stock shares issued upon conversion | 1,543,000 | ||||||||||||||||||||
Kodiak Capital Group, LLC [Member] | Purchase Agreement [Member] | |||||||||||||||||||||
Outstanding balance of debt | $ 320,000 | ||||||||||||||||||||
Debt conversion percentage of amount | 80.00% | ||||||||||||||||||||
Number of warrant purchase shares | 4,000,000 | 4,000,000 | 4,000,000 | 100,000 | |||||||||||||||||
Warrant exercise price per share | $ 0.25 | $ 0.25 | $ 0.25 | $ 0.25 | |||||||||||||||||
Unamortized balance | $ 191,740 | ||||||||||||||||||||
Proceeds from sale of common stock | $ 2,000,000 | $ 2,000,000 | |||||||||||||||||||
Purchase price of shares | $ 2,000,000 | ||||||||||||||||||||
Accrued interest | $ 3,281 | ||||||||||||||||||||
Kodiak Capital Group, LLC [Member] | Three Convertible Note Payable [Member] | Purchase Agreement [Member] | |||||||||||||||||||||
Outstanding balance of debt | $ 320,000 | ||||||||||||||||||||
Interest rate | 5.00% | ||||||||||||||||||||
Debt conversion price per share | $ 0.25 | ||||||||||||||||||||
Number of warrant purchase shares | 2,000,000 | ||||||||||||||||||||
Maturity date, description | March 2018 through June 2018 | ||||||||||||||||||||
Warrant exercise price per share | $ 0.15 | $ 0.20 | |||||||||||||||||||
Exchange for cash | $ 200,000 | ||||||||||||||||||||
Original issue discount | 20,000 | ||||||||||||||||||||
Settlement of financing expense | 100,000 | ||||||||||||||||||||
Fair value of derivatives | 412,214 | ||||||||||||||||||||
Financing costs | $ 92,214 | ||||||||||||||||||||
EMA Financial and Auctus Fund [Member] | Unsecured Convertible Notes [Member] | |||||||||||||||||||||
Outstanding balance of debt | $ 370,000 | $ 370,000 | |||||||||||||||||||
Interest rate | 8.00% | ||||||||||||||||||||
Maturity date | Dec. 8, 2018 | ||||||||||||||||||||
Debt conversion percentage of amount | 70.00% | ||||||||||||||||||||
Number of warrant purchase shares | 2,400,000 | 1,200,000 | |||||||||||||||||||
Warrant exercise price per share | $ 0.11 | ||||||||||||||||||||
Exchange for cash | $ 323,000 | ||||||||||||||||||||
Original issue discount | 47,000 | ||||||||||||||||||||
Unamortized balance | $ 343,636 | ||||||||||||||||||||
Fair value of derivatives | 565,252 | 118,589 | |||||||||||||||||||
Financing costs | $ 195,252 | 47,000 | |||||||||||||||||||
Accrued interest | 1,866 | ||||||||||||||||||||
Warrant life of year | 5 years | ||||||||||||||||||||
PowerUp Lending [Member] | Unsecured Convertible Notes [Member] | |||||||||||||||||||||
Outstanding balance of debt | $ 105,000 | 105,000 | |||||||||||||||||||
Interest rate | 8.00% | ||||||||||||||||||||
Maturity date | Sep. 20, 2018 | ||||||||||||||||||||
Debt conversion percentage of amount | 70.00% | ||||||||||||||||||||
Exchange for cash | $ 90,000 | ||||||||||||||||||||
Original issue discount | 15,000 | ||||||||||||||||||||
Unamortized balance | 99,822 | ||||||||||||||||||||
Fair value of derivatives | 160,426 | 105,000 | |||||||||||||||||||
Financing costs | $ 55,426 | 15,000 | |||||||||||||||||||
Accrued interest | 414 | ||||||||||||||||||||
Amortization of interest expenses | 294,397 | ||||||||||||||||||||
Accrued interest | $ 143,145 |
Convertible Series A Preferre_2
Convertible Series A Preferred Stock (Details Narrative) - USD ($) | Feb. 14, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 |
Number of shares issued during period | 1,679,276 | ||||||
Number of shares issued during period, value | $ 2,978,500 | $ 796,000 | $ 1,524,030 | ||||
Debt discount | 48,942 | ||||||
Interest expense | $ 58,916 | $ 205,038 | $ 321,637 | $ 375,862 | 555,094 | $ 340,580 | |
Series A Convertible Preferred Stock [Member] | |||||||
Interest expense | 75,000 | ||||||
Redemption premium | $ 13,999 | ||||||
Series A Preferred Stock [Member] | |||||||
Number of shares issued during period | 630,000 | ||||||
Exchange for cash | $ 555,000 | ||||||
Debt discount | $ 75,000 | ||||||
Redemption premium | 25.00% | ||||||
Preferred stock, redemption shares | 630,000 | ||||||
Conversion of stock, shares converted | 2,862,006 | ||||||
Conversion of stock, amount | $ 303,641 | ||||||
Cash payment | 543,465 | ||||||
Preferred stock redemption amount | 847,106 | ||||||
Interest expense | 217,106 | ||||||
Redemption premium | 157,500 | ||||||
Fair value of common shares | $ 45,607 | ||||||
Interest rate | 5.00% | ||||||
Securities Purchase Agreement [Member] | Accredited Investor [Member] | Series A Convertible Preferred Stock [Member] | |||||||
Number of shares issued during period | 1,050,000 | ||||||
Number of shares issued during period, value | $ 1,050,000 | ||||||
Exchange for cash | 1,000,000 | ||||||
Debt discount | $ 50,000 | ||||||
Redemption premium | 25.00% | ||||||
Preferred stock accrued dividend rate | 5.00% | ||||||
Preferred stock redemption description | Mandatorily redeemable at an installment basis starting August 13, 2017 in the amount of $63,000 plus accrued interest. |
Derivative Liability (Details N
