Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2016 | Nov. 21, 2016 | |
Document And Entity Information | ||
Entity Registrant Name | Dthera Sciences | |
Entity Central Index Key | 1,586,372 | |
Document Type | 10-QT | |
Document Period End Date | Sep. 30, 2016 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Is Entity a Well-known Seasoned Issuer? | No | |
Is Entity a Voluntary Filer? | No | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 40,000,000 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2,016 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 |
CURRENT ASSETS | ||
Cash | $ 115,531 | $ 27,238 |
Prepaid expenses | 5,000 | 21,390 |
Deposits | 1,000 | 1,000 |
TOTAL CURRENT ASSETS | 121,531 | 49,628 |
LONG TERM ASSETS | ||
Property and equipment, net | 936 | 1,648 |
TOTAL LONG TERM ASSETS | 936 | 1,648 |
TOTAL ASSETS | 122,467 | 51,276 |
CURRENT LIABILITIES | ||
Accounts payable and accrued liabilities | 139,960 | 149,965 |
Accrued interest | 0 | 17,993 |
Derivative liabilities | 191,949 | 0 |
Notes payable-related party | 0 | 61,064 |
Notes payable | 20,000 | 0 |
Convertible notes payable, net | 11,178 | 189,243 |
Convertible notes payable-related party, net | 0 | 29,114 |
TOTAL CURRENT LIABILITIES | 363,087 | 447,379 |
LONG TERM LIABILITIES | ||
Notes payable | 0 | 270,000 |
Convertible notes payable-related party, net | 0 | 30,000 |
TOTAL LONG TERM LIABILITIES | 0 | 300,000 |
TOTAL LIABILITIES | 363,087 | 747,379 |
STOCKHOLDERS' DEFICIT | ||
Preferred stock 1,000,000 Shares Authorized; $0.001 Par Value; 112,690 and 0 shares issued and outstanding as at September 30, 2016 and December 31, 2015 | 11 | 0 |
Common stock 200,000,000 Shares Authorized; $0.001 Par Value; 40,000,000 and 14,353,091 shares issued and outstanding as of September 30, 2016 and December 31, 2015 | 40,000 | 14,311 |
Additional paid in capital | 1,159,377 | 73,182 |
Accumulated deficit | (1,440,008) | (783,596) |
Total Stockholders' Deficit | (240,620) | (696,103) |
Total Liabilities and Stockholders' Deficit | $ 122,467 | $ 51,276 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares | Sep. 30, 2016 | Dec. 31, 2015 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, authorized | 1,000,000 | 1,000,000 |
Preferred stock, shares issued | 112,690 | 0 |
Preferred stock, shares outstanding | 112,690 | 0 |
Common stock Par value | $ 0.001 | $ 0.001 |
Common stock, Authorized | 200,000,000 | 100,000,000 |
Common stock, Issued | 40,000,000 | 14,353,091 |
Common stock, outstanding | 40,000,000 | 14,353,091 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
REVENUES | ||||
Sales | $ 0 | $ 0 | $ 0 | $ 0 |
Cost of services | 0 | 0 | 0 | 0 |
GROSS PROFIT | 0 | 0 | 0 | 0 |
OPERATING EXPENSES | ||||
Amortization and depreciation | 239 | 0 | 712 | 0 |
General and administrative | 136,209 | 177,010 | 388,402 | 259,229 |
Professional fees | 183,312 | 37,317 | 212,464 | 137,934 |
TOTAL OPERATING EXPENSES | 319,760 | 214,327 | 601,578 | 397,163 |
OPERATING LOSS | (319,760) | (214,327) | (601,578) | (397,163) |
OTHER EXPENSES | ||||
Interest expense | (32,962) | (6,805) | (68,800) | (6,953) |
Derivative expense | (30,197) | 0 | (30,197) | 0 |
Gain on derivative liability | 68,248 | 0 | 68,248 | 0 |
Gain on extinguishment of debt | 34,875 | 0 | 34,875 | 0 |
Impairment of intangible assets | 0 | 0 | (58,960) | 0 |
TOTAL OTHER EXPENSES | 39,964 | (6,805) | (54,834) | (6,953) |
NET LOSS | $ (279,796) | $ (221,132) | $ (656,412) | $ (404,116) |
WEIGHTED AVERAGE SHARES OUTSTANDING - Basic and diluted | 17,713,943 | 14,774,889 | 15,512,115 | 11,852,384 |
Loss per share - Basic and diluted | $ (0.02) | $ (0.01) | $ (0.04) | $ (0.03) |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | |
CASH FLOWS FROM OPERATING ACTIVITIES | |||||
Net Income (Loss) | $ (279,796) | $ (221,132) | $ (656,412) | $ (404,116) | |
Adjustments for non-cash items: | |||||
Amortization and depreciation | 17,316 | 0 | |||
Impairment of intangible assets | 0 | 0 | 58,960 | 0 | $ 7,100 |
Stock issued for services | 16,750 | 0 | |||
Gain on extinguishment of debt | (34,875) | 0 | (34,875) | 0 | |
Gain on derivative liability | (68,248) | 0 | (68,248) | 0 | |
Initial derivative expense | 30,197 | 0 | 30,197 | 0 | |
Options issued for services | 105,141 | 0 | |||
Operating expense paid in behalf of the company | 20,627 | 38,859 | |||
Changes in operating assets and liabilities: | |||||
Prepaid expenses | 16,390 | (18,992) | |||
Deposits | 0 | (1,000) | |||
Accounts payable and accrued liabilities | 166,350 | 153,524 | |||
Accrued interest | 52,197 | 6,953 | |||
NET CASH USED IN OPERATING ACTIVITIES | (275,607) | (224,772) | |||
CASH FLOWS FROM INVESTING ACTIVITIES | |||||
Property and equipment | 0 | (2,166) | |||
NET CASH USED IN INVESTING ACTIVITIES | 0 | (2,166) | |||
