Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2017 | May 22, 2017 | |
Document And Entity Information [Abstract] | ||
Entity Registrant Name | Indoor Harvest Corp | |
Entity Central Index Key | 1,572,565 | |
Trading Symbol | inqd | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 19,073,352 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2017 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q1 |
BALANCE SHEETS (UNAUDITED)
BALANCE SHEETS (UNAUDITED) - USD ($) | Mar. 31, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash | $ 147,434 | $ 78,219 |
Accounts receivable | 34,853 | |
Other receivable | 7,323 | 7,323 |
Inventory | 2,360 | 2,360 |
Total current assets | 157,117 | 122,755 |
Furniture and equipment, net | 146,252 | 158,418 |
Security deposit | 12,600 | 12,600 |
Investment in joint venture | 250,000 | |
Intangible asset, net | 7,178 | 7,604 |
Total assets | 573,147 | 301,377 |
Current liabilities: | ||
Accounts payable and accrued expenses | 52,726 | 55,797 |
Convertible note payable, net of debt discount of $0 and $152,617, respectively | 122,383 | |
Note payable, net of discount of $116,895 and $15,714, respectively | 158,105 | 209,786 |
Accrued payroll | 7,142 | |
Deferred rent | 7,945 | 8,513 |
Note payable - current portion | 6,965 | 6,790 |
Billings in excess of costs and estimated earnings | 20,155 | 20,155 |
Total current liabilities | 245,896 | 430,566 |
Long term liabilities: | ||
Note payable | 18,534 | 20,342 |
Total liabilities | 264,430 | 450,908 |
Stockholders' equity: | ||
Series, A Convertible Preferred stock: $0.01 par value, 5,000,000 shares authorized; 0 and 250,000 shares issued and outstanding at March 31, 2017 and December 31, 2016, respectively | 2,500 | |
Common stock: $0.001 par value, 50,000,000 shares authorized; 19,073,352 and 15,213,512 shares issued and outstanding at March 31, 2017 and December 31, 2016, respectively | 19,073 | 15,213 |
Additional paid-in capital | 5,342,669 | 3,829,528 |
Accumulated deficit | (5,053,025) | (3,996,772) |
Total stockholders' equity/(deficit) | 308,717 | (149,531) |
Total liabilities and stockholders' equity | $ 573,147 | $ 301,377 |
BALANCE SHEETS (UNAUDITED) (Par
BALANCE SHEETS (UNAUDITED) (Parentheticals) - USD ($) | Mar. 31, 2017 | Dec. 31, 2016 |
Statement of Financial Position [Abstract] | ||
Debt discount on convertible note payable | $ 0 | $ 152,617 |
Note payable, net of discount | $ 116,895 | $ 15,714 |
Series A, Convertible Preferred Stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Series A, Convertible Preferred Stock, shares authorized | 5,000,000 | 5,000,000 |
Series A, Convertible Preferred Stock, shares issued | 0 | 250,000 |
Series A, Convertible Preferred Stock, shares outstanding | 0 | 250,000 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 50,000,000 | 50,000,000 |
Common stock, shares issued | 19,073,352 | 15,213,512 |
Common stock, shares outstanding | 19,073,352 | 15,213,512 |
STATEMENTS OF OPERATIONS (UNAUD
STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($) | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Income Statement [Abstract] | ||
Revenue | $ 22,294 | |
Cost of sales | $ 11,735 | 16,798 |
Gross income (loss) | (11,735) | 5,496 |
Operating expenses | ||
Depreciation and amortization expense | 13,141 | 12,573 |
Research and development | 737 | 3,030 |
Professional fees | 90,547 | 57,272 |
General and administrative expenses | 622,403 | 243,460 |
Loss from operations | 726,828 | 316,335 |
Other income (expense) | ||
Other income (expense) | 2 | 7 |
Interest expense | (112,685) | (1,210) |
Amortization of debt offering costs | (978) | |
Amortization of debt discount | (205,007) | (8,655) |
Total other income (expense) | (317,690) | (10,836) |
Net loss | $ (1,056,253) | $ (321,675) |
Net loss per common share: | ||
Net loss per share, basic and diluted (in dollars per share) | $ (0.06) | $ (0.03) |
Weighted average number of common shares outstanding: | ||
Basic and diluted (in shares) | 16,816,214 | 11,583,326 |
STATEMENTS OF SHAREHOLDERS' EQU
STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED) - 3 months ended Mar. 31, 2017 - USD ($) | Series A Convertible Preferred Stock, $0.01 Par Value | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Total |
Balance at Dec. 31, 2016 | $ 2,500 | $ 15,213 | $ 3,829,528 | $ (3,996,772) | $ (149,531) |
Balance (in shares) at Dec. 31, 2016 | 250,000 | 15,213,512 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Issuance of common stock for cash | $ 2,060 | 821,940 | 824,000 | ||
Issuance of common stock for cash (in shares) | 2,060,000 | ||||
Issuance of common stock for services, net of debt offering costs | $ 1,050 | 460,880 | 461,930 | ||
Issuance of common stock for services, net of debt offering costs (in shares) | 1,049,840 | ||||
Convertible debt converted into common stock | $ 333 | 99,667 | 100,000 | ||
Convertible debt converted into common stock (in shares) | 333,333 | ||||
Beneficial conversion feature | 95,333 | 95,333 | |||
Conversion of preferred stock into common shares | $ (2,500) | $ 417 | 35,321 | 33,238 | |
Conversion of preferred stock into common shares (in shares) | (250,000) | 416,667 | |||
Net loss | (1,056,253) | (1,056,253) | |||
Balance at Mar. 31, 2017 | $ 19,073 | $ 5,342,669 | $ (5,053,025) | $ 308,717 | |
Balance (in shares) at Mar. 31, 2017 | 19,073,352 |
CONDENSED STATEMENTS OF CASH FL
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Cash flows from operating activities: | ||
Net loss | $ (1,056,253) | $ (321,675) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization expense | 13,141 | 12,573 |
Amortization of original issue discount | 1,100 | |
Amortization of debt discount | 205,007 | 8,655 |
Amortization of debt offering costs | 978 | |
Stock issued for services - related party | 109,930 | 25,609 |
Stock issued for services | 352,000 | 50,478 |
Change in operating liability: | ||
(Increase) Decrease in deferred rent | (568) | 188 |
(Increase) Decrease in accounts receivable | 34,853 | (1,236) |
Increase in prepaid expense | (1,035) | |
(Decrease) Increase in accounts payable and accrued expenses | (3,071) | 27,322 |
Decrease in accrued compensation - officers | (7,142) | |
Increase in costs and estimated earnings in excess of billings | 68,386 | |
Decrease in accrued compensation | (971) | |
Net cash used in operating activities | (352,103) | (130,730) |
Cash flows from investing activities: | ||
Investment in joint venture | (250,000) | |
Purchase of equipment and software | (550) | (911) |
Net cash used in investing activities | (250,550) | (911) |
Cash flows from financing activities: | ||
Repayments of note payable | (227,132) | (1,474) |
Proceeds from convertible note payable, less offerings costs and OID costs paid | 230,000 | |
Repayment of convertible note | (175,000) | |
Proceeds from demand note payable, less OID costs paid | 250,000 | |
Issuance of common stock for cash | 824,000 | 50,000 |
Net cash provided by financing activities | 671,868 | 278,526 |
Increase in cash and cash equivalents | 69,215 | 146,885 |
Cash and cash equivalents at beginning of period | 78,219 | 100,906 |
Cash and cash equivalents at end of period | 147,434 | 247,791 |
Cash paid during the period for: | ||
Interest | 682 | 840 |
Income taxes | ||
Supplemental disclosure of non-cash investing and financing activities: | ||
Beneficial conversion feature | 95,333 | 154,416 |
Shares issued for debt issuance costs | $ 143,500 | |
Settlement of convertible note into common shares | 100,000 | |
Conversion of preferred shares into common shares | $ 2,500 |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Mar. 31, 2017 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying financial statements have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (GAAP). It is management's opinion, however, that all material adjustments (consisting of normal and recurring adjustments) have been made which are necessary for a fair financial statements presentation. The results for the interim period are not necessarily indicative of the results to be expected for the year. Indoor Harvest Corp., or the "Company," is a Texas corporation formed on November 23, 2011. Indoor Harvest Corp., through its brand name Indoor Harvest™, is a company specializing in equipment design, development, marketing and direct-selling of commercial grade aeroponics fixtures and supporting systems for use in urban Controlled Environment Agriculture ("CEA") and Building Integrated Agriculture ("BIA"). Indoor Harvest Corp is a Design-Build contractor for the vertical farming and indoor farming industry. The Company’s principal lines of business are engineering, procurement and construction services as well as the manufacture of a variety of indoor farming fixtures and equipment. The Company provides its products and services worldwide for controlled environment and building integrated agricultural operators. These unaudited interim consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2016, filed with the SEC on April 17, 2017. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include, but are not limited to the estimate of percentage of complete on construction contracts in progress at each reporting period which we rely on as a primary basis of revenue recognition, estimated useful lives of equipment for purposes of depreciation and the valuation of common shares issued for services, equipment and the liquidation of liabilities. Cash and Cash Equivalents The Company considers all highly liquid instruments with a maturity of three months or less to be cash and cash equivalents. Accounts Receivable and Work in Progress Work in process consists of costs recorded and revenue earned on projects recognized on the percentage of completion method for work performed on contracts in progress at March 31, 2017 and December 31, 2016. The Company records revenue based on contractual agreements entered into at the inception of construction contracts. Amounts are payable from customers based on milestones established in each contract. Amounts are billed at milestone completion and are reflected as accounts receivable when billed. Costs and estimated earnings are accumulated on projects in process and compared to amounts billed based on the percentage of completion method of accounting (cost to cost). Costs incurred in excess of amounts billed and related profit recognized are reflected as an asset in the balance sheet as costs and estimated earnings in excess of billings. Unearned billings are reflected in the balance sheet as a liability as billings in excess of costs and estimated earnings on projects in process (See Note 7). Inventories Inventory consists primarily of raw materials and packaging materials and is valued at the lower of cost or market. Cost is determined using the weighted average method and average cost is recomputed after each inventory purchase or sale. Inventory is periodically reviewed in order to identify obsolete or damaged inventory and impaired values. Inventory is comprised of raw materials such as steel for our framing systems and packaging materials such as boxes and pallets valued at $2,360 at both March 31, 2017 and December 31, 2016. Revenue Recognition The Company recognizes revenue on arrangements in accordance with FASB ASC No. 605, “Revenue Recognition”. In all cases, revenue is recognized only when the price is fixed and determinable, persuasive evidence of an arrangement exists, the service is performed and collectability of the resulting receivable is reasonably assured. The Company will generate revenue from the design and installation of the equipment. Revenue from construction contracts are reported under