Derivative Liability (Details Narrative) 10Q - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||
Derivative liability | $ 673,376 | $ 673,376 | $ 1,250,581 | |||
Derivative liability from issuance of convertible debt and warrant | 301,739 | |||||
Gain on derivative liability | 1,718,816 | |||||
Change in fair value of derivative liability | (340,851) | 839,872 | (5,900) | |||
Fair value of the derivative liability | $ 673,376 | $ 673,376 | $ 1,250,581 |
Derivative Liability (Details_2
Derivative Liability (Details Narrative) - USD ($) | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Derivative liabilty from issuance of convertible debt and warrant | $ 301,739 | ||
Derivative liability | 673,376 | $ 1,250,581 | |
Gain on derivative liability | $ 1,718,816 | ||
Derivative Liability [Member] | |||
Derivative liabilty from issuance of convertible debt and warrant | 1,256,481 | ||
Derivative liability | 1,250,581 | ||
Gain on derivative liability | $ 5,900 |
Derivative Liability - Schedule
Derivative Liability - Schedule of Derivative Liability Using Weighted Average Black-Scholes-Merton Pricing Model (Details) - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018 | Dec. 31, 2017 | |
Stock Price | $ 0.40 | $ 0.10 |
Exercise Price | $ 0.13 | $ 0.06 |
Expected Life | 4 years 2 months 23 days | 1 year 3 months 4 days |
Volatility | 221.00% | 189.00% |
Dividend Yield | 0.00% | 0.00% |
Risk Free Interest Rate | 1.89% | 1.72% |
Fair Value | $ 673,376 | $ 1,250,581 |
Upon Issuance [Member] | ||
Stock Price | $ 0.10 | $ 0.09 |
Exercise Price | $ 0.08 | $ 0.06 |
Expected Life | 2 years 3 months 29 days | 1 year 4 months 13 days |
Volatility | 193.00% | 183.00% |
Dividend Yield | 0.00% | 0.00% |
Risk Free Interest Rate | 1.18% | 1.56% |
Fair Value | $ 301,739 | $ 1,256,481 |
Common Stock (Details Narrative
Common Stock (Details Narrative) - USD ($) | Jan. 29, 2018 | Sep. 26, 2017 | Sep. 16, 2017 | Dec. 03, 2016 | Jan. 28, 2016 | Nov. 30, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Dec. 31, 2016 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Feb. 21, 2018 | May 22, 2017 |
Number of shares issued during period | 1,679,276 | ||||||||||||||||
Number of common stock shares issued, value | $ 2,978,500 | $ 796,000 | $ 1,524,030 | ||||||||||||||
Number of warrant purchase shares | 275,000 | 500,000 | 500,000 | 2,000,000 | 100,000 | ||||||||||||
Warrant exercise price per share | $ 0.08 | $ 0.14 | $ 0.14 | $ 0.25 | $ 0.40 | ||||||||||||
Share based compensation | $ 2,960,733 | $ 1,824,045 | $ 2,533,245 | 1,301,402 | |||||||||||||
Number of common stock shares issued upon conversion | 1,250,000 | 1,026,195 | |||||||||||||||
Fair value of common shares issued | $ 125,000 | 3,065,837 | $ 181,845 | ||||||||||||||
Proceeds from sale of common stock | 2,978,500 | 470,000 | 796,000 | 1,524,030 | |||||||||||||
Share based compensation - shares issued for vendor services | 726,839 | ||||||||||||||||
Debt extinguishment | $ 10,057 | $ (1,074,602) | $ (424,331) | $ (423,028) | $ (977,201) | $ (977,203) | $ (455,975) | ||||||||||
Exercise price of common stock granted | $ 0.46 | $ 0.17 | $ 0.09 | ||||||||||||||
Vendor [Member] | Accounts Payable [Member] | |||||||||||||||||
Share based compensation - shares issued for vendor services, shares | 400,000 | ||||||||||||||||
Share based compensation - shares issued for vendor services | $ 30,000 | ||||||||||||||||
Fair value of shares issued | 56,000 | ||||||||||||||||
Debt extinguishment | $ 26,000 | ||||||||||||||||
Purchase Agreement [Member] | Kodiak Capital Group, LLC [Member] | |||||||||||||||||
Number of shares issued during period | 656,168 | ||||||||||||||||
Number of common stock shares issued, value | $ 50,000 | ||||||||||||||||
Number of warrant purchase shares | 4,000,000 | 4,000,000 | 4,000,000 | 100,000 | |||||||||||||
Warrant exercise price per share | $ 0.25 | $ 0.25 | $ 0.25 | $ 0.25 | |||||||||||||
Investment amount | $ 25,000 | $ 25,000 | $ 25,000 | ||||||||||||||
Beneficial ownership, percentage | 9.99% | 9.99% | 9.99% | ||||||||||||||
Common stock conversion percentage | 80.00% | ||||||||||||||||
Proceeds from sale of common stock | $ 2,000,000 | $ 2,000,000 | |||||||||||||||
Stock Repurchase Agreements [Member] | Three Former Employee and Consultants [Member] | |||||||||||||||||
Number of restricted common stock shares issued during the period | 9,011,324 | ||||||||||||||||
Exercise price of common stock granted | $ 0.02 | ||||||||||||||||
Share repurchases | 8,311,324 | 8,311,324 | |||||||||||||||
Number of common stock shares repurchase during the period | 166,226 | ||||||||||||||||
Conversion of Debt [Member] | |||||||||||||||||
Number of common stock shares issued upon conversion | 1,026,195 | ||||||||||||||||
Fair value of common shares issued | $ 181,845 | ||||||||||||||||
Series A Preferred Stock [Member] | |||||||||||||||||
Number of shares issued during period | 630,000 | ||||||||||||||||
Conversion of stock, shares converted | 2,862,006 | ||||||||||||||||