CASH FLOWS FROM FINANCING ACTIVITIES | |||||
Proceeds from issuance of common stock, net | 0 | 3,962 | |||
Proceeds from issuance of notes payable | 20,000 | 0 | |||
Proceeds from issuance of notes payable - related party | 0 | 25,000 | |||
Proceeds from issuance of convertible notes | 330,000 | 140,000 | |||
Proceeds from issuance of notes payable - related party | 94,000 | 0 | |||
Proceeds from issuance of convertible notes - related party | 0 | 115,000 | |||
Payments of notes payable - related party | (80,100) | (58,033) | |||
NET CASH PROVIDED BY FINANCING ACTIVITIES | 363,900 | 225,929 | |||
NET CHANGE IN CASH AND CASH EQUIVALENTS | 88,293 | (1,009) | |||
CASH AND CASH EQUIVALENTS - Beginning of period | 27,238 | 8,641 | 8,641 | ||
CASH AND CASH EQUIVALENTS - End of period | $ 115,531 | $ 7,632 | 115,531 | 7,632 | $ 27,238 |
NON-CASH INVESTING AND FINANCING ACTIVITIES | |||||
Shares issued for assets | 58,960 | 0 | |||
Common stock issued for interest | 6,700 | 0 | |||
Preferred shares issued for debt | 112,690 | 0 | |||
Share issued in settlement of stock options | 4,135 | 0 | |||
Shares issued in settlement of debt | 731,391 | 0 | |||
Assets & liabilities settled in Share exchange | 56,355 | 0 | |||
Debt discount on convertible debt | $ 240,000 | $ 0 |
1. Condensed Financial Statemen
1. Condensed Financial Statements | 9 Months Ended |
Sep. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
1. Condensed Financial Statements | The accompanying financial statements of Dthera Sciences (the “Company”) have been prepared by the Company without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, and cash flows at September 30, 2016, and for all periods presented herein, have been made. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been condensed or omitted. It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company's December 31, 2015 audited financial statements. The results of operations for the periods ended September 30, 2016 and 2015 are not necessarily indicative of the operating results for the full years. |
2. Going Concern
2. Going Concern | 9 Months Ended |
Sep. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
2. Going Concern | The Company's financial statements are prepared using U.S. GAAP applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. As of the date of this Report, the Company had an accumulated deficit of $1,440,008, negative working capital of $240,620, and no revenues to cover its operating costs, which raises substantial doubt about its ability to continue as a going concern. As of the date of this Report, the Company had not yet established an ongoing source of revenues sufficient to cover its operating costs and allow it to continue as a going concern. The future of the Company as an operating business will depend on its ability to (1) obtain sufficient capital contributions and/or financing as may be required to sustain its operations and (2) to achieve adequate revenues from its operations. Management's plan to address these issues includes, (a) continued exercise of tight cost controls to conserve cash, (b) obtaining additional financing, (c) placing revenue producing services into place (d) identifying and executing on additional revenue generating opportunities. The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. If the Company is unable to obtain adequate capital, it could be forced to cease operations. |
3. Summary of Significant Accou
3. Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2016 | |
Accounting Policies [Abstract] | |
3. Summary of Significant Accounting Policies | Nature of Business The Company offers a subscription-based service that captures, shares, and stores photos and audio in cloud. It offers the EveryStory platform, which enables users to preserve and share memories, and will initially target a Quality of Life benefit in certain patient populations, principally patients suffering from Alzheimer’s disease and dementia. On September 21, 2016, the Company acquired a new operating subsidiary, EveryStory, Inc., a Delaware corporation (“EveryStory”). Following the acquisition (referred to herein as the “EveryStory Transaction”), the Company’s business is to develop a Digital Therapeutic technology designed to deliver Reminiscence Therapy to certain patient populations, principally patients suffering from Alzheimer’s disease and dementia with the goal of a Quality of Life benefit and reduction in anxiety in those populations. As of the date of this Report, EveryStory was our only subsidiary. In connection with the EveryStory transaction, the Company dissolved its other former subsidiary entity and terminated its prior business operations. Acquisition of EveryStory; EveryStory Transaction On September 21, 2016, the Company entered into an Amended and Restated Acquisition