the percentage of completion method for financial statement purposes. The estimated revenue for each contract reflected in the financial statements represent that percentage of estimated total revenue that costs incurred to date bear to estimated total costs, based on the Company’s current estimates. With respect to contracts that extend over one or more accounting periods, revisions in costs and revenue estimates during the course of the work are reflected in the period the revisions become known. When current estimates of total contract costs indicate a loss, provision is made for the entire estimated loss. The asset, “Costs and estimated earnings in excess of billings on uncompleted contracts,” represents revenues recognized in excess of amounts billed. The liability, “Estimated earnings on uncompleted contracts,” represents billings in excess of revenues recognized. Billing practices for these projects are governed by the contract terms of each project based upon actual costs incurred, achievement of milestones, or pre-agreed schedules. Billings do not necessarily correlate with revenue recognized under the percentage of completion method of accounting. With the exception of claims and change orders that are in the process of being negotiated with customers, unbilled work is usually billed during normal billing processes following achievement of the contractual requirements. Stock Based Compensation The Company follows ASC 718-10, Stock Compensation, which addresses the accounting for transactions in which an entity exchanges its equity instruments for goods or services, with a primary focus on transactions in which an entity obtains employee services in stock based payment transactions. ASC 718-10 requires measurement of the cost of employee services received in exchange for an award of equity instruments based on the grant date fair value of the award (with limited exceptions). Loss per Share Basic earnings per share amounts are calculated based on the weighted average number of shares of common stock outstanding during each period. Diluted earnings per share is based on the weighted average numbers of shares of common stock outstanding for the periods, including dilutive effects of stock options, warrants granted and convertible preferred stock. Dilutive options and warrants that are issued during a period or that expire or are canceled during a period are reflected in the computations for the time they were outstanding during the periods being reported. Since the Company has incurred losses for all periods, the impact of the common stock equivalents would be antidilutive and therefore are not included in the calculation. The Company has the following common stock equivalents for the three months ended March 31, 2017 and 2016, respectively: March 31, 2017 March 31, 2016 Convertible debt (exercise price - $0.30/share) 916,667 908,333 Fair Value of Financial Instruments The Company adopted ASC Topic 820 Fair Value Measurements for financial and non-financial assets and liabilities. The adoption did not have a material impact on our results of operations, financial position or liquidity. This standard defines fair value and provides guidance for measuring fair value and requires certain disclosures. This standard does not require any new fair value measurements, but rather applies to all other accounting pronouncements that require or permit fair value measurements. This guidance does not apply to measurements related to share based payments. This guidance discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow), and the cost approach (cost to replace the service capacity of an asset or replacement cost). The guidance utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels: · Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities. · Level 2: Inputs other than quoted prices that are observable, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active. · Level 3: Unobservable inputs in which little or no market data exists, therefore developed using estimates and assumptions developed by us, which reflect those that a market participant would use. Carrying amounts reported in the balance sheets for cash and cash equivalents, accounts receivable, accounts payable, and accrued expenses approximate fair value due to their relatively short maturity. Debt classified as Level 2 in the fair value hierarchy represent notes payable, net of debt discount, of $158,105 and $209,786 at March 31, 2017 and December 31, 2016, respectively, and convertible notes payable of $0 and $122,383 at March 31, 2017 and December 31, 2016, respectively.. Income Taxes The Company accounts for income taxes pursuant to FASB ASC 740—Income Taxes, which requires recognition of deferred income tax liabilities and assets for the expected future tax consequences of events that have been recognized in the financial statements or tax returns. The Company provides for deferred taxes on temporary differences between the financial statements and tax basis of assets using the enacted tax rates that are expected to apply to taxable income when the temporary differences are expected to reverse. FASB ASC 740 establishes a more likely than not threshold for recognizing the benefits of tax return positions in the financial statements. Also, the statement implements a process for measuring those tax positions that meet the recognition threshold of being ultimately sustained upon examination by the taxing authorities. There are no uncertain tax positions taken by the Company on its tax returns. The Company files tax returns in the U.S. and states in which it has operations and is subject to taxation. Tax years 2016, 2015, 2014, 2013, 2012 and 2011, remain subject to examination by the IRS and respective states. Property and Equipment Property and equipment is recorded at cost and depreciated or amortized using the straight-line method over the estimated useful life of the asset or the underlying lease term for leasehold improvements, whichever is shorter. The estimated useful life by asset description is noted in the following table: Asset Description Estimated Useful Life (Years) Furniture and equipment 3 - 5 Tooling equipment 10 Leasehold improvements * __________ * The shorter of 5 years or the life of the lease. Additions are capitalized and maintenance and repairs are charged to expense as incurred. Gains and losses on dispositions of equipment are reflected in other income. Intangible Asset The Company's intangible assets consist of domain names and is accounted for as an indefinite lived intangible asset in accordance with ASC 350 "Goodwill and Other Intangible Assets" ("ASC 350"). It also includes software and is amortized over a 3-5 year period. Intangible assets are reviewed annually for impairment or whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. There were no impairment charges taken during the three months ended March 31, 2017 and 2016. Intangible Assets consist of the following at March 31, 2017 and December 31, 2016: Classification March 31, December 31, Domain Name $ 2,000 $ 2,000 Facilities Manager’s Package Online 1,023 1,023 MLC CD Systems (software) 7,561 7,561 Total 10,584 10,584 Less: Accumulated amortization (3,406 ) (2,980 ) Intangible Assets, net $ 7,178 $ 7,604 Patent and Patent Application Expenses Although the Company believes that its patent and underlying technology will have continuing value, the amount of future benefits to be derived from the patent is uncertain. Therefore, patent costs are expensed as incurred. Research and Development Research and development expenditures are charged to expense as incurred. Research and development expense for the three months ended March 31, 2017 and 2016 are as follows: Three Months Ended March 31, 2017 March 31, 2016 Research and development expense $ 737 $ 3,030 Advertising Expense Advertising and promotional costs are expensed as incurred. Advertising expense for the three months ended March 31, 2017 and 2016, are as follows: Three Months Ended March 31, 2017 March 31, 2016 Advertising expense $ 9,852 $ 32,830 Reclassifications Certain expense items have been reclassified in the statement of operations for the three months ended March 31, 2016, to conform to the reporting format adopted for the three months ended March 31, 2017. Recent Accounting Pronouncements The Company has implemented all new accounting pronouncements that are in effect as of the date of the issuance of these financial statements. The following pronouncements will significantly impact future reporting of financial positon and results of operations. Management is currently assessing implementation. The FASB has issued Accounting Standards Update (ASU) No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business, clarifying the definition of a business. The amendments affect all companies and other reporting organizations that must determine whether they have acquired or sold a business. For public companies, the amendments are effective for annual periods beginning after December 15, 2017, including interim periods within those periods. The FASB has issued its new lease accounting guidance in Accounting Standards Update (ASU) No. 201602, Leases (Topic 842). Under the new guidance, lessees will be required to recognize the following for all leases (with the exception of short-term leases) at the commencement date: · A lease liability, which is a lessee‘s obligation to make lease payments arising from a lease, measured on a discounted basis; and · A right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. · Under the new guidance, lessor accounting is largely unchanged. Certain targeted improvements were made to align, where necessary, lessor accounting with the lessee accounting model and Topic 606, Revenue from Contracts with Customers. · The new lease guidance simplified the accounting for sale and leaseback transactions primarily because lessees must recognize lease assets and lease liabilities. Lessees will no longer be provided with a source of off-balance sheet financing. Public business entities should apply the amendments in ASU 2016-02 for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years (i.e., January 1, 2019, for a calendar year entity). The FASB has issued Accounting Standards Update (ASU) No. 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The amendments are intended to improve the accounting for employee share-based payments and affect all organizations that issue share-based payment awards to their employees. Several aspects of the accounting for share-based payment award transactions are simplified, including: (a) income tax consequences; (b) classification of awards as either equity or liabilities; and (c) classification on the statement of cash flows. For public companies, the amendments are effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. For private companies, the amendments are effective for annual periods beginning after December 15, 2017, and interim periods within annual periods beginning after December 15, 2018. Early adoption is permitted for any organization in any interim or annual period. The FASB has issued Accounting Standards Update No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing. The amendments clarify the following two aspects of Topic 606: (a) identifying performance obligations; and (b) the licensing implementation guidance. The amendments do not change the core principle of the guidance in Topic 606. The effective date and transition requirements for the amendments are the same as the effective date and transition requirements in Topic 606. Public entities should apply the amendments for annual reporting periods beginning after December 15, 2017, including interim reporting periods therein (i.e., January 1, 2018, for a calendar year entity). Early application for public entities is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The effective date for nonpublic entities is deferred by one year. Derivative Liability The Company accounts for derivative instruments in accordance with ASC 815, which establishes accounting and reporting standards for derivative instruments and hedging activities, including certain derivative instruments embedded in other financial instruments or contracts and requires recognition of all derivatives on the balance sheet at fair value, regardless of hedging relationship designation. Accounting for changes in fair value of the derivative instruments depends on whether the derivatives qualify as hedge relationships and the types of relationships designated are based on the exposures hedged. At March 31, 2017 and December 31, 2016, the Company did not have any derivative instruments that were designated as hedges. Beneficial Conversion Feature For conventional convertible debt where the rate of conversion is below market value, the Company records a "beneficial conversion feature" ("BCF") and related debt discount. When the Company records a BCF, the relative fair value of the BCF is recorded as a debt discount against the face amount of the respective debt instrument. The discount is amortized to interest expense over the life of the debt. |