Conversion of stock, amount | $ 303,641 | ||||||||||||||||
Preferred stock, redemption shares | 630,000 | ||||||||||||||||
Stock Subscription to Investors [Member] | |||||||||||||||||
Number of shares issued during period | 31,335,556 | 11,182,143 | |||||||||||||||
Number of common stock shares issued, value | $ 1,524,030 | $ 796,000 | |||||||||||||||
Number of warrant purchase shares | 100,000 | ||||||||||||||||
Warrant exercise price per share | $ 0.40 | ||||||||||||||||
Warrant expiration | May 21, 2019 | ||||||||||||||||
Consultants and Vendor [Member] | |||||||||||||||||
Number of common stock shares issued for service | 8,280,435 | 6,388,334 | |||||||||||||||
Share based compensation | $ 1,647,160 | $ 726,789 | |||||||||||||||
Two Officers and Lead Director [Member] | |||||||||||||||||
Number of common stock shares issued for service | 4,500,000 | ||||||||||||||||
Share based compensation | $ 441,000 | ||||||||||||||||
Note Holder [Member] | |||||||||||||||||
Number of shares issued during period | 50,000 | 240,000 | |||||||||||||||
Number of common stock shares issued, value | $ 12,500 | $ 21,600 | |||||||||||||||
Number of warrant purchase shares | 1,000,000 | 1,000,000 | 4,830,000 | ||||||||||||||
Warrant exercise price per share | $ 0.14 | $ 0.14 | $ 0.15 | ||||||||||||||
Number of common stock shares issued upon conversion | 18,647,831 | ||||||||||||||||
Board of Directors [Member] | |||||||||||||||||
Number of common stock shares issued for service | 1,150,000 | ||||||||||||||||
Share based compensation | $ 116,682 |
Equity Transactions (Details Na
Equity Transactions (Details Narrative) 10Q - USD ($) | Aug. 08, 2018 | Mar. 28, 2018 | Feb. 21, 2018 | Jan. 29, 2018 | Sep. 16, 2017 | May 22, 2017 | Feb. 28, 2018 | Jan. 31, 2018 | Jun. 30, 2017 | Dec. 31, 2016 | Sep. 30, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Number of common stock shares issued, shares | 1,679,276 | ||||||||||||
Number of common stock shares issued, value | $ 2,978,500 | $ 796,000 | $ 1,524,030 | ||||||||||
Stock issued price per share | $ 0.50 | ||||||||||||
Number of common stock shares issued for service, value | $ 1,547,429 | $ 2,088,160 | |||||||||||
Number of common stock shares issued upon conversion | 1,250,000 | 1,026,195 | |||||||||||
Shares issued upon exercise of option | 487,620 | ||||||||||||
Shares issued upon exercise of option, value | $ 34,133 | ||||||||||||
Warrants to purchase shares of common stock | 2,000,000 | 275,000 | 100,000 | 500,000 | |||||||||
Warrant exercise price per share | $ 0.25 | $ 0.08 | $ 0.40 | $ 0.14 | |||||||||
Stock repurchase | $ 20,000 | $ 166,226 | |||||||||||
Number of stock options granted | 16,831,272 | 13,210,000 | 5,860,000 | ||||||||||
Exercise price of common stock granted | $ 0.46 | $ 0.17 | $ 0.09 | ||||||||||
Fair value of stock options grants | $ 8,019,558 | $ 1,781,000 | $ 462,000 | ||||||||||
Expense recognized relating to stock options | 418,389 | ||||||||||||
Unrecognized stock based compensation expense | $ 457,881 | $ 5,944,834 | $ 837,120 | 457,881 | |||||||||
Warrants issued for derivative liability | 2,000,000 | 500,000 | |||||||||||
Warrant granted shares | 2,446,700 | ||||||||||||
Secured debt | $ 1,248,833 | ||||||||||||
Fair value of warrant | $ 1,074,602 | $ 1,074,602 | $ 455,975 | ||||||||||
Warrants expire date | Feb. 20, 2023 | Mar. 15, 2018 | May 21, 2019 | ||||||||||
Warrants [Member] | |||||||||||||
Weighted average exercise price of warrants | $ 0.34 | $ 0.19 | $ 0.08 | ||||||||||
Number of cash and cashless exercise | 11,917,705 | ||||||||||||
Warrant exercise | $ 22,000 | ||||||||||||
Equity Option [Member] | |||||||||||||
Shares issued upon exercise of option | 487,620 | ||||||||||||
Shares issued upon exercise of option, value | $ 34,133 | ||||||||||||
Number of cash exercise of option during period | 487,620 | ||||||||||||
Expense recognized relating to stock options | $ 1,413,304 | ||||||||||||
Warrant [Member] | |||||||||||||
Shares issued upon exercise of option | 14,683,075 | ||||||||||||
Shares issued upon exercise of option, value | $ 22,000 | ||||||||||||
Number of cash exercise of option during period | 11,917,705 | ||||||||||||
Weighted average exercise price of warrants | $ 0.09 | ||||||||||||
Investor [Member] | |||||||||||||
Number of common stock shares issued, shares | 17,459,067 | ||||||||||||
Number of common stock shares issued, value | $ 2,978,500 | ||||||||||||
Stock repurchase, shares | 700,000 | ||||||||||||
Stock repurchase | $ 20,000 | ||||||||||||
Investor [Member] | Minimum [Member] | |||||||||||||
Stock issued price per share | $ 0.06 | ||||||||||||
Investor [Member] | Maximum [Member] | |||||||||||||
Stock issued price per share | $ 1 | ||||||||||||
Employees and Vendors [Member] | |||||||||||||
Number of common stock shares issued for service | 4,790,181 | ||||||||||||
Number of common stock shares issued for service, value | $ 1,547,429 | ||||||||||||
Officers and Directors [Member] | |||||||||||||