and Share Exchange Agreement (the “A&R Agreement”) with EveryStory, Inc., a Delaware corporation (“EveryStory”), and each of its shareholder (the “Shareholders”), and closed the acquisition (the “Acquisition”) of the ownership of EveryStory (the “Closing”). The Company acquired all of the outstanding shares of EveryStory, and agreed to issue an aggregate of 77,377,712 shares of the Company’s common stock to the EveryStory holders, with the understanding that an additional 45,247,288 shares were to be reserved for issuance to holders of EveryStory derivative securities which are convertible or exercisable into shares of EveryStory common stock (collectively, the “Exchange Shares”). Additionally, prior to Closing, the parties agreed that certain shares of the Company’s common stock were to be returned to the Company for cancellation, resulting in the current Company’s shareholders owning an aggregate of 40,875,000 shares of the Company’s common stock immediately prior to the Closing. Pursuant to the A&R Agreement, the 122,625,000 Exchange Shares issued or to be issued to the EveryStory constituted 75% of the total issued and outstanding shares of the Company’s common stock, and the legacy Company shareholders (who were the owners of the Company’s common stock immediately prior to the Closing) owned an aggregate of 40,875,000 shares, which constituted 25% of the total outstanding Company common stock. The Company’s and EveryStory’s management agreed, and the A&R Agreement provides, that following the Closing, the Company will conduct a reverse stock split (discussed in more detail below), following which the outstanding shares of the Company’s Series A Preferred Stock will convert into a total of 8,000,000 post-reverse-split common stock. Following such conversion, the EveryStory owners will own or have the right to receive shares of the Company’s common stock equal to 60% of the then-outstanding Company common stock, and the Company legacy shareholders will own shares of the Company’s common stock equal to 40% of the then-outstanding Company common stock, consisting of 8,000,000 shares of Company common stock issued on conversion of the Company’s Series A Preferred Stock (20%) and 8,000,000 shares of the Company’s common stock owned by the other legacy Company shareholders (20%). As a result of the Closing of the A&R Agreement, EveryStory became a wholly owned subsidiary of the Company. Additionally, the directors and officers of the Company immediately prior to the Closing appointed the EveryStory management to become officers and directors of the Company, and then resigned from their positions with the Company. In addition, the Company terminated its pre-Closing business operations and agreed to dissolve its other wholly owned subsidiary, Knowledge Machine, Inc. Immediately prior to the Closing, there were 40,875,000 shares of the Company’s common stock. In connection with the Closing, the Company issued an aggregate of 77,377,712 shares to the EveryStory shareholders, and 45,247,288 shares were reserved for issuance to the holders of EveryStory options and convertible debt instruments, and the parties to the A&R Agreement understand and anticipate that all such holders would exercise and convert their securities into the reserved shares of the Company. On November 2, 2016, a reverse stock split (the “Reverse Split”) of the Company’s common stock took effect. The ratio of the Reverse Split was 1:5.109375, meaning one new share for each 5.109375 old shares of the Company’s common stock. All share numbers provided in this Quarterly Report are given on a post-reverse-split basis. Accounting Basis The Company’s financial statements are prepared using the accrual basis of accounting in accordance with U.S. GAAP. As disclosed in a Current Report on Form 8-K filed November 17, 2016, the Company recently changed to a December 31 fiscal year end. Use of Estimates The preparation of financial statements in conformity with U.S. 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 dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Significant estimates are made in relation to the allowance for doubtful accounts and the fair value of certain financial instruments. Principles of Consolidation The consolidated financial statements include the accounts of Dthera Sciences and its subsidiaries. All significant inter-Company accounts and transactions have been eliminated. Fair Value of Financial Instruments The Company measures assets and liabilities at fair value based on an expected exit price as defined by the authoritative guidance on fair value measurements, which represents the amount that would be received on the sale of an asset or paid to transfer a liability, as the case may be, in an orderly transaction between market participants. As