GOING CONCERN
GOING CONCERN | 3 Months Ended |
Mar. 31, 2017 | |
Going Concern [Abstract] | |
GOING CONCERN | NOTE 2 - GOING CONCERN As reflected in the accompanying unaudited financial statements, the Company had a net loss of 1,056,253, net cash used in operations of $352,103 and has an accumulated deficit of $5,053,025, for the three months ended March 31, 2017. 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 on Management's plans which include potential asset acquisitions, mergers or business combinations with other entities, further implementation of its business plan and continuing to raise funds through debt or equity financings. The Company will likely rely upon related party debt or equity financing in order to ensure the continuing existence of the business. The business plan of the Company is to engage in the design, development, marketing and direct-selling of commercial grade aeroponics fixtures and supporting systems for use in urban Controlled Environment Agriculture ("CEA") and Building Integrated Agriculture ("BIA"). During the next twelve months, the Company's strategy is to: complete ongoing product development; commence product marketing, product assembly and sales; construct a demonstration CEA and BIA farm; and offer design-build services. The Company's long-term strategy is to direct sale, license and franchise their patented technologies and methods. The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. These financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern. |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 3 Months Ended |
Mar. 31, 2017 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | NOTE 3 - PROPERTY AND EQUIPMENT Property and equipment consist of the following at March 31, 2017 and December 31, 2016: Classification March 31, 2017 December 31, 2016 Furniture and equipment $ 124,379 $ 123,829 Tooling equipment 27,015 27,015 Leasehold improvements 57,780 57,780 Computer equipment 8,933 8,933 Research and development lab 59,482 59,482 Total 277,589 277,039 Less: Accumulated depreciation and amortization (131,337 ) (118,621 ) Property and equipment, net $ 146,252 $ 158,418 Depreciation expense for the three months ended March 31, 2017, totaled $12,716. |
COMMITMENTS & CONTINGENCIES
COMMITMENTS & CONTINGENCIES | 3 Months Ended |
Mar. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS & CONTINGENCIES | NOTE 4 – COMMITMENTS & CONTINGENCIES On January 3, 2017, the Company signed a binding letter of intent with Alamo CBD, LLC (“Alamo CBD”) to enter discussions to combine and create a medical cannabinoids pharmaceutical group. Pursuant to the terms, the Company was required as a precondition, to raise, as necessary, up to $1,000,000 in capital by February 15, 2017, to pay off all existing debt, including convertible notes, owed by the Company and to complete a spin-off of the Company’s produce related operations. On February 15, 2017, the Company and Alamo CBD extended the terms of the preconditions until March 15, 2017. On March 23, 2017, the Company entered into a Contractual Joint Venture Agreement by and between Vyripharm Enterprises, LLC (“Vyripharm”) and Alamo CBD, collectively the Parties, pursuant to which the parties agreed to participate in an unincorporated joint venture (the “Joint Venture”) for the following business purposes: The parties will work together to enhance the ability of Alamo CBD to apply for and obtain licensure, or a permit, to grow and/or dispense marijuana products for medical and/or consumer use, as the case may be: · In Texas, pursuant to the Texas Compassionate Use Act, as may be amended; · In Colorado, pursuant to recent Colorado legislation permitting foreign ownership of entities that grow and/or dispense marijuana products for medical and/or consumer use; and · Pursuant to recent United States Drug Enforcement Administration regulations which expand the Opportunities for entities providing research involving marijuana and its chemical constituents, as referenced in 21 U.S.C. 822(a)(1) and 21 U.S.C. 823(a), et. seq. To establish Alamo CBD as a supplier of a variety of medical use cannabis oil to Vyripharm for Vyripharm’s use in conducting research and development to create novel pharmaceutical and radiopharmaceutical compounds designed to image and treat certain debilitating diseases including, but not limited to epilepsy, post-traumatic stress disorder, Alzheimer’s, ALS, and other neurodegenerative diseases; and to establish Indoor Harvest as the project developer and engineering, procurement and construction group, in which Indoor Harvest is responsible for costs and efforts related to Alamo CBD's efforts to become licensed under the Texas Compassionate Use Act and to meet its obligations under this Joint Venture agreement. The initial term of the Joint Venture shall be five (5) years following the Effective Date, and the Agreement may be extended beyond the Initial Term by mutual consent of the Parties. Pursuant to the Agreement, IHI has agreed to contribute a total of $5,000,000 based on $1,000,000 per year for each of the first five (5) years of the Initial Term. The first payment of $1,000,000 shall be paid to Vyripharm no later than four (4) days following the Effective Date, and the remaining four (4) annual payments shall be paid by IHI to Vyripharm on each of the following one (1) year anniversaries of the Effective Date. If IHI should fail to timely pay the initial $1,000,000 as set forth above, this Agreement shall terminate and neither Party shall have further obligation to the other. If IHI should fail to pay the second $1,000,000 payment within thirty (30) days following the second anniversary of the Effective Date, then this Agreement shall terminate and Alamo CBD shall forfeit four-fifths (4/5) of its revenue share from any product that has been developed or is subsequently developed by Vyripharm which uses cannabis oil or processes supplied to Vyripharm by IHI. If IHI should fail to pay the third $1,000,000 payment within thirty (30) days following the third anniversary of the Effective Date, then this Agreement shall terminate and IHI shall forfeit three-fifths (3/5) of its revenue share from any product that has been developed or is subsequently developed by Vyripharm which uses medical cannabis oil or processes supplied to Vyripharm by IHI. If IHI should fail to pay the fourth $1,000,000 payment within thirty (30) days following the fourth anniversary of the Effective Date, then this Agreement shall terminate and IHI shall forfeit four-fifths (2/5) of its revenue share from any product that has been developed or is subsequently developed by Vyripharm which uses medical cannabis oil or processes supplied to Vyripharm by IHI. If IHI should fail to pay the fifth $1,000,000 payment within thirty (30) days following the fifth anniversary of the Effective Date, then this Agreement shall terminate and IHI shall forfeit one-fifth (1/5) of its revenue share from any product that has been developed or is subsequently developed by Vyripharm which uses medical cannabis oil or processes supplied to Vyripharm by IHI. Except for cost sharing for the filing of, prosecuting and maintaining any joint patent applications pursuant to Paragraph 6 of this Agreement, and unless the Parties mutually agree, IHI shall have no further financial obligations under this Agreement during the Initial Term. The Parties shall otherwise bear their own costs in carrying out their respective responsibilities under this Agreement. Note1: Due to the Fees and schedule that Vyripharm must attained with the institutions in the TMC the only pay out structure that we can approve is the following: The first $1,000,000 shall be paid as follow: Option 1) Upfront all the $1,000,000.00 for the year if excess funds are raised (Over the $10,250,000), Option 2) 5% of funds up to $10,250,000, which are raised from presentations to investors in which Vyripharm participates; Option 3) if less than $10,250,000 is raised in 2017, then IHI will/should make a $250,000 down payment to Vyripharm, and pay another $250,000 at the end of the 2nd quarter of 2017. If IHI does not have the funds to pay another $250,000 in the 3rd quarter of 2017, then that payment can be pushed back to the 4th quarter with the final payment of $500,000 owed to Vyripharm in or at the end of the 4th quarter of 2017 As of March 31, 2017, the Company paid $250,000 down payment as required by the agreement. Deferred rent payable at March 31, 2017 was $7,945. Deferred rent payable is the sum of the difference between the monthly rent payment and the straight-line monthly rent expense of an operating lease that contains escalated payments in future periods. Rent expense for the three months ended March 31, 2017 and 2016, were: Three Months Ended March 31, 2017 March 31, 2016 Rent expense $ 18,639 $ 12,788 |
CONCENTRATIONS
CONCENTRATIONS | 3 Months Ended |
Mar. 31, 2017 | |
Risks and Uncertainties [Abstract] | |
CONCENTRATIONS | NOTE 5 - CONCENTRATIONS At March 31, 2017 and December 31, 2016, the Company had concentrations of accounts receivable of: Customer March 31, 2017 December 31, 2016 Tweed, Inc. - % 100 % For the three months ended March 31, 2017 and 2016, the Company had a concentration of sales of: Customer March 31, 2017 December 31, 2016 University of Arizona CEAC - % 6 % GSS Colorado - % 22 % ER Michigan - % 55 % PH Research Platform - % 17 % |
WORK IN PROCESS
WORK IN PROCESS | 3 Months Ended |
Mar. 31, 2017 | |
Contractors [Abstract] | |
WORK IN PROCESS | NOTE 6 - WORK IN PROCESS Work in progress as of March 31, 2017 and December 31, 2016, consisted of the following: Description March 31, 2017 December 31, 2016 Costs incurred on uncompleted contracts $ 80,620 $ 80,620 Estimated earnings - - Less: Billings to date (100,775 ) (100,775 ) Total (20,155 ) (20,155 ) Reflected in balance sheet as: Costs and estimated earnings in excess of billings on contracts in process $ - $ - Billings in excess of costs and estimated earnings on contracts in process 20,155 20,155 Total $ 20,155 $ 201,55 |
NOTE PAYABLE
NOTE PAYABLE | 3 Months Ended |
Mar. 31, 2017 | |
Notes Payable [Abstract] | |