Number of common stock shares issued for service | 4,500,000 | ||||||||||||
Number of common stock shares issued for service, value | $ 1,539,000 | ||||||||||||
Note Holder [Member] | |||||||||||||
Number of common stock shares issued, shares | 50,000 | 240,000 | |||||||||||
Number of common stock shares issued, value | $ 12,500 | $ 21,600 | |||||||||||
Number of common stock shares issued upon conversion | 18,647,831 | ||||||||||||
Warrants to purchase shares of common stock | 1,000,000 | 4,830,000 | |||||||||||
Warrant exercise price per share | $ 0.14 | $ 0.15 | |||||||||||
Warrants expire date | Jan. 31, 2023 | ||||||||||||
CEO [Member] | |||||||||||||
Conversion of stock, amount converted | $ 582,333 | ||||||||||||
Conversion of stock, shares converted | 407,226 | ||||||||||||
Fair value of shares issued | $ 582,333 | ||||||||||||
Kodiak [Member] | |||||||||||||
Shares issued upon exercise of option | 3,048,105 | 3,048,105 | |||||||||||
Shares issued upon exercise of option, value | $ 1,000,000 | $ 1,000,000 | |||||||||||
Warrants to purchase shares of common stock | 2,000,000 | ||||||||||||
Warrant exercise price per share | $ 0.25 |
Equity Transactions - Schedule
Equity Transactions - Schedule of Stock Option Activity (Details) 10Q - USD ($) | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Equity [Abstract] | |||
Number of options outstanding beginning balance | 21,840,953 | 10,530,953 | 7,656,250 |
Number of options granted | 16,831,272 | 13,210,000 | 5,860,000 |
Number of options exercised | (487,620) | ||
Number of options forfeited or expired | (4,200,000) | (1,900,000) | (2,985,297) |
Number of options outstanding ending balance | 33,984,605 | 21,840,953 | 10,530,953 |
Number of options exercisable | 11,304,808 | 9,357,620 | |
Weighted average exercise price outstanding beginning balance | $ 0.33 | $ 0.33 | $ 0.66 |
Weighted average exercise price granted | 0.46 | 0.17 | 0.09 |
Weighted average exercise price exercised | 0.07 | ||
Weighted average exercise price forfeited or expired | 0.34 | 0.16 | 0.93 |
Weighted average exercise price outstanding ending balance | 0.26 | 0.33 | $ 0.33 |
Weighted average exercise price exercisable | $ 0.35 | $ 0.36 | |
Weighted average remaining contractual term outstanding | 4 years 11 days | 4 years 10 days | 4 years 10 months 14 days |
Weighted average remaining contractual term outstanding | 3 years 22 days | 2 years 1 month 2 days | 4 years 11 days |
Aggregate intrinsic value outstanding beginning balance | |||
Aggregate intrinsic value granted | |||
Aggregate intrinsic value exercised | |||
Aggregate intrinsic value forfeited or expired | |||
Aggregate intrinsic value outstanding ending balance | $ 3,992,194 | ||
Aggregate intrinsic value exercisable | $ 2,994,627 | $ 24,166 |
Equity Transaction - Schedule o
Equity Transaction - Schedule of Fair Value Assumptions Using Black-Scholes Method (Details) 10Q | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Expected term (years) | 5 years | 5 years |
Expected dividend yield | 0.00% | 0.00% |
Minimum [Member] | ||
Risk-free interest rate | 2.73% | 1.77% |
Expected volatility | 184.00% | 157.00% |
Maximum [Member] | ||
Risk-free interest rate | 2.99% | 1.93% |
Expected volatility | 190.00% | 171.00% |
Equity Transaction - Schedule_2
Equity Transaction - Schedule of Warrants Outstanding (Details) 10Q - Warrants [Member] - USD ($) | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Number of Warrants outstanding beginning balance | 28,436,413 | 18,455,264 | 10,967,879 |
Number of Warrants granted | 5,446,700 | 9,981,149 | 7,487,385 |
Number of Warrants forfeited | (48,000) | ||
Number of Warrants exercised | (14,683,075) | ||
Number of Warrants outstanding ending balance | 19,152,038 | 28,436,413 | 18,455,264 |
Number of Warrants exercisable | 19,152,038 | 28,436,413 | |
Weighted average exercise price outstanding beginning balance | $ 0.13 | $ 0.10 | $ 0.12 |
Weighted average exercise price granted | 0.34 | 0.19 | 0.08 |
Weighted average exercise price forfeited | 0.10 | ||
Weighted average exercise price exercised | 0.09 | ||
Weighted average exercise price outstanding ending balance | $ 0.22 | $ 0.13 | $ 0.10 |
Weighted average remaining contractual term outstanding | 2 years 9 months 14 days | 2 years 7 months 13 days | 3 years 6 months 25 days |
Weighted average remaining contractual term outstanding | 3 years 11 days | 2 years 9 months 14 days | 2 years 7 months 13 days |
Aggregate intrinsic value outstanding beginning balance | |||
Aggregate intrinsic value granted | |||
Aggregate intrinsic value exercised | |||
Aggregate intrinsic value forfeited | |||
Aggregate intrinsic value outstanding ending balance | 3,827,516 | ||
Aggregate intrinsic value exercisable | $ 3,827,516 | $ 457,530 |
Stock Options (Details Narrativ
Stock Options (Details Narrative) - USD ($) | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||
Number of stock options granted | 16,831,272 | 13,210,000 | 5,860,000 |