such, fair value may be based on assumptions that market participants would use in pricing an asset or liability. The authoritative guidance on fair value measurements establishes a consistent framework for measuring fair value on either a recurring or nonrecurring basis whereby inputs, used in valuation techniques, are assigned a hierarchical level. The following are the hierarchical levels of inputs to measure fair value: Level 1 - Observable inputs that reflect quoted market prices in active markets for identical assets or liabilities. Level 2 - Inputs reflect quoted prices for identical assets or liabilities in markets that are not active; quoted prices for similar assets or liabilities in active markets; inputs other than quoted prices that are observable for the assets or liabilities; or inputs that are derived principally from or corroborated by observable market data by correlation or other means. Level 3 - Unobservable inputs reflecting the Company's assumptions incorporated in valuation techniques used to determine fair value. These assumptions are required to be consistent with market participant assumptions that are reasonably available. The carrying amounts of the Company's financial assets and liabilities, such as cash, prepaid expenses, other current assets, accounts payable & accrued expenses, certain notes payable and notes payable - related party, approximate their fair values because of the short maturity of these instruments. The Company accounts for its derivative liabilities, at fair value, on a recurring basis under level 2. Embedded Conversion Features The Company evaluates embedded conversion features within convertible debt under Accounting Standards Codification (“ASC”) 815, "Derivatives and Hedging" to determine whether the embedded conversion feature(s) should be bifurcated from the host instrument and accounted for as a derivative at fair value with changes in fair value recorded in earnings. If the conversion feature does not require derivative treatment under ASC 815, the instrument is evaluated under ASC 470-20 "Debt with Conversion and Other Options" for consideration of any beneficial conversion feature. Derivative Financial Instruments The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates all of it financial instruments, including stock purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported as charges or credits to income. For option-based simple derivative financial instruments, the Company uses the Black-Scholes option-pricing model to value the derivative instruments at inception and subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period. Debt Issue Costs and Debt Discount The Company may record debt issue costs and/or debt discounts in connection with raising funds through the issuance of debt. These costs may be paid in the form of cash, or equity (such as warrants). These costs are amortized to interest expense over the life of the debt. If a conversion of the underlying debt occurs, a proportionate share of the unamortized amounts is immediately expensed. Stock-Based Compensation The Company accounts for share based payments in accordance with ASC 718, Compensation - Stock Compensation, which requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on the grant date fair value of the award. In accordance with ASC 718-10-30-9, Measurement Objective – Fair Value at Grant Date, the Company estimates the fair value of the award using a valuation technique. For this purpose, the Company uses the Black-Scholes option pricing model. The Company believes this model provides the best estimate of fair value due to its ability to incorporate inputs that change over time, such as volatility and interest rates, and to allow for actual exercise behavior of option holders. Compensation cost is recognized over the requisite service period which is generally equal to the vesting period. Upon exercise, shares issued will be newly issued shares from authorized common stock. ASC 505, "Compensation-Stock Compensation", establishes standards for the accounting for transactions in which an entity exchanges its equity instruments to non-employees for goods or services. Under this transition method, stock compensation expense includes compensation expense for all stock-based compensation awards granted on or after January 1, 2006, based on the grant-date fair value estimated in accordance with the provisions of ASC 505. Loss Per Share Basic loss per Common Share is computed by dividing losses attributable to Common shareholders by the weighted-average number of shares of Common Stock outstanding during the period. Diluted loss per Common Share is computed by dividing loss attributable to Common shareholders by the weighted-average number of Shares of Common Stock outstanding during the period