NOTE PAYABLE | NOTE 7 - NOTE PAYABLE On June 5, 2015, the Company entered into a five year loan agreement totaling $36,100. The loan carries interest at a rate of 10.25%. The balance at March 31, 2017 and December 31, 2016 is $25,499 and $27,132, respectively. |
DEBT AND CONVERTIBLE LOAN PAYAB
DEBT AND CONVERTIBLE LOAN PAYABLE | 3 Months Ended |
Mar. 31, 2017 | |
Debt And Convertible Loan Payable [Abstract] | |
DEBT AND CONVERTIBLE LOAN PAYABLE | NOTE 8 - DEBT AND CONVERTIBLE LOAN PAYABLE Convertible Note Payable On March 20, 2017, the Company settled $225,500 in principal and interest, plus 115% multiplied by the principal amount of $225,500 plus accrued interest of $8,846 on the principal amount of a promissory note with Chuck Rifici Holdings, Inc originally dated September 26, 2016. The Company settled the amount owed by paying $269,498 in cash. The Company was released from any further liability under this Rifici Note upon payment of this amount. On March 20, 2017, the Company settled $275,000 in principal and interest, plus 115% multiplied by the principal amount of $275,000 plus accrued interest of $7,333 on the principal amount of a promissory note with FirstFire Global Opportunities Fund, LLC originally dated October 19, 2016 and December 12, 2016. The Company settled the amount owed by paying $252,917 in cash and issuing 333,333 shares of common stock with a fair value of $100,000 based upon the conversion price of $0.30 per share. The Company was released from any further liability under this FirstFire Global Opportunities Fund, LLC Note upon payment of this amount. On March 24, 2017, the Company entered into a securities purchase agreements with Tangiers Global, LLC, relating to the issuance and sale of notes of $550,000 in aggregate principal amount including $250,000 actual payment of purchase price plus a 10% original issue discount. The notes carry an interest on the unpaid principal amount at the rate of 8% per annum. Any Principal Amount or Interest which is not paid when due shall bear interest at the rate of 18% per annum from the due date until the same is paid. The March 24, 2017 note matures on November 24, 2017 and may be prepaid in whole or in part except otherwise explicitly set forth in the Note. If the Company exercises its right to prepay or repay the Note, the Company shall make payment to the note holders of an amount in cash equal to the following: Days Since Effective Date Prepayment Amount Under 90 days 115% of principal amount 91 - 135 days 120% of principal amount 136 - 180 days 155% of principal amount After 180 days from the effective date of this note may not be prepaid. The notes convert into shares of Common Stock at a price equal to $0.30; provided, however that from and after the occurrence of any Event of Default hereunder, the Conversion Price shall be the lower of: (i) the Fixed Conversion Price or (ii) 65% multiplied by the lowest sales price of the Common Stock in a public market during the fifteen (15) consecutive Trading Day period immediately preceding the Trading Day that the Company receives a Notice of Conversion (as defined in the Note). For the three months ended March 31, 2017, the Company received $275,000 proceeds less $25,000 in original issuance discount fee pursuant to the terms of this convertible note. For convertible debt, the convertible was not in default as of March 31, 2017, as a result, the Company will record a BCF and related debt discount. For the three months ended March 31, 2017, the Company accrued $422 in accrued interest related to outstanding the note. Debt Discount and Original Issuance Costs During the three months March 31, 2017 and March 31, 2016, the Company recorded debt discounts and original issuance costs totaling $120,333 and $176,916, respectively. The debt discounts recorded in 2017 and 2016, pertain to beneficial conversion feature on the convertible notes. The notes are required to be bifurcated and reported at fair value on the date of grant. (see Note 1 Fair Value Measurements). The Company amortized $156,055 and $8,654 to interest expense during the three months ended March 31, 2017 and 2016, as follows: Three Months Ended Year Ended March 31, December 31, Debt discount, beginning of period $ 152,617 $ - Additional debt discount 120,333 417,834 Amortization of debt discount (156,055 ) (265,217 ) Debt discount, end of period $ 116,895 $ 152,617 Debt Issuance Costs During the three months ended March 31, 2017 and March 31, 2016, the Company paid debt issuance costs totaling $0 and $20,000, respectively. During the three months ended March 31, 2017 and March 31, 2016, the Company amortized $0 and $978 of debt issue costs, respectively. Three Months Ended Year Ended March 31, December 31, Debt discount, beginning of period $ - $ - Additional debt discount - 20,000 Amortization of debt discount - (978 ) Debt discount, end of period $ - $ 19,022 |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 3 Months Ended |
Mar. 31, 2017 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 9 - RELATED PARTY TRANSACTIONS On May 9, 2016, the Company entered into a Director Agreement with Pawel Hardej. The Company will reimburse the Director for reasonable travel and other incidental expenses incurred by the Director in performing his services and attending meetings as approved in advance by the Company. The Company shall award to the Director 166,560 shares of common stock over a two-year period as directed in the Director Agreement. As of March 31, 2017, the Company issued 166,560 shares of common stock having a fair value of $77,638 ($0.65-$0.44 per share) based upon the most recent trading price per share of the Company's common stock (See Note 10). |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 3 Months Ended |
Mar. 31, 2017 | |
Equity [Abstract] | |
STOCKHOLDERS' EQUITY | NOTE 10 - STOCKHOLDERS' EQUITY Series A Convertible Preferred Stock During the third quarter 2016, the Company initiated a subscription agreement to offer accredited investors up to 1,000,000 units (“Unit”) of security, where each Unit consists of 1 (one) share of Series A Convertible Preferred Stock and 1 (one) Series A Warrant. The price per Unit is $0.50 for a maximum aggregate of 1,000,000 Units and maximum aggregate proceeds of $500,000. The stated value of each preferred stock is $0.50 and there are no dividends on the Series A Convertible Preferred Stock. The Warrants are exercisable at $0.50 per share and shall be exercisable for a period of one year. From August 15 to August 29, 2016, the Company subscribed 250,000 Units to three investors for total proceeds of $125,000. Based on the fair value of the issued 250,000 warrants, $33,238 proceeds allocated as discount to the total $125,000 preferred stock. During the three months ended March 31, 2017 and 2016, the Company amortized $33,238 and $0 of debt discount related to the warrants, respectively. The remaining debt discount related to the warrants is $0. On March 20, 2017, the Company's Series A Preferred Convertible Stock shareholders ("Series A Holders") each voted to waive and remove the provisions of Section 5(iii) of the Series A Preferred Stock Designation. This waives and removes what is known as “full ratchet protection” provisions for adjustments in the Conversion Price and formula. Series A Holders have each agreed individually and also as a group to convert their Series A Convertible Preferred Stock into Common Stock at a conversion price equal to $0.30 per share. A total of 250,000 shares of the Company's Series A Preferred Convertible Stock were converted into 416,667 shares of Common Stock. As a result of this action, there currently are no Series A Convertible Preferred Stock issued and outstanding. Common Stock January 16, 2017, we issued 145,740 shares of Common Stock related to a Director Agreement with Pawel Hardej. The Company recorded fair value of $64,126 ($0.44/share) based upon the most recent trading price per share of the Company's stock. January 16, 2017, we issued 41,640 shares of Common Stock related to a Director Agreement with John Zimmerman. The Company recorded fair value of $18,322 ($0.44/share) based upon the most recent trading price per share of the Company's stock. January 16, 2017, we issued 62,460 shares of Common Stock related to a Director Agreement with John Choo. The Company recorded fair value of $27,482 ($0.44/share) based upon the most recent trading price per share of the Company's stock. January 17, 2017, we issued 800,000 shares of Common Stock to Lyons Capital, LLC for a six month consulting and road show services agreement. The Company recorded fair value of $352,000 ($0.44/share) based upon the most recent trading price per share of the Company's stock. On January 17, 2016, the Company issued 20,820 shares of Common Stock related to a Director Agreement with John Zimmerman, of common stock with a fair value of $9,369 ($0.45/share) based upon the most recent trading price per share of the Company's stock. From February 22, 2017 through March 15, 2017, the Company sold, in reliance upon Regulation D Rule 506, a total of 2,060,000 shares of Common Stock to 17 U.S. accredited investors at $0.40 per share for cash totaling $824,000. On March 20, 2017, the Company settled the amount owed to FirstFire Global Opportunities Fund LLC by paying $252,917 in cash and issuing 333,333 shares of common stock with a fair value of $100,000 based upon the conversion price of $0.30/share (See Note 8). Common Stock Warrants On September 26, 2016, the Company entered into a promissory note with Chuck Rifici Holdings, Inc., relating to the issuance of $225,500 in aggregate principal amount including $204,000 actual payment of purchase price plus a 10% original issue discount. In conjunction with the issuance of the Note, the company issued) one year warrants to purchase 250,000 shares of common stock at an exercise price of $0.30 per share (See Note 8). Number of Warrants Weighted Average Exercise Price Weighted Average Remaining Contractual Life (in Years) Balance, December 31, 2016 500,000 - - Granted - - - Exercised - - - Canceled/Forfeited 250,000 - - Balance March 31, 2017 250,000 $ 0.30 $ 0.49 For the three months ended March 31, 2017, the following warrants were outstanding: Exercise Price Warrants Outstanding Warrants Exercisable Weighted Average Remaining Contractual Life Aggregate Intrinsic Value $ 0.30 250,000 0.49 25,000 For the year ended December 31, 2016, the following warrants were outstanding: Exercise Price Warrants Outstanding Warrants Exercisable Weighted Average Remaining Contractual Life Aggregate Intrinsic Value $ 0.30-0.50 500,000 0.69 32,500 Lattice Binomial model was used to value aggregate intrinsic value. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 3 Months Ended |
Mar. 31, 2017 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 11 – SUBSEQUENT EVENTS From April 26, 2017 through May 3, 2017, the Company sold, in reliance upon Regulation D Rule 506, a total of 750,000 shares of Series A Convertible Preferred Stock to 13 U.S. accredited investors at $0.40 per share for cash totaling $300,000. |
SUMMARY OF SIGNIFICANT ACCOUN18