Exercise price of common stock granted | $ 0.46 | $ 0.17 | $ 0.09 |
Expiration period | 3 years | 5 years | |
Fair value of stock options grants | $ 8,019,558 | $ 1,781,000 | $ 462,000 |
Expected term | 4 years | 5 years | |
Risk free interest rate | 1.92% | 1.23% | |
Volatility rate | 230.00% | 123.00% | |
Dividend yield | 0.00% | 0.00% | |
Expense recognized relating to stock options | $ 418,389 | ||
Unrecognized stock based compensation expense | $ 5,944,834 | $ 837,120 | $ 457,881 |
Stock Options - Schedule of Sto
Stock Options - Schedule of Stock Option Activity (Details) - USD ($) | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||
Number of options outstanding beginning balance | 21,840,953 | 10,530,953 | 7,656,250 |
Number of options granted | 16,831,272 | 13,210,000 | 5,860,000 |
Number of options forfeited | (4,200,000) | (1,900,000) | (2,985,297) |
Number of options exercised | 487,620 | ||
Number of options outstanding ending balance | 33,984,605 | 21,840,953 | 10,530,953 |
Number of options vested | 12,286,613 | ||
Number of options exercisable | 11,304,808 | 9,357,620 | |
Weighted average exercise price outstanding beginning balance | $ 0.33 | $ 0.33 | $ 0.66 |
Weighted average exercise price granted | 0.46 | 0.17 | 0.09 |
Weighted average exercise price forfeited | 0.34 | 0.16 | 0.93 |
Weighted average exercise price exercised | 0.07 | ||
Weighted average exercise price outstanding ending balance | 0.26 | 0.33 | $ 0.33 |
Weighted average exercise price vested | 0.28 | ||
Weighted average exercise price exercisable | $ 0.35 | $ 0.36 | |
Weighted average remaining contractual term outstanding | 4 years 11 days | 4 years 10 days | 4 years 10 months 14 days |
Weighted average remaining contractual term outstanding | 3 years 22 days | 2 years 1 month 2 days | 4 years 11 days |
Aggregate intrinsic value outstanding beginning balance | |||
Aggregate intrinsic value granted | |||
Aggregate intrinsic value exercised | |||
Aggregate intrinsic value forfeited | |||
Aggregate intrinsic value outstanding ending balance | $ 3,992,194 | ||
Aggregate intrinsic value vested | 44,030 | ||
Aggregate intrinsic value exercisable | $ 2,994,627 | $ 24,166 |
Stock Warrants (Details Narrati
Stock Warrants (Details Narrative) - USD ($) | Feb. 21, 2018 | Sep. 16, 2017 | Aug. 04, 2017 | May 22, 2017 | Apr. 02, 2017 | Dec. 30, 2016 | Apr. 04, 2016 | Aug. 31, 2017 | May 31, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | May 04, 2017 |
Warrants to purchase shares of common stock | 2,000,000 | 275,000 | 100,000 | 500,000 | 500,000 | ||||||||||||
Warrant exercise price per share | $ 0.25 | $ 0.08 | $ 0.40 | $ 0.14 | $ 0.14 | ||||||||||||
Warrants expire date | Feb. 20, 2023 | Mar. 15, 2018 | May 21, 2019 | ||||||||||||||
Share based compensation | $ 2,960,733 | $ 1,824,045 | $ 2,533,245 | $ 1,301,402 | |||||||||||||
Debt extinguishment | $ 10,057 | $ (1,074,602) | $ (424,331) | $ (423,028) | $ (977,201) | (977,203) | $ (455,975) | ||||||||||
Expense recognized relating to stock warrants | $ 26,696 | ||||||||||||||||
Note Holder [Member] | |||||||||||||||||
Warrants to purchase shares of common stock | 1,000,000 | 4,830,000 | 1,000,000 | 4,830,000 | |||||||||||||
Warrant exercise price per share | $ 0.14 | $ 0.15 | $ 0.14 | $ 0.15 | |||||||||||||
Warrants expire date | Jan. 31, 2023 | ||||||||||||||||
Warrants expire date, description | June 2020 up to December 2022 | ||||||||||||||||
Derivative liability | $ 1,200,000 | $ 1,200,000 | |||||||||||||||
Note Holder [Member] | Extension Agreement [Member] | |||||||||||||||||
Warrants to purchase shares of common stock | 1,316,800 | ||||||||||||||||
Warrant exercise price per share | $ 0.15 | ||||||||||||||||
Warrants expire date | Aug. 31, 2020 | ||||||||||||||||
Oceanside Strategies, Inc [Member] | |||||||||||||||||
Warrants to purchase shares of common stock | 2,429,530 | ||||||||||||||||
Warrant exercise price per share | $ 0.07 | ||||||||||||||||
Warrants expire date | Apr. 4, 2019 | ||||||||||||||||
Unsecured convertible note payable | $ 680,268 | ||||||||||||||||
Oceanside Strategies, Inc [Member] | Extension Agreement [Member] | |||||||||||||||||
Warrants to purchase shares of common stock | 2,429,530 | ||||||||||||||||
Warrant exercise price per share | $ 0.08 | ||||||||||||||||
Warrants expire date | Aug. 4, 2017 | ||||||||||||||||
Warrants expire date, description | April 2016 Note to August 4, 2017 | ||||||||||||||||
Consultant [Member] | |||||||||||||||||
Warrants to purchase shares of common stock | 375,000 | ||||||||||||||||
Warrant exercise price per share | $ 0.12 | ||||||||||||||||
Warrants expire date | Mar. 31, 2019 | ||||||||||||||||
Share based compensation | $ 26,696 | ||||||||||||||||
Rory Cutaia [Member] | |||||||||||||||||
Warrants to purchase shares of common stock | 2,452,325 | ||||||||||||||||
Warrant exercise price per share | $ 0.07 | ||||||||||||||||
Warrants expire date | Apr. 4, 2019 | ||||||||||||||||