increased to include the number of additional Shares of Common Stock that would have been outstanding if the potentially dilutive securities had been issued. Potentially dilutive securities include outstanding convertible Preferred Stock, stock options, warrants, and convertible debt. The dilutive effect of potentially dilutive securities is reflected in diluted earnings per share by application of the treasury stock method. Under the treasury stock method, an increase in the fair market value of the Company’s Common Stock can result in a greater dilutive effect from potentially dilutive securities. For the nine months ended September 30, 2016 and 2015, all of the Company’s potentially dilutive securities (warrants, options, convertible preferred stock, and convertible debt) were excluded from the computation of diluted earnings per share as they were anti-dilutive. The total number of potentially dilutive Common Shares that were excluded were 240,886 and 0 at nine months ended September 30, 2016 and 2015, respectively. Recent Accounting Pronouncements Management has considered all other recent accounting pronouncements issued since the last audit of our consolidated financial statements. The Company’s management believes that these recent pronouncements will not have a material effect on the Company’s consolidated financial statements. |
4. Property and Equipment
4. Property and Equipment | 9 Months Ended |
Sep. 30, 2016 | |
Property, Plant and Equipment [Abstract] | |
4. Property and Equipment | The Company’s property and equipment were comprised of the following as of September 30, 2016, and December 31, 2015: September 30, 2016 December 31, 2015 Computer & Equipment 2,816 2,816 Less: Accumulated Depreciation (1,880 ) (1,168 ) Net Property and Equipment $ 936 $ 1,648 |
5. Asset Acquisition
5. Asset Acquisition | 9 Months Ended |
Sep. 30, 2016 | |
Business Combinations [Abstract] | |
5. Asset Acquisition | On June 5, 2016, EveryStory issued The Company evaluated this acquisition in accordance with ASC 805, Business Combinations (10-55-4) to discern whether the assets and operations of SIT met the definition of a business. The Company concluded there were not a sufficient number of key processes obtained to develop the inputs into outputs, nor could such processes be easily obtained by the Company. Accordingly, the Company accounted for this transaction as the acquisition of assets. The transaction was accounted for in accordance with asset acquisition guidance found in ASC 805. The consideration transferred and assets acquired recognized is as follows: Consideration paid: $ Common Stock 58,960 Consideration received: $ Intangible assets 58,960 Net value of assets purchased: 58,960 |
6. Intangible Assets
6. Intangible Assets | 9 Months Ended |
Sep. 30, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
6. Intangible Assets | The Company’s intangible assets were comprised of the following of September 30, 2016, and December 31, 2015: September 30, 2016 December 31, 2015 Technology asset purchase $ 58,960 $ 7,100 Less: Accumulated Amortization – – Less: Impairment (58,960 ) (7,100 ) Net Intangible Assets $ – $ – The Company impaired intangible assets related to the technology asset purchase and patent purchase due to no revenue production, totaling $58,960 and $7,100, for the years ended September 30, 2016 and 2015, respectively. |
7. Loans Payable
7. Loans Payable | 9 Months Ended |
Sep. 30, 2016 | |
Debt Disclosure [Abstract] | |
7. Loans Payable | Notes Payable – Related Parties Notes payable due to related parties consisted of the following as of September 30, 2016 and December 31, 2015: Balance December 31, 2015 $ 61,064 Cash additions 94,000 Expense additions 20,627 Cash payments (80,100 ) Conversions (95,591 ) Balance September 30, 2016 $ – During the nine months ended September 30, 2016 and the year ended December 31, 2015, the company Founder and CEO advanced $88,000 and $110,000, and expense additions of $20,627 and $68,904, and was repaid $66,000 and $75,000, respectively. The notes bear an interest rate of 0% per annum. During the nine months ended September 30, 2016 and the year ended December 31, 2015, the company Founder and CTO advanced $6,000 and $25,000, and expense additions of $0 and $595, and was repaid $14,100 and $73,153, respectively. The notes bear an interest rate of 0% per annum. On September 21, 2016, the Company’s wholly owned subsidiary (EveryStory) issued 112,690 shares of the EveryStory Series A Preferred Stock to the CEO and CTO in exchange for and as full payment of amounts to them which included $6,096 of accrued expenses, $95,591 of related party loans, $10,000 of convertible notes payable and $1,003 of accrued interest on the convertible notes payable. The EveryStory Series A Preferred stock are