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Mar. 31, 2017 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying financial statements have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (GAAP). It is management's opinion, however, that all material adjustments (consisting of normal and recurring adjustments) have been made which are necessary for a fair financial statements presentation. The results for the interim period are not necessarily indicative of the results to be expected for the year. Indoor Harvest Corp., or the "Company," is a Texas corporation formed on November 23, 2011. Indoor Harvest Corp., through its brand name Indoor Harvest™, is a company specializing in equipment design, development, marketing and direct-selling of commercial grade aeroponics fixtures and supporting systems for use in urban Controlled Environment Agriculture ("CEA") and Building Integrated Agriculture ("BIA"). Indoor Harvest Corp is a Design-Build contractor for the vertical farming and indoor farming industry. The Company’s principal lines of business are engineering, procurement and construction services as well as the manufacture of a variety of indoor farming fixtures and equipment. The Company provides its products and services worldwide for controlled environment and building integrated agricultural operators. These unaudited interim consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2016, filed with the SEC on April 17, 2017. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include, but are not limited to the estimate of percentage of complete on construction contracts in progress at each reporting period which we rely on as a primary basis of revenue recognition, estimated useful lives of equipment for purposes of depreciation and the valuation of common shares issued for services, equipment and the liquidation of liabilities. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid instruments with a maturity of three months or less to be cash and cash equivalents. |
Accounts Receivable and Work in Progress | Accounts Receivable and Work in Progress Work in process consists of costs recorded and revenue earned on projects recognized on the percentage of completion method for work performed on contracts in progress at March 31, 2017 and December 31, 2016. The Company records revenue based on contractual agreements entered into at the inception of construction contracts. Amounts are payable from customers based on milestones established in each contract. Amounts are billed at milestone completion and are reflected as accounts receivable when billed. Costs and estimated earnings are accumulated on projects in process and compared to amounts billed based on the percentage of completion method of accounting (cost to cost). Costs incurred in excess of amounts billed and related profit recognized are reflected as an asset in the balance sheet as costs and estimated earnings in excess of billings. Unearned billings are reflected in the balance sheet as a liability as billings in excess of costs and estimated earnings on projects in process (See Note 7). |
Inventories | Inventories Inventory consists primarily of raw materials and packaging materials and is valued at the lower of cost or market. Cost is determined using the weighted average method and average cost is recomputed after each inventory purchase or sale. Inventory is periodically reviewed in order to identify obsolete or damaged inventory and impaired values. Inventory is comprised of raw materials such as steel for our framing systems and packaging materials such as boxes and pallets valued at $2,360 at both March 31, 2017 and December 31, 2016. |
Revenue Recognition | Revenue Recognition The Company recognizes revenue on arrangements in accordance with FASB ASC No. 605, “Revenue Recognition”. In all cases, revenue is recognized only when the price is fixed and determinable, persuasive evidence of an arrangement exists, the service is performed and collectability of the resulting receivable is reasonably assured. The Company will generate revenue from the design and installation of the equipment. Revenue from construction contracts are reported under the percentage of completion method for financial statement purposes. The estimated revenue for each contract reflected in the financial statements represent that percentage of estimated total revenue that costs incurred to date bear to estimated total costs, based on the Company’s current estimates. With respect to contracts that extend over one or more accounting periods, revisions in costs and revenue estimates during the course of the work are reflected in the period the revisions become known. When current estimates of total contract costs indicate a loss, provision is made for the entire estimated loss. The asset, “Costs and estimated earnings in excess of billings on uncompleted contracts,” represents revenues recognized in excess of amounts billed. The liability, “Estimated earnings on uncompleted contracts,” represents billings in excess of revenues recognized. Billing practices for these projects are governed by the contract terms of each project based upon actual costs incurred, achievement of milestones, or pre-agreed schedules. Billings do not necessarily correlate with revenue recognized under the percentage of completion method of accounting. With the exception of claims and change orders that are in the process of being negotiated with customers, unbilled work is usually billed during normal billing processes following achievement of the contractual requirements. |
Stock Based Compensation | Stock Based Compensation The Company follows ASC 718-10, Stock Compensation, which addresses the accounting for transactions in which an entity exchanges its equity instruments for goods or services, with a primary focus on transactions in which an entity obtains employee services in stock based payment transactions. ASC 718-10 requires measurement of the cost of employee services received in exchange for an award of equity instruments based on the grant date fair value of the award (with limited exceptions). |
Loss per Share | Loss per Share Basic earnings per share amounts are calculated based on the weighted average number of shares of common stock outstanding during each period. Diluted earnings per share is based on the weighted average numbers of shares of common stock outstanding for the periods, including dilutive effects of stock options, warrants granted and convertible preferred stock. Dilutive options and warrants that are issued during a period or that expire or are canceled during a period are reflected in the computations for the time they were outstanding during the periods being reported. Since the Company has incurred losses for all periods, the impact of the common stock equivalents would be antidilutive and therefore are not included in the calculation. The Company has the following common stock equivalents for the three months ended March 31, 2017 and 2016, respectively: March 31, 2017 March 31, 2016 Convertible debt (exercise price - $0.30/share) 916,667 908,333 |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company adopted ASC Topic 820 Fair Value Measurements for financial and non-financial assets and liabilities. The adoption did not have a material impact on our results of operations, financial position or liquidity. This standard defines fair value and provides guidance for measuring fair value and requires certain disclosures. This standard does not require any new fair value measurements, but rather applies to all other accounting pronouncements that require or permit fair value measurements. This guidance does not apply to measurements related to share based payments. This guidance discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow), and the cost approach (cost to replace the service capacity of an asset or replacement cost). The guidance utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels: · Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities. · Level 2: Inputs other than quoted prices that are observable, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active. · Level 3: Unobservable inputs in which little or no market data exists, therefore developed using estimates and assumptions developed by us, which reflect those that a market participant would use. Carrying amounts reported in the balance sheets for cash and cash equivalents, accounts receivable, accounts payable, and accrued expenses approximate fair value due to their relatively short maturity. Debt classified as Level 2 in the fair value hierarchy represent notes payable, net of debt discount, of $158,105 and $209,786 at March 31, 2017 and December 31, 2016, respectively, and convertible notes payable of $0 and $122,383 at March 31, 2017 and December 31, 2016, respectively.. |
Income Taxes | Income Taxes The Company accounts for income taxes pursuant to FASB ASC 740—Income Taxes, which requires recognition of deferred income tax liabilities and assets for the expected future tax consequences of events that have been recognized in the financial statements or tax returns. The Company provides for deferred taxes on temporary differences between the financial statements and tax basis of assets using the enacted tax rates that are expected to apply to taxable income when the temporary differences are expected to reverse. FASB ASC 740 establishes a more likely than not threshold for recognizing the benefits of tax return positions in the financial statements. Also, the statement implements a process for measuring those tax positions that meet the recognition threshold of being ultimately sustained upon examination by the taxing authorities. There are no uncertain tax positions taken by the Company on its tax returns. The Company files tax returns in the U.S. and states in which it has operations and is subject to taxation. Tax years 2016, 2015, 2014, 2013, 2012 and 2011, remain subject to examination by the IRS and respective states. |
Property and Equipment | Property and Equipment Property and equipment is recorded at cost and depreciated or amortized using the straight-line method over the estimated useful life of the asset or the underlying lease term for leasehold improvements, whichever is shorter. The estimated useful life by asset description is noted in the following table: Asset Description Estimated Useful Life (Years) Furniture and equipment 3 - 5 Tooling equipment 10 Leasehold improvements * __________ * The shorter of 5 years or the life of the lease. Additions are capitalized and maintenance and repairs are charged to expense as incurred. Gains and losses on dispositions of equipment are reflected in other income. |
Intangible Asset | Intangible Asset The Company's intangible assets consist of domain names and is accounted for as an indefinite lived intangible asset in accordance with ASC 350 "Goodwill and Other Intangible Assets" ("ASC 350"). It also includes software and is amortized over a 3-5 year period. Intangible assets are reviewed annually for impairment or whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. There were no impairment charges taken during the three months ended March 31, 2017 and 2016. Intangible Assets consist of the following at March 31, 2017 and December 31, 2016: Classification March 31, December 31, Domain Name $ 2,000 $ 2,000 Facilities Manager’s Package Online 1,023 1,023 MLC CD Systems (software) 7,561 7,561 Total 10,584 10,584 Less: Accumulated amortization (3,406 ) (2,980 ) Intangible Assets, net $ 7,178 $ 7,604 |
Patent and Patent Application Expenses | Patent and Patent Application Expenses Although the Company believes that its patent and underlying technology will have continuing value, the amount of future benefits to be derived from the patent is uncertain. Therefore, patent costs are expensed as incurred. |
Research and Development | Research and Development Research and development expenditures are charged to expense as incurred. Research and development expense for the three months ended March 31, 2017 and 2016 are as follows: Three Months Ended March 31, 2017 March 31, 2016 Research and development expense $ 737 $ 3,030 |