Secured convertible note issued | $ 343,326 | ||||||||||||||||
Rory Cutaia [Member] | Extension Agreement [Member] | |||||||||||||||||
Warrants to purchase shares of common stock | 3,084,349 | 3,084,349 | 1,755,192 | ||||||||||||||
Warrant exercise price per share | $ 0.15 | $ 0.36 | $ 0.15 | $ 0.355 | |||||||||||||
Warrants expire date | May 31, 2020 | May 31, 2020 | |||||||||||||||
Debt extinguishment | $ 172,456 |
Stock Warrants - Summary of War
Stock Warrants - Summary of Warrants (Details) - Warrants [Member] - USD ($) | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Number of Warrants outstanding beginning balance | 28,436,413 | 18,455,264 | 10,967,879 |
Number of Warrants granted | 5,446,700 | 9,981,149 | 7,487,385 |
Number of Warrants forfeited | (48,000) | ||
Number of Warrants exercised | (14,683,075) | ||
Number of Warrants outstanding ending balance | 19,152,038 | 28,436,413 | 18,455,264 |
Number of Warrants vested | 28,436,413 | ||
Number of Warrants exercisable | 19,152,038 | 28,436,413 | |
Weighted average exercise price outstanding beginning balance | $ 0.13 | $ 0.10 | $ 0.12 |
Weighted average exercise price granted | 0.34 | 0.19 | 0.08 |
Weighted average exercise price forfeited | 0.10 | ||
Weighted average exercise price exercised | 0.09 | ||
Weighted average exercise price outstanding ending balance | $ 0.22 | $ 0.13 | $ 0.10 |
Weighted average remaining contractual term outstanding | 2 years 9 months 14 days | 2 years 7 months 13 days | 3 years 6 months 25 days |
Weighted average remaining contractual term outstanding | 3 years 11 days | 2 years 9 months 14 days | 2 years 7 months 13 days |
Aggregate intrinsic value outstanding beginning balance | |||
Aggregate intrinsic value granted | |||
Aggregate intrinsic value exercised | |||
Aggregate intrinsic value forfeited | |||
Aggregate intrinsic value outstanding ending balance | 3,827,516 | ||
Aggregate intrinsic value vested | 457,530 | ||
Aggregate intrinsic value exercisable | $ 3,827,516 | $ 457,530 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Percentage of valuation allowance against the asset amount | 100.00% | |
Statutory federal corporate tax rate | 34.00% | 34.00% |
Income tax rate description | The Company is currently assessing the extensive changes under the TCJ Act and its overall impact on the Company; however, based on its preliminary assessment of the reduction in the federal corporate tax rate from 35% to 21% to become effective on January 1, 2018, the Company currently expects that its effective tax rate for 2018 will be between 20% and 23%. | |
Federal and state net operating loss carry forwards | $ 12,800,000 | |
Net operating loss carry forwards expire date | 2,034 | |
Tax Cuts and Jobs Act [Member] | ||
Statutory federal corporate tax rate | 21.00% | |
Income tax rate description | Reduction of the federal tax rate for corporations from 35% to 21% and changes or limitations to certain tax deductions. |
Income Taxes - Schedule of Comp
Income Taxes - Schedule of Components of Deferred Tax Assets and Liabilities (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Income Tax Disclosure [Abstract] | ||
Net operating loss carryforwards | $ 3,464,000 | $ 4,149,000 |
Share based compensation | (704,000) | (518,000) |
Non-cash interest and financing expenses | (833,000) | (343,000) |
Other temporary differences | (108,000) | (55,000) |
Less: Valuation allowance | (1,819,000) | (3,233,000) |
Deferred tax assets, net |
Income Taxes - Schedule of Prov
Income Taxes - Schedule of Provision of Income Taxes (Details) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | ||
Statutory federal income tax rate | (34.00%) | (34.00%) |
State taxes, net of federal benefit | (5.80%) | (5.80%) |
Non-deductible items | (0.10%) | (0.10%) |
Effect of change in tax rate | 12.00% | |
Change in valuation allowance | 27.90% | 39.90% |
Provision for income taxes | 0.00% | 0.00% |
Accrued Officers Salary (Detail
Accrued Officers Salary (Details Narrative) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Accrued officers' salary | $ 168,895 | $ 607,333 | $ 200,028 |
Chief Executive Officer [Member] | |||
Ownership percentage | 32.00% |
Commitments and Contingencies -
Commitments and Contingencies - (Details Narrative) 10Q | 9 Months Ended |
Sep. 30, 2018USD ($) | |
Board Members [Member] | |
Annual compensation | $ 270,000 |
Commitments and Contingencies (
Commitments and Contingencies (Details Narrative) - USD ($) | Sep. 15, 2017 | Nov. 21, 2014 | Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2017 | Dec. 31, 2016 |
Rent expenses | $ 51,734 | $ 68,328 | ||||
Multicore Technologies [Member] | ||||||
Loss contingency, actions taken by defendant | the litigation was dismissed by plaintiff as against us in exchange for our guarantee of two payments to be made by another defendant in the action totaling $5,000, for which we have a right of off-set against any sums we may owe such party for services currently being rendered to us by such party. | |||||