redeemable at any time for cash on a dollar-per-dollar basis at a redemption price of $1.00 per share. If not redeemed for cash, the shares of EveryStory Series A Preferred can be convertible into an aggregate of 160,986 shares of common stock, using a conversion price of $0.70 per share pursuant to the A&R Agreement. Notes Payable Notes payable consisted of the following as of September 30, 2016, and December 31, 2015: Balance December 31, 2015 $ – Cash additions 20,000 Expense additions – Cash payments – Conversions – Balance September 30, 2016 $ 20,000 On August 3, 2016, the Company entered into a promissory note purchase agreement with an unrelated individual for $20,000, pursuant to the original version of the Share Exchange Agreement with EveryStory dated July 1, 2016. This note is due on demand. In lieu of interest, the Company issued 10,000 pre-split split shares of the Company’s common stock (69,811 post-split shares of the Company’s common stock) for a value of $6,700. Convertible Notes Payable – Related Parties Convertible notes payable due to related parties consisted of the following as of September 30, 2016, and December 31, 2015: Balance December 31, 2015 $ 60,000 Cash additions – Expense additions – Conversions (60,000 ) Debt discount from debt issuance costs – Balance September 30, 2016 $ – On June 29, 2015, the Company issued to two related party individuals convertible notes for $30,000 that mature on December 31, 2016. The notes bear an interest rate of 12% per annum and are convertible into shares of the Company’s common stock at the lesser of 70% of the price per share paid by the investors for the next preferred stock in a qualified financing or the quotient of $2,000,000 divided by the fully diluted capitalization of the Company immediately prior to the closing date of the qualified financing. On November 18, 2015, the Company issued to two related party individuals convertible notes for $30,000 that mature on November 18, 2017. The notes bear an interest rate of 12% per annum and are convertible into shares of the Company’s common stock at the lesser of 60% of the lowest price per share paid by the investors for the next preferred stock in a qualified financing or the quotient of $5,000,000 divided by the fully diluted capitalization of the Company immediately prior to the closing date of the qualified financing. On September 21, 2016, in connection with the EveryStory Transaction and the A&R Agreement, the Company's CEO converted the full balance of notes totaling $10,000 of principal and $1,003 of interest, and a director of the Company converted $50,000 of principal and $6,231 of interest into an aggregate of 478,419 shares of the Company’s common stock. Convertible Notes Payable Notes payable due to non-related parties consisted of the following as of September 30, 2016, and December 31, 2015: Balance December 31, 2015 $ 465,000 New additions 340,000 Conversions (565,000 ) Debt discount (228,822 ) Balance September 30, 2016 $ 11,178 On June 29, 2015, the Company issued to ten unrelated individuals convertible notes in the aggregate amount of $195,000 that mature on December 31, 2016. The notes bear an interest rate of 12% per annum and are convertible into shares of the Company’s common stock at the lesser of 70% of the price per share paid by the investors for the next preferred stock in a qualified financing or the quotient of $2,000,000 divided by the fully diluted capitalization of the Company immediately prior to the closing date of the qualified financing. On September 21, 2016, all of these convertible notes were converted into common stock based on the terms of the A&R Agreement. On October 20, 2015, the Company issued to an unrelated individual a convertible note for $5,000 that matures on October 20, 2017. The note bears an interest rate of 12% per annum and is convertible into shares of the Company’s common stock at the lesser of 60% of the lowest price per share paid by the investors for the next preferred stock in a qualified financing or the quotient of $5,000,000 divided by the fully diluted capitalization of the Company immediately prior to the closing date of the qualified financing. On September 21, 2016, this convertible note was converted into common stock based on the terms of the A&R Agreement. On November 18, 2015, the Company issued to eleven unrelated individuals convertible notes in the aggregate amount of $265,000 that mature on November 18, 2017. The notes bear an interest rate of 12% per annum and are convertible into shares of the Company’s common stock at the lesser of 60% of the lowest price per share paid by the investors for the next preferred stock in a qualified financing or the quotient of $5,000,000 divided by the fully diluted capitalization of the Company immediately