Advertising Expense | Advertising Expense Advertising and promotional costs are expensed as incurred. Advertising expense for the three months ended March 31, 2017 and 2016, are as follows: Three Months Ended March 31, 2017 March 31, 2016 Advertising expense $ 9,852 $ 32,830 |
Reclassification | Reclassifications Certain expense items have been reclassified in the statement of operations for the three months ended March 31, 2016, to conform to the reporting format adopted for the three months ended March 31, 2017. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements The Company has implemented all new accounting pronouncements that are in effect as of the date of the issuance of these financial statements. The following pronouncements will significantly impact future reporting of financial positon and results of operations. Management is currently assessing implementation. The FASB has issued Accounting Standards Update (ASU) No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business, clarifying the definition of a business. The amendments affect all companies and other reporting organizations that must determine whether they have acquired or sold a business. For public companies, the amendments are effective for annual periods beginning after December 15, 2017, including interim periods within those periods. The FASB has issued its new lease accounting guidance in Accounting Standards Update (ASU) No. 201602, Leases (Topic 842). Under the new guidance, lessees will be required to recognize the following for all leases (with the exception of short-term leases) at the commencement date: · A lease liability, which is a lessee‘s obligation to make lease payments arising from a lease, measured on a discounted basis; and · A right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. · Under the new guidance, lessor accounting is largely unchanged. Certain targeted improvements were made to align, where necessary, lessor accounting with the lessee accounting model and Topic 606, Revenue from Contracts with Customers. · The new lease guidance simplified the accounting for sale and leaseback transactions primarily because lessees must recognize lease assets and lease liabilities. Lessees will no longer be provided with a source of off-balance sheet financing. Public business entities should apply the amendments in ASU 2016-02 for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years (i.e., January 1, 2019, for a calendar year entity). The FASB has issued Accounting Standards Update (ASU) No. 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The amendments are intended to improve the accounting for employee share-based payments and affect all organizations that issue share-based payment awards to their employees. Several aspects of the accounting for share-based payment award transactions are simplified, including: (a) income tax consequences; (b) classification of awards as either equity or liabilities; and (c) classification on the statement of cash flows. For public companies, the amendments are effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. For private companies, the amendments are effective for annual periods beginning after December 15, 2017, and interim periods within annual periods beginning after December 15, 2018. Early adoption is permitted for any organization in any interim or annual period. The FASB has issued Accounting Standards Update No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing. The amendments clarify the following two aspects of Topic 606: (a) identifying performance obligations; and (b) the licensing implementation guidance. The amendments do not change the core principle of the guidance in Topic 606. The effective date and transition requirements for the amendments are the same as the effective date and transition requirements in Topic 606. Public entities should apply the amendments for annual reporting periods beginning after December 15, 2017, including interim reporting periods therein (i.e., January 1, 2018, for a calendar year entity). Early application for public entities is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The effective date for nonpublic entities is deferred by one year. |
Derivative Liability | Derivative Liability The Company accounts for derivative instruments in accordance with ASC 815, which establishes accounting and reporting standards for derivative instruments and hedging activities, including certain derivative instruments embedded in other financial instruments or contracts and requires recognition of all derivatives on the balance sheet at fair value, regardless of hedging relationship designation. Accounting for changes in fair value of the derivative instruments depends on whether the derivatives qualify as hedge relationships and the types of relationships designated are based on the exposures hedged. At March 31, 2017 and December 31, 2016, the Company did not have any derivative instruments that were designated as hedges. |
Beneficial Conversion Feature | Beneficial Conversion Feature For conventional convertible debt where the rate of conversion is below market value, the Company records a "beneficial conversion feature" ("BCF") and related debt discount. When the Company records a BCF, the relative fair value of the BCF is recorded as a debt discount against the face amount of the respective debt instrument. The discount is amortized to interest expense over the life of the debt. |
SUMMARY OF SIGNIFICANT ACCOUN19
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Accounting Policies [Abstract] | |
Schedule of common stock equivalents | March 31, 2017 March 31, 2016 Convertible debt (exercise price - $0.30/share) 916,667 908,333 |
Schedule of estimated useful life by asset description | Asset Description Estimated Useful Life (Years) Furniture and equipment 3 - 5 Tooling equipment 10 Leasehold improvements * __________ * The shorter of 5 years or the life of the lease. |
Schedule of intangible asset | Classification March 31, December 31, Domain Name $ 2,000 $ 2,000 Facilities Manager’s Package Online 1,023 1,023 MLC CD Systems (software) 7,561 7,561 Total 10,584 10,584 Less: Accumulated amortization (3,406 ) (2,980 ) Intangible Assets, net $ 7,178 $ 7,604 |
Schedule of research and development expense | Three Months Ended March 31, 2017 March 31, 2016 Research and development expense $ 737 $ 3,030 |
Schedule of advertising expense | Three Months Ended March 31, 2017 March 31, 2016 Advertising expense $ 9,852 $ 32,830 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment | Classification March 31, 2017 December 31, 2016 Furniture and equipment $ 124,379 $ 123,829 Tooling equipment 27,015 27,015 Leasehold improvements 57,780 57,780 Computer equipment 8,933 8,933 Research and development lab 59,482 59,482 Total 277,589 277,039 Less: Accumulated depreciation and amortization (131,337 ) (118,621 ) Property and equipment, net $ 146,252 $ 158,418 |
COMMITMENTS & CONTINGENCIES (Ta
COMMITMENTS & CONTINGENCIES (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of rent expense | Three Months Ended March 31, 2017 March 31, 2016 Rent expense $ 18,639 $ 12,788 |
CONCENTRATIONS (Tables)
CONCENTRATIONS (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Risks and Uncertainties [Abstract] | |
Schedule of concentration of accounts receivable and sales | At March 31, 2017 and December 31, 2016, the Company had concentrations of accounts receivable of: Customer March 31, 2017 December 31, 2016 Tweed, Inc. - % 100 % For the three months ended March 31, 2017 and 2016, the Company had a concentration of sales of: Customer March 31, 2017 December 31, 2016 University of Arizona CEAC - % 6 % GSS Colorado - % 22 % ER Michigan - % 55 % PH Research Platform - % 17 % |
WORK IN PROCESS (Tables)
WORK IN PROCESS (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Contractors [Abstract] | |
Schedule of Work in progress | Description March 31, 2017 December 31, 2016 Costs incurred on uncompleted contracts $ 80,620 $ 80,620 Estimated earnings - - Less: Billings to date (100,775 ) (100,775 ) Total (20,155 ) (20,155 ) Reflected in balance sheet as: Costs and estimated earnings in excess of billings on contracts in process $ - $ - Billings in excess of costs and estimated earnings on contracts in process 20,155 20,155 Total $ 20,155 $ 201,55 |
DEBT AND CONVERTIBLE LOAN PAY24
DEBT AND CONVERTIBLE LOAN PAYABLE (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Debt And Convertible Loan Payable [Abstract] | |
Schedule of convertible note payable | Days Since Effective Date Prepayment Amount Under 90 days 115% of principal amount 91 - 135 days 120% of principal amount 136 - 180 days 155% of principal amount |
Schedule of debt discount and original issuance costs | Three Months Ended Year Ended March 31, December 31, Debt discount, beginning of period $ 152,617 $ - Additional debt discount 120,333 417,834 Amortization of debt discount (156,055 ) (265,217 ) Debt discount, end of period $ 116,895 $ 152,617 |
Schedule of debt issuance costs | Three Months Ended Year Ended March 31, December 31, Debt discount, beginning of period $ - $ - Additional debt discount - 20,000 Amortization of debt discount - (978 ) Debt discount, end of period $ - $ 19,022 |
STOCKHOLDERS' EQUITY (Tables)
STOCKHOLDERS' EQUITY (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Equity [Abstract] | |
Schedule of warrant activity during the year | Number of Warrants Weighted Average Exercise Price Weighted Average Remaining Contractual Life (in Years) Balance, December 31, 2016 500,000 - - Granted - - - Exercised - - - Canceled/Forfeited 250,000 - - Balance March 31, 2017 250,000 $ 0.30 $ 0.49 |
Schedule of outstanding warrants | For the three months ended March 31, 2017, the following warrants were outstanding: Exercise Price Warrants Outstanding Warrants Exercisable Weighted Average Remaining Contractual Life Aggregate Intrinsic Value $ 0.30 250,000 0.49 25,000 For the year ended December 31, 2016, the following warrants were outstanding: Exercise Price Warrants Outstanding Warrants Exercisable Weighted Average Remaining Contractual Life Aggregate Intrinsic Value $ 0.30-0.50 500,000 0.69 32,500 |
SUMMARY OF SIGNIFICANT ACCOUN26
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - shares | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Convertible Debt (Exercise price - $0.30/share) | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total | 916,667 | 908,333 |
SUMMARY OF SIGNIFICANT ACCOUN27
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Parentheticals) (Details) | 3 Months Ended |
Mar. 31, 2017USD ($) | |
Convertible Debt (Exercise price - $0.30/share) | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |
Antidilutive securities excluded from Computation of earnings per share, exercise price (in dollars per share) | $ 0.30 |
SUMMARY OF SIGNIFICANT ACCOUN28
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 1) | 3 Months Ended |
Mar. 31, 2017 | |
Furniture and equipment | |
Accounting Policies [Line Items] | |
Estimate Useful Life (Years) | 3 - 5 Years |
Tooling equipment | |
Accounting Policies [Line Items] | |
Estimate Useful Life (Years) | 10 Years |
Leasehold improvements | |
Accounting Policies [Line Items] | |
Estimate Useful Life (Years) | The shorter of 5 years or the life of the lease. |
SUMMARY OF SIGNIFICANT ACCOUN29
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 2) - USD ($) | Mar. 31, 2017 | Dec. 31, 2016 |
Accounting Policies [Line Items] | ||
Intangible assets, gross | $ 10,584 | $ 10,584 |
Less: Accumulated amortization | (3,406) | (2,980) |
Intangible asset, net | 7,178 | 7,604 |
Domain Name | ||
Accounting Policies [Line Items] | ||
Indefinite-lived intangible assets | 2,000 | 2,000 |