Loss contingency by defendant, amount | $ 5,000 | |||||
Executive Employment Agreement [Member] | Rory Cutaia [Member] | ||||||
Annual salary | $ 325,000 | |||||
Annual bonus | $ 325,000 | |||||
Employment agreement term description | The initial term of the employment agreement is five years, and, upon expiration of the initial five-year term, it may be extended for additional one-year periods on ninety days prior notice. | |||||
Employment termination description | (i) Mr. Cutaia’s employment is terminated without cause, (ii) Mr. Cutaia is unable to perform his duties due to a physical or mental condition for a period of 120 consecutive days or an aggregate of 180 days in any 12 month period; or (iii) Mr. Cutaia voluntarily terminates the employment agreement upon the occurrence of a material reduction in his salary or bonus, a reduction in his job title or position, or the required relocation of Mr. Cutaia to an office outside of a 30 mile radius of Los Angeles, California(i) Mr. Cutaia’s employment is terminated without cause, (ii) Mr. Cutaia is unable to perform his duties due to a physical or mental condition for a period of 120 consecutive days or an aggregate of 180 days in any 12 month period; or (iii) Mr. Cutaia voluntarily terminates the employment agreement upon the occurrence of a material reduction in his salary or bonus, a reduction in his job title or position, or the required relocation of Mr. Cutaia to an office outside of a 30 mile radius of Los Angeles, California | |||||
Compensation | $ 27,083 | |||||
Executive Employment Agreement [Member] | Rory Cutaia [Member] | Maximum [Member] | ||||||
Percentage of annual salary increase every year | 10.00% | |||||
Maximum annual salary mandatory increase | $ 100,000 | |||||
West Hollywood [Member] | ||||||
Operating lease monthly rent | $ 6,700 | |||||
Operating lease, description | Through July 31, 2016 | |||||
Los Angels [Member] | ||||||
Operating lease monthly rent | $ 4,743 | $ 2,950 | ||||
Operating lease, description | Through April 30, 2018 | Tthrough June 25, 2017 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) 10Q | Nov. 08, 2018USD ($) | Oct. 30, 2018USD ($)shares | Oct. 19, 2018USD ($)Number / Integershares | Jan. 29, 2018shares | Mar. 31, 2018USD ($)$ / sharesshares | Sep. 30, 2018USD ($)$ / sharesshares | Dec. 31, 2017USD ($)shares | Dec. 31, 2016USD ($) | Feb. 21, 2018$ / shares | Nov. 30, 2017USD ($) | Sep. 16, 2017$ / shares | May 22, 2017$ / shares |
Warrant exercise price | $ / shares | $ 0.14 | $ 0.25 | $ 0.08 | $ 0.40 | ||||||||
Shares issued, price per share | $ / shares | $ 0.50 | |||||||||||
Stock option expiration period | 3 years | 5 years | ||||||||||
Debt discount amount | $ 48,942 | |||||||||||
Number of shares issued during period | shares | 1,679,276 | |||||||||||
Number of common stock shares issued upon conversion | shares | 1,250,000 | 1,026,195 | ||||||||||
Fair value of derivatives | $ 48,961 | |||||||||||
Subsequent Event [Member] | ||||||||||||
Number of shares issued during period for service | shares | 106,847 | |||||||||||
Shares issued, price per share | $ / shares | $ 0.16 | |||||||||||
Stock option vesting period | 3 years | |||||||||||
Debt instrument face amount | $ 400,000 | $ 1,870,769 | $ 100,000 | |||||||||
Proceeds from issuance of debt | $ 400,000 | |||||||||||
Debt discount amount | $ 77,830 | |||||||||||
Number of shares issued during period | shares | 7,383,006 | |||||||||||
Common stock conversion percentage | 75.00% | |||||||||||
Number of common stock shares issued upon conversion | shares | 1,523,809 | |||||||||||
Fair value of derivatives | $ 383,966 | |||||||||||
Debt interest rate | 5.00% | |||||||||||
Debt instruments maturity date | Apr. 29, 2019 | |||||||||||
Subsequent Event [Member] | Agreement and Plan of Merger [Member] | ||||||||||||
Pay to sharesholder of sound concepts | $ 25,000,000 | |||||||||||
Cash payment | 15,000,000 | |||||||||||
Issuance of shares of common stock with a fair market value | $ 10,000,000 | |||||||||||
Subsequent Event [Member] | Bellridge Capital, LP [Member] | ||||||||||||
Debt instrument face amount | $ 1,500,000 | |||||||||||
Proceeds from issuance of debt | 1,241,500 | |||||||||||
Debt discount amount | 150,000 | |||||||||||
Legal and financing expenses | $ 108,500 | |||||||||||
Number of shares issued during period | shares | 1,450,000 | |||||||||||
Common stock conversion percentage | 70.00% | |||||||||||
Number of trading days | Number / Integer | 10 | |||||||||||