Facilities Manager's Package Online | ||
Accounting Policies [Line Items] | ||
Finite-lived intangible assets, gross | 1,023 | 1,023 |
MLC CD Systems (software) | ||
Accounting Policies [Line Items] | ||
Finite-lived intangible assets, gross | $ 7,561 | $ 7,561 |
SUMMARY OF SIGNIFICANT ACCOUN30
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 3) - USD ($) | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Accounting Policies [Abstract] | ||
Research and development expense | $ 737 | $ 3,030 |
SUMMARY OF SIGNIFICANT ACCOUN31
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 4) - USD ($) | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Accounting Policies [Abstract] | ||
Advertising expense | $ 9,852 | $ 32,830 |
SUMMARY OF SIGNIFICANT ACCOUN32
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Detail Textuals) - USD ($) | 3 Months Ended | |
Mar. 31, 2017 | Dec. 31, 2016 | |
Accounting Policies [Line Items] | ||
Inventory of raw materials for framing systems and packaging materials | $ 2,360 | $ 2,360 |
Note payable, net of discount | $ 158,105 | 209,786 |
Convertible note payable, net of debt discount | $ 122,383 | |
Software | Maximum | ||
Accounting Policies [Line Items] | ||
Amortization period | 5 years | |
Software | Minimum | ||
Accounting Policies [Line Items] | ||
Amortization period | 3 years |
GOING CONCERN (Detail Textuals)
GOING CONCERN (Detail Textuals) - USD ($) | 3 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | |
Going Concern [Abstract] | |||
Net loss | $ (1,056,253) | $ (321,675) | |
Net cash used in operations | (352,103) | $ (130,730) | |
Accumulated deficit | $ (5,053,025) | $ (3,996,772) |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) | Mar. 31, 2017 | Dec. 31, 2016 |
Property, Plant and Equipment [Line Items] | ||
Total | $ 277,589 | $ 277,039 |
Less: Accumulated Depreciation and Amortization | (131,337) | (118,621) |
Property & Equipment, net | 146,252 | 158,418 |
Furniture and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Total | 124,379 | 123,829 |
Tooling equipment | ||
Property, Plant and Equipment [Line Items] | ||
Total | 27,015 | 27,015 |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Total | 57,780 | 57,780 |
Computer equipment | ||
Property, Plant and Equipment [Line Items] | ||
Total | 8,933 | 8,933 |
Research and development lab | ||
Property, Plant and Equipment [Line Items] | ||
Total | $ 59,482 | $ 59,482 |
PROPERTY AND EQUIPMENT (Detail
PROPERTY AND EQUIPMENT (Detail Textuals) | 3 Months Ended |
Mar. 31, 2017USD ($) | |
Property, Plant and Equipment [Abstract] | |
Depreciation expense | $ 12,716 |
COMMITMENTS & CONTINGENCIES (De
COMMITMENTS & CONTINGENCIES (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Rent expense | $ 18,639 | $ 12,788 |
COMMITMENTS & CONTINGENCIES (37
COMMITMENTS & CONTINGENCIES (Detail Textuals) - USD ($) | 1 Months Ended | 3 Months Ended | ||
Mar. 23, 2017 | Mar. 31, 2017 | Feb. 15, 2017 | Dec. 31, 2016 | |
Commitments And Contingencies [Line Items] | ||||
Down payment under joint venture agreement | $ 250,000 | |||
Deferred rent payable | $ 7,945 | $ 8,513 | ||
Binding letter of intent | Alamo CBD, LLC ("Alamo CBD") | ||||
Commitments And Contingencies [Line Items] | ||||
Maximum capital required to pay off existing debt | $ 1,000,000 | |||
Contractual Joint Venture Agreement | Vyripharm Enterprises, LLC ("Vyripharm") and Alamo CBD | ||||
Commitments And Contingencies [Line Items] | ||||
Total contribution in joint venture | $ 5,000,000 | |||
Per year contribution in joint venture | 1,000,000 | |||
Payment made in first anniversary of joint venture | 1,000,000 | |||
Payment made in second anniversary of joint venture | 1,000,000 | |||
Payment made in third anniversary of joint venture | 1,000,000 | |||
Payment made in fourth anniversary of joint venture | 1,000,000 | |||
Payment made in fifth anniversary of joint venture | $ 1,000,000 | |||
Description of conditions for fail in payments | If IHI should fail to timely pay the initial $1,000,000 as set forth above, this Agreement shall terminate and neither Party shall have further obligation to the other. If IHI should fail to pay the second $1,000,000 payment within thirty (30) days following the second anniversary of the Effective Date, then this Agreement shall terminate and Alamo CBD shall forfeit four-fifths (4/5) of its revenue share from any product that has been developed or is subsequently developed by Vyripharm which uses cannabis oil or processes supplied to Vyripharm by IHI. If IHI should fail to pay the third $1,000,000 payment within thirty (30) days following the third anniversary of the Effective Date, then this Agreement shall terminate and IHI shall forfeit three-fifths (3/5) of its revenue share from any product that has been developed or is subsequently developed by Vyripharm which uses medical cannabis oil or processes supplied to Vyripharm by IHI. If IHI should fail to pay the fourth $1,000,000 payment within thirty (30) days following the fourth anniversary of the Effective Date, then this Agreement shall terminate and IHI shall forfeit four-fifths (2/5) of its revenue share from any product that has been developed or is subsequently developed by Vyripharm which uses medical cannabis oil or processes supplied to Vyripharm by IHI. If IHI should fail to pay the fifth $1,000,000 payment within thirty (30) days following the fifth anniversary of the Effective Date, then this Agreement shall terminate and IHI shall forfeit one-fifth (1/5) of its revenue share from any product that has been developed or is subsequently developed by Vyripharm which uses medical cannabis oil or processes supplied to Vyripharm by IHI. With the exception of cost sharing for the filing of, prosecuting and maintaining any joint patent applications pursuant to Paragraph 6 of this Agreement, and unless the Parties mutually agree, IHI shall have no further financial obligations under this Agreement during the Initial Term. The Parties shall otherwise bear their own costs in carrying out their respective responsibilities under this Agreement. | |||
Description of conditions for pay out structure | Due to the Fees and schedule that Vyripharm must attained with the institutions in the TMC the only pay out structure that we can approve is the following: The first $1,000,000 shall be paid as follow: Option 1) Upfront all the $1,000,000.00 for the year if excess funds are raised (Over the $10,250,000), Option 2) 5% of funds up to $10,250,000, which are raised from presentations to investors in which Vyripharm participates; Option 3) if less than $10,250,000 is raised in 2017, then IHI will/should make a $250,000 down payment to Vyripharm, and pay another $250,000 at the end of the 2nd quarter of 2017. If IHI does not have the funds to pay another $250,000 in the 3rd quarter of 2017, then that payment can be pushed back to the 4th quarter with the final payment of $500,000 owed to Vyripharm in or at the end of the 4th quarter of 2017 | |||
Down payment under joint venture agreement | $ 250,000 | |||
Initial term of the Joint Venture | 5 years |
CONCENTRATIONS (Details)
CONCENTRATIONS (Details) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2017 | Dec. 31, 2016 | |
Accounts receivable | Tweed, Inc. | ||
Concentration Risk [Line Items] | ||
Percentage of concentration | 100.00% | |
Sales revenue | University of Arizona CEAC | ||
Concentration Risk [Line Items] | ||
Percentage of concentration | 6.00% | |
Sales revenue | GSS Colorado | ||
Concentration Risk [Line Items] | ||
Percentage of concentration | 22.00% | |
Sales revenue | ER Michigan | ||
Concentration Risk [Line Items] | ||
Percentage of concentration | 55.00% | |
Sales revenue | PH Research Platform | ||
Concentration Risk [Line Items] | ||
Percentage of concentration | 17.00% |
WORK IN PROCESS (Details)
WORK IN PROCESS (Details) - USD ($) | Mar. 31, 2017 | Dec. 31, 2016 |
Contractors [Abstract] | ||
Costs incurred on uncompleted contracts | $ 80,620 | $ 80,620 |
Estimated earnings | ||
Less: Billings to date | (100,775) | (100,775) |
Total | (20,155) | (20,155) |
Reflected in balance sheet as: | ||
Costs and estimated earnings in excess of billings on contracts in process | ||
Billings in excess of costs and estimated earnings on contracts in process | 20,155 | 20,155 |
Total | $ 20,155 | $ 20,155 |
NOTE PAYABLE (Detail Textuals)
NOTE PAYABLE (Detail Textuals) - USD ($) | Jun. 05, 2015 | Mar. 31, 2017 | Dec. 31, 2016 |
Notes Payable [Abstract] | |||
Loan payable term | 5 years | ||
Principal loan amount | $ 36,100 | ||
Loan payable, interest rate | 10.25% | ||
Balance loan | $ 25,499 | $ 27,132 |
DEBT AND CONVERTIBLE LOAN PAY41
DEBT AND CONVERTIBLE LOAN PAYABLE (Details) - Convertible note payable | 3 Months Ended |
Mar. 31, 2017 | |
Under 90 days | |
Debt And Convertible Loan Payable [Line Items] | |
Days Since Effective Date | Under 90 days |
Prepayment Amount | 115% of principal amount |
91 - 135 days | |
Debt And Convertible Loan Payable [Line Items] | |
Days Since Effective Date | 91 - 135 days |
Prepayment Amount | 120% of principal amount |
136 - 180 days | |
Debt And Convertible Loan Payable [Line Items] | |
Days Since Effective Date | 136 - 180 days |
Prepayment Amount | 155% of principal amount |
DEBT AND CONVERTIBLE LOAN PAY42
DEBT AND CONVERTIBLE LOAN PAYABLE (Details 1) - USD ($) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2017 | Dec. 31, 2016 | |
Debt Instrument, Unamortized Discount [Roll Forward] | ||
Debt discount, beginning of period | $ 152,617 | |
Additional debt discount | 120,333 | 417,834 |
Amortization of debt discount | (156,055) | (265,217) |
Debt discount, end of period | $ 116,895 | $ 152,617 |
DEBT AND CONVERTIBLE LOAN PAY43
DEBT AND CONVERTIBLE LOAN PAYABLE (Details 2) - USD ($) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | |
Debt Instrument, Unamortized Debt Issue Costs [Roll Forward] | |||
Debt discount, beginning of period | |||
Additional debt discount | 20,000 | ||
Amortization of debt offering costs | $ (978) | ||
Debt discount, end of period | $ 19,022 |
DEBT AND CONVERTIBLE LOAN PAY44
DEBT AND CONVERTIBLE LOAN PAYABLE (Detail Textuals) - USD ($) | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||||
Mar. 24, 2017 | Mar. 20, 2017 | Sep. 26, 2016 | Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | Feb. 22, 2017 | |
Debt And Convertible Loan Payable [Line Items] | |||||||
Proceeds from convertible note payable | $ 230,000 | ||||||
Repayments of note payable | $ 227,132 | 1,474 | |||||
Value of common stock issued for services | 461,930 | ||||||
Shares issued price per share (in dollars per share) | $ 0.40 | ||||||
Additional debt discount | $ 20,000 | ||||||
Debt discount | 120,333 | 176,916 | |||||
Interest expense | 156,055 | 8,654 | |||||
Amortization of debt issue costs | $ 978 | ||||||
Value of conversion of debt | $ 203,319 | ||||||
Conversion of debt, shares issued | 2,581,561 | ||||||
Accrued interest | 422 | ||||||
Chuck Rifici Holdings, Inc | |||||||
Debt And Convertible Loan Payable [Line Items] | |||||||
Proceeds from notes payable | $ 225,500 | ||||||
Repayments of note payable | $ 225,500 | $ 204,000 | |||||
Original issue discount percentage | 10.00% | ||||||
Number of common stock called by warrants | 250,000 | ||||||
Exercise price of warrant | $ 0.30 | ||||||
Principle and interest amount settled | $ 269,498 | ||||||
Percentage multiplied by principal and accrued interest | 115.00% | ||||||
Principal amount | $ 225,500 | ||||||
Accrued interest | 8,846 | ||||||
Securities purchase agreement | Firstfire Global Opportunities Fund, LLC | |||||||
Debt And Convertible Loan Payable [Line Items] | |||||||
Repayments of note payable | 252,917 | ||||||