Description of event of default | The Note is convertible into shares of our Common Stock only on or after the occurrence of an uncured “Event of Default.” Primarily, we will be in default if we do not repay the principal amount of the Note, as required. The other Events of Default are standard for the type of transaction represented by the related Securities Purchase Agreement and the Note. The conversion price in effect on any date on which some or all of the principal of the Note is to be converted shall be a price equal to 70% of the lowest VWAP during the ten trading days immediately preceding the date on which the third party provided its notice of conversion. Upon an Event of Default, we will owe the third party an amount equivalent to 110% of the then-outstanding principal amount of the Note in addition to of all other amounts, costs, expenses, and liquidated damages that might also be due in respect thereof. We have agreed that, on or after the occurrence of an Event of Default, we will reserve and keep available that number of shares of our Common Stock that is at least equal to 200% of the number of such shares that potentially would be issuable pursuant to the terms of the SPA and the Note (assuming conversion in full of the Note and on any date of determination). | |||||||||||
Number of common stock shares issued upon conversion | shares | 5,603,706 | |||||||||||
Fair value of derivatives | $ 1,674,106 | |||||||||||
Financing cost | 285,500 | |||||||||||
Subsequent Event [Member] | Bellridge Capital, LP [Member] | Maximum [Member] | ||||||||||||
Financing cost | $ 174,106 | |||||||||||
Warrant [Member] | ||||||||||||
Number of warrants exercised | shares | 4,600,000 | |||||||||||
Cashless exercise of warrants | shares | 4,206,111 | |||||||||||
Warrant exercise price | $ / shares | $ 0.21 | |||||||||||
Number of shares issued during period for service | shares | 2,125,000 | |||||||||||
Stock option expiration period | 5 years | |||||||||||
Stock option vesting period | 3 years | |||||||||||
Fair value of stock option grant | $ 1,021,764 |
Subsequent Events (Details Na_2
Subsequent Events (Details Narrative) - USD ($) | Oct. 30, 2018 | Mar. 28, 2018 | Sep. 16, 2017 | Jan. 31, 2018 | Nov. 30, 2017 | Sep. 30, 2018 | Mar. 31, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Feb. 21, 2018 | May 22, 2017 |
Warrants to purchase shares of common stock | 275,000 | 500,000 | 500,000 | 2,000,000 | 100,000 | |||||||||
Warrant exercise price | $ 0.08 | $ 0.14 | $ 0.14 | $ 0.25 | $ 0.40 | |||||||||
Number of stock options granted | 16,831,272 | 13,210,000 | 5,860,000 | |||||||||||
Number of shares issued during period | 1,679,276 | |||||||||||||
Number of shares issued during period, value | $ 2,978,500 | $ 796,000 | $ 1,524,030 | |||||||||||
Interest expense | $ 58,916 | $ 205,038 | 321,637 | $ 375,862 | 555,094 | 340,580 | ||||||||
Debt extinguishment | $ 10,057 | $ (1,074,602) | $ (424,331) | $ (423,028) | $ (977,201) | (977,203) | (455,975) | |||||||
Shares issued, price per share | $ 0.50 | $ 0.50 | ||||||||||||
Unamortized debt discount | $ 48,942 | |||||||||||||
Subsequent Event [Member] | ||||||||||||||
Debt interest rate | 5.00% | |||||||||||||
Maturity date | Apr. 29, 2019 | |||||||||||||
Common stock conversion percentage | 75.00% | |||||||||||||
Debt instrument face amount | $ 400,000 | $ 100,000 | $ 1,870,769 | |||||||||||
Number of shares issued during period for service | 106,847 | |||||||||||||
Number of stock options granted | 906,272 | |||||||||||||
Fair value of options vested in period | $ 181,157 | |||||||||||||
Stock option vesting period | 3 years | |||||||||||||
Stock options exercise price | $ 0.26 | |||||||||||||
Number of shares issued during period | 7,383,006 | |||||||||||||
Number of shares issued during period, value | $ 976,120 | |||||||||||||
Accrued interest | 147,097 | |||||||||||||
Interest expense | 893,120 | |||||||||||||
Gain on derivative liability | 136,226 | 1,248,809 | ||||||||||||
Debt extinguishment | 158,396 | $ 1,090,057 | ||||||||||||
Conversion of stock, shares issued | 20,469,028 | |||||||||||||
Conversion of stock, amount issued | $ 3,300,500 | |||||||||||||
Shares issued, price per share | $ 0.16 | |||||||||||||
Unamortized debt discount | $ 77,830 | |||||||||||||
Number of common stock reserved for future issuance | 200,000 | |||||||||||||
Number of shares subject to vest that was previously issued | 4,641,667 | |||||||||||||
Subsequent Event [Member] | Chief Executive Officer [Member] | ||||||||||||||
Shares issued, price per share | $ 1.43 | |||||||||||||
Accrued salary | $ 582,333 | |||||||||||||
Number of restricted common stock shares issued during the period | 407,226 | |||||||||||||
Subsequent Event [Member] | Auctus Fund and EMA Financial [Member] | ||||||||||||||
Unsecured convertible notes | $ 150,000 | |||||||||||||
Debt exchanged for cash | $ 130,000 | |||||||||||||
Debt interest rate | 8.00% | |||||||||||||
Original issue discount | $ 20,000 | |||||||||||||
Maturity date | Jan. 31, 2019 | |||||||||||||
Common stock conversion percentage | 70.00% | |||||||||||||
Warrants to purchase shares of common stock | 1,000,000 | |||||||||||||
Warrant exercise price | $ 0.14 | |||||||||||||
Warrant term | 5 years | |||||||||||||
Beneficial conversion feature | $ 301,739 | |||||||||||||
Debt instrument face amount | 150,000 | |||||||||||||
Financing costs | $ 151,739 |