Value of common stock issued for services | $ 100,000 | ||||||
Conversion of debt, shares issued | 333,333 | ||||||
Principle and interest amount settled | $ 275,000 | ||||||
Percentage multiplied by principal and accrued interest | 115.00% | ||||||
Principal amount | $ 275,000 | ||||||
Accrued interest | $ 7,333 | ||||||
Conversion of stock price per share | $ 0.30 | ||||||
Securities purchase agreement | Tangiers Global, LLC | |||||||
Debt And Convertible Loan Payable [Line Items] | |||||||
Proceeds from notes payable | $ 550,000 | ||||||
Proceeds from convertible note payable | 275,000 | ||||||
Repayments of note payable | $ 250,000 | ||||||
Original issue discount percentage | 10.00% | ||||||
Interest rate percentage on unpaid principal amount | 8.00% | ||||||
Debt default percentage | 18.00% | ||||||
Debt default description | If the Company exercises its right to prepay or repay the Note, the Company shall make payment to the note holders of an amount in cash equal to the following:After 180 days from the effective date of this note may not be prepaid.The notes convert into shares of Common Stock at a price equal to $0.30; provided, however that from and after the occurrence of any Event of Default hereunder, the Conversion Price shall be the lower of: (i) the Fixed Conversion Price or (ii) 65% multiplied by the lowest sales price of the Common Stock in a public market during the fifteen (15) consecutive Trading Day period immediately preceding the Trading Day that the Company receives a Notice of Conversion (as defined in the Note). For the three months ended March 31, 2017, the Company received $275,000 proceeds less $25,000 in original issuance discount fee pursuant to the terms of this convertible note. For convertible debt, the convertible was not in default as of March 31, 2017, as a result, the Company will record a BCF and related debt discount. | ||||||
Additional debt discount | $ 250,000 | ||||||
Original issuance discount fee | $ 25,000 | ||||||
Rate of increase in outstanding of debt | 115.00% | ||||||
Principle and interest amount settled | $ 180 | ||||||
Accrued interest | $ 0 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Detail Textuals) - USD ($) | May 09, 2016 | Mar. 31, 2017 | Feb. 22, 2017 |
Related Party Transaction [Line Items] | |||
Shares of common stock with a fair value | $ 461,930 | ||
Shares issued price per share (in dollars per share) | $ 0.40 | ||
Director Agreement | Pawel Hardej | |||
Related Party Transaction [Line Items] | |||
Common stock issued for services (in shares) | 166,560 | 166,560 | |
Shares of common stock with a fair value | $ 77,638 | ||
Term period of services | 2 years | ||
Director Agreement | Pawel Hardej | Minimum | |||
Related Party Transaction [Line Items] | |||
Shares issued price per share (in dollars per share) | $ 0.44 | ||
Director Agreement | Pawel Hardej | Maximum | |||
Related Party Transaction [Line Items] | |||
Shares issued price per share (in dollars per share) | $ 0.65 |
SHAREHOLDERS' EQUITY (Details)
SHAREHOLDERS' EQUITY (Details) - Warrant | 3 Months Ended |
Mar. 31, 2017$ / sharesshares | |
Number of Warrants | |
Balance, December 31, 2016 | 500,000 |
Granted | |
Exercised | |
Cancelled/Forfeited | 250,000 |
Balance March 31, 2017 | 250,000 |
Weighted Average Exercise Price | |
Balance, December 31, 2016 | $ / shares | |
Balance March 31, 2017 | $ / shares | $ 0.30 |
Weighted Average Remaining Contractual Life (in Years) | |
Balance March 31, 2017 | 5 months 27 days |
SHAREHOLDERS' EQUITY (Details 1
SHAREHOLDERS' EQUITY (Details 1) - Warrant - USD ($) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2017 | Dec. 31, 2016 | |
Class of Warrant or Right [Line Items] | ||
Exercise Price Warrants Outstanding | $ 0.30 | |
Warrants Exercisable | 250,000 | 500,000 |
Weighted Average Remaining Contractual Life | 5 months 27 days | 8 months 9 days |
Aggregate Intrinsic Value | $ 25,000 | $ 32,500 |
Maximum | ||
Class of Warrant or Right [Line Items] | ||
Exercise Price Warrants Outstanding | $ 0.50 | |
Minimum | ||
Class of Warrant or Right [Line Items] | ||
Exercise Price Warrants Outstanding | $ 0.30 |
SHAREHOLDERS' EQUITY (Detail Te
SHAREHOLDERS' EQUITY (Detail Textuals) | Aug. 29, 2016USD ($)Investorshares | Mar. 31, 2017USD ($)$ / sharesshares | Mar. 31, 2016USD ($) | Sep. 30, 2016USD ($)$ / shares$ / unitshares | Feb. 22, 2017$ / shares | Dec. 31, 2016USD ($)$ / sharesshares | Dec. 31, 2015USD ($) |
Class of Stock [Line Items] | |||||||
Preferred stock, shares authorized | shares | 5,000,000 | 5,000,000 | |||||
Stated value of each issued share of preferred stock | $ / shares | $ 0.01 | $ 0.01 | |||||
Amortization of debt discount | $ 205,007 | $ 8,655 | |||||
Remaining debt discount related to warrants | $ 116,895 | $ 152,617 | |||||
Shares issued price per share (in dollars per share) | $ / shares | $ 0.40 | ||||||
Investor | |||||||
Class of Stock [Line Items] | |||||||
Maximum number of equity units issued | shares | 250,000 | 1,000,000 | |||||
Number of investors | Investor | 3 | ||||||
Description of equity units | each Unit consists of 1 (one) share of Series A Convertible Preferred Stock | ||||||
Par value of equity units | $ / unit | 0.50 | ||||||
Proceeds from issuance or sale of equity | $ 125,000 | $ 500,000 | |||||
Stated value of each issued share of preferred stock | $ / shares | $ 0.50 | ||||||
Exercise price of warrant | $ / shares | $ 0.50 | ||||||
Warrant exercisable term | 1 year | ||||||
Discount on preferred stock | 33,238 | ||||||
Preferred Stock | |||||||
Class of Stock [Line Items] | |||||||
Proceeds from issuance or sale of equity | $ 125,000 | ||||||
Warrant | |||||||
Class of Stock [Line Items] | |||||||
Number of warrants issued | shares | 250,000 | ||||||
Exercise price of warrant | $ / shares | $ 0.30 | ||||||
Amortization of debt discount | $ 33,238 | ||||||
Remaining debt discount related to warrants | $ 0 | ||||||
Common Stock | |||||||
Class of Stock [Line Items] | |||||||
Conversion of preferred stock into common shares (in shares) | shares | 416,667 | ||||||
Series A Convertible Preferred Stock, $0.01 Par Value | |||||||
Class of Stock [Line Items] | |||||||
Conversion of preferred stock into common shares (in shares) | shares | (250,000) | ||||||
Shares issued price per share (in dollars per share) | $ / shares | $ 0.30 |
SHAREHOLDERS' EQUITY (Detail 49
SHAREHOLDERS' EQUITY (Detail Textuals 1) | May 03, 2017USD ($)Investor$ / sharesshares | Mar. 20, 2017USD ($)$ / sharesshares | Mar. 15, 2017USD ($)Investor$ / sharesshares | Jan. 17, 2017USD ($)$ / sharesshares | Jan. 16, 2017USD ($)$ / sharesshares | Jan. 17, 2016USD ($)$ / sharesshares | Mar. 31, 2017USD ($) | Mar. 31, 2016USD ($) | Dec. 31, 2016USD ($)shares | Feb. 22, 2017$ / shares |
Shareholders Equity [Line Items] | ||||||||||
Value of common stock issued for services | $ 461,930 | |||||||||
Shares issued price per share (in dollars per share) | $ / shares | $ 0.40 | |||||||||
Common shares issued for cash (in shares) | shares | 2,060,000 | |||||||||
Common shares issued for cash | $ 824,000 | 824,000 | ||||||||
Repayments of note payable | $ 227,132 | $ 1,474 | ||||||||
Value of conversion of debt | $ 203,319 | |||||||||
Conversion of debt, shares issued | shares | 2,581,561 | |||||||||
U.S. accredited investor | ||||||||||
Shareholders Equity [Line Items] | ||||||||||
Shares issued price per share (in dollars per share) | $ / shares | $ 0.40 | |||||||||
Common shares issued for cash (in shares) | shares | 2,060,000 | |||||||||
Common shares issued for cash | $ 824,000 | |||||||||
Number of U.S. accredited investors | Investor | 17 | |||||||||
Director Agreement | Pawel Hardej | ||||||||||
Shareholders Equity [Line Items] | ||||||||||
Common stock issued for services (in shares) | shares | 145,740 | |||||||||
Value of common stock issued for services | $ 64,126 | |||||||||
Shares issued price per share (in dollars per share) | $ / shares | $ 0.44 | |||||||||
Director Agreement | John Zimmerman | ||||||||||
Shareholders Equity [Line Items] | ||||||||||
Common stock issued for services (in shares) | shares | 41,640 | 20,820 | ||||||||
Value of common stock issued for services | $ 18,322 | $ 9,369 | ||||||||
Shares issued price per share (in dollars per share) | $ / shares | $ 0.44 | $ 0.45 | ||||||||
Director Agreement | John Choo | ||||||||||
Shareholders Equity [Line Items] | ||||||||||
Common stock issued for services (in shares) | shares | 62,460 | |||||||||
Value of common stock issued for services | $ 27,482 | |||||||||
Shares issued price per share (in dollars per share) | $ / shares | $ 0.44 | |||||||||
Securities purchase agreement | Firstfire Global Opportunities Fund, LLC | ||||||||||
Shareholders Equity [Line Items] | ||||||||||
Value of common stock issued for services | $ 100,000 | |||||||||
Repayments of note payable | $ 252,917 | |||||||||
Conversion of debt, shares issued | shares | 333,333 | |||||||||
Conversion of stock price per share | $ / shares | $ 0.30 | |||||||||
Common stock | Consulting and road show services agreement | Lyons Capital, LLC | ||||||||||
Shareholders Equity [Line Items] | ||||||||||
Common stock issued for services (in shares) | shares | 800,000 | |||||||||
Value of common stock issued for services | $ 352,000 | |||||||||
Shares issued price per share (in dollars per share) | $ / shares | $ 0.44 | |||||||||
Series A Preferred Convertible Stock shareholders ("Series A Holders") | ||||||||||
Shareholders Equity [Line Items] | ||||||||||
Shares issued price per share (in dollars per share) | $ / shares | $ 0.30 | |||||||||
Number of common stock issued on conversion | shares | 416,667 | |||||||||
Preferred convertible stock shares issued upon conversion | shares | 250,000 | |||||||||
Series A Preferred Convertible Stock shareholders ("Series A Holders") | Subsequent Event | ||||||||||
Shareholders Equity [Line Items] | ||||||||||
Shares issued price per share (in dollars per share) | $ / shares | $ 0.40 | |||||||||
Common shares issued for cash (in shares) | shares | 750,000 | |||||||||
Common shares issued for cash | $ 300,000 | |||||||||
Number of U.S. accredited investors | Investor | 13 |
SHAREHOLDERS' EQUITY (Detail 50
SHAREHOLDERS' EQUITY (Detail Textuals 2) - USD ($) | 1 Months Ended | 3 Months Ended | ||
Mar. 20, 2017 | Sep. 26, 2016 | Mar. 31, 2017 | Mar. 31, 2016 | |
Shareholders Equity [Line Items] | ||||
Repayments of note payable | $ 227,132 | $ 1,474 | ||
Chuck Rifici Holdings, Inc | ||||
Shareholders Equity [Line Items] | ||||
Proceeds from notes payable | $ 225,500 | |||
Repayments of note payable | $ 225,500 | $ 204,000 | ||
Original issue discount percentage | 10.00% | |||
Number of common stock called by warrants | 250,000 | |||
Exercise price of warrant | $ 0.30 |
SUBSEQUENT EVENTS (Detail Textu
SUBSEQUENT EVENTS (Detail Textuals) | May 03, 2017USD ($)Investor$ / sharesshares | Mar. 15, 2017USD ($)shares | Mar. 31, 2017USD ($) | Mar. 20, 2017$ / shares | Feb. 22, 2017$ / shares |
Subsequent Event [Line Items] | |||||
Stock issued (in shares) | shares | 2,060,000 | ||||
Shares issued price per share (in dollars per share) | $ 0.40 | ||||
Value of stock issued | $ | $ 824,000 | $ 824,000 | |||
Series A Convertible Preferred Stock, $0.01 Par Value | |||||
Subsequent Event [Line Items] | |||||
Shares issued price per share (in dollars per share) | $ 0.30 | ||||
Subsequent Event | Series A Convertible Preferred Stock, $0.01 Par Value | |||||
Subsequent Event [Line Items] | |||||
Stock issued (in shares) | shares | 750,000 | ||||
Number of U.S. accredited investors | Investor | 13 | ||||
Shares issued price per share (in dollars per share) | $ 0.40 | ||||
Value of stock issued | $ | $ 300,000 |