prior to the closing date of the qualified financing. On September 21, 2016, all of these convertible notes were converted into common stock based on the terms of the A&R Agreement. On February 9, 2016, the Company issued to an unrelated individual two convertible notes for $100,000 that mature on February 9, 2018. The notes bear an interest rate of 0% per annum and are convertible into shares of the Company’s common stock at the $1.60 per share. On September 21, 2016, these convertible notes were converted into common stock based on the terms of the A&R Agreement. On September 13, 2016, the Company conducted a private offering of convertible notes (the “ Note Offering Note SPA Convertible Notes On September 21, 2016 as part of the EveryStory Transaction, 28 note holders converted promissory notes in the aggregate amount of $565,000 and interest totaling $56,256 into 566,503 pre-split/3,954,836 post-split shares of the Company’s common stock. For the nine months ended September 30, 2016, conversions of convertible notes into common stock totaled $625,000 and interest totaling $63,713, converted into 635,033 pre-split/4,433,255 post-split shares of the Company’s common stock. |
8. Derivative Liabilities
8. Derivative Liabilities | 9 Months Ended |
Sep. 30, 2016 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
8. Derivative Liabilities | Determining which category an asset or liability falls within the hierarchy requires significant judgment. The Company evaluates its hierarchy disclosures each quarter. The Company has four liability measured at fair value on a recurring basis, which consists of a derivative liability on certain convertible notes payable (see note 7). As of September 30, 2016 this derivative liability had an estimated fair value of $191,949. The Company has no assets that are measured at fair value on a recurring basis. The following table presents information about our derivative liability, which was our only financial instrument measured at fair value on a recurring basis using significant inputs other than level one inputs that are either directly or indirectly observable (Level 2) as of September 30, 2016: Balance at December 31, 2015 $ – Issuances 260,197 Change in Fair Value of Derivative (68,248 ) Balance at September 30, 2016 $ 191,949 The fair value of this derivative liability was calculated using the multinomial lattice models that value the derivative liability within the notes based on a probability weighted discounted cash flow model. These models are based on future projections of the various potential outcomes. The features in the notes that were analyzed and incorporated into the model included the conversion feature with the reset provisions; redemption provisions; and the default provisions. Assumptions used to calculate the fair value of the derivative liability were as follows: September 30, 2016 Expected term in years 1.00 - 0.95 years Risk-free interest rates 0.56 - 0.63% Volatility 103.83 - 176.59% Dividend yield 0% In addition to the assumptions above, the Company also takes into consideration whether or not the Company would participate in another round of financing and if that financing is registered or not and what that stock price would be for the financing at that time. The Company notes that the notes have matured and is no longer calculating a derivative value for these notes. |
9. Preferred Stock
9. Preferred Stock | 9 Months Ended |
Sep. 30, 2016 | |
Equity [Abstract] | |
9. Preferred Stock | Preferred Shares – EveryStory Inc. The Company’s subsidiary, EveryStory, Inc. (“EveryStory”), has authorized 10,000,000 shares of $0.0001 par value per share Preferred Stock, of which 112,690 and 0 units were issued and outstanding as of September 30, 2016, and December 31, 2015, respectively. On September 21, 2016, EveryStory issued 112,690 shares of the EveryStory Series A Preferred Stock to the CEO and CTO in exchange for and as full payment of amounts to them which included $6,096 of accrued expenses, $95,591 of related party loans, $10,000 of convertible notes payable and $1,003 of accrued interest on the convertible notes payable. The EveryStory Series A Preferred stock are redeemable at any time for cash on a dollar-per-dollar basis at a redemption price of $1.00 per share. If not redeemed for cash, the shares of EveryStory Series A Preferred can be converted into an aggregate of 160,986 shares of common stock (using a conversion price of $0.70 per share pursuant to the A&R Agreement. Preferred Shares – Dthera Sciences The Company has authorized 10,000,000 shares of $0.001 par value per share Preferred Stock, of which no shares were issued and outstanding as of the date of this Report. Series A Convertible Preferred Stock The Company authorized to issue 1,000,000 preferred shares, par value $0.001 per share, including 150,000 of which were designated as Series A Shares. The Series A Shares have the following rights and preferences: · The Series A Shares are convertible into shares of the Company’s Common Stock at any time at a conversion rate of 80 shares of Common Stock for each Series A Share converted, subject to adjustments in the event of stock splits, recapitalizations, or similar events, provided that the Series A Shares will not be adjusted for any reverse stock split for a period of one year from the filing date of the Certificate of Designations creating the series, which is intended to occur with the first sale of Series A Shares in this offering. · The Series A Shares are entitled to the number of votes equal to the number of whole shares of Common Stock into which the Series A Shares are convertible and vote together with the holders of the Common Stock, except as otherwise required by Nevada law or as provided in the Certificate of Designations for the Series A Shares. · A majority vote of the outstanding Series A Shares voting as a single class is required for any of the following actions: o Any alteration, amendment, or change in the rights, preferences or privileges of the Series A Shares; o Any amendment to the Company’s Certificate of Incorporation or Bylaws that would impair or reduce the rights of the Series A Shares; and o Any transaction resulting in the redemption of any of the Company’s securities. · In the event of any voluntary or involuntary liquidation, dissolution or winding up of our Company (including a disposition of substantially all of our assets, whether by sale, merger or other reorganization, or a sale of over 50% of the ownership of the Company), the holders of the Series A Shares will be entitled to receive the greater of 150% of the purchase price of the Series A Shares, plus accrued dividends, if any, or the amount distributed to the holders of the Common Stock as though the Series A Shares were converted. Liquidating distributions will be in preference to the holders of Common Stock. · The holders of the Series A Shares are not entitled to preference over the common shares on dividends, if any, declared by the Board. · There are no redemption or sinking fund provisions applicable to the Series A Shares. Pursuant to the terms of the A&R Agreement, following the effectiveness of the Reverse Split, all of the outstanding shares of the Company’s Series A Preferred Stock were converted into an aggregate of 160,986 shares of common stock of EveryStory (using a conversion price of $0.70 per share pursuant to the A&R Agreement), which then would be automatically converted into shares of the Company’s common stock, per the A&R Agreement.” |
10. Common Stock
10. Common Stock | 9 Months Ended |
Sep. 30, 2016 | |
Equity [Abstract] | |
10. Common Stock | The Company (Dthera) has authorized 200,000,000 shares of $0.001 par value per share Common Stock, of which 5,729,722 pre-split/40,000,000 post-split shares and 2,050,000 pre-split/14,311,341 post-split shares were issued outstanding as of September 30, 2016, and December 31, 2015, respectively. On February 23, 2016, EveryStory amended its Certificate of Incorporation to increase the number of authorized shares to 100,000,000. The activity surrounding the issuances of the Common Stock by EveryStory is as follows: Nine months Ended September 30, 2016 EveryStory issued 436,321 shares of EveryStory’s common stock for the services value of $41,875 and recorded a $34,875 gain on extinguishment of debt. EveryStory issued On September 21, 2016 as part of the A&R Agreement, EveryStory issued 635,055 pre-split/4,433,255 post-split shares of EveryStory’s common stock for the conversion of debt for a value of $730,174, and issued 10,000 pre-split/69,811 post split shares of EveryStory’s common stock in lieu of interest for a value of $6,700. EveryStory also issued 592,300 pre-split/4,134,930 post-split shares of EveryStory’s common stock for the conversion of 592,300 options. The Company exchanged 16,000,000 post-split shares of the Company’s common stock as part of the agreement totaling $56,355. Year Ended December 31, 2015 EveryStory issued 900,000 pre-split/6,283,028 post-split shares of EveryStory Common Stock for net cash proceeds of $10,000 to Company founders. EveryStory also issued 50,000 pre-split/349,057 post-split shares of Common Stock as payment for services at $0.67 per share for a value of $33,500. |
11. Stock Purchase Options
11. Stock Purchase Options | 9 Months Ended |
Sep. 30, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
11. Stock Purchase Options | In 2015, the Board of Directors of EveryStory approved the adoption of the EveryStory’s Stock Option Plan (“the Plan”). The purpose of the Plan is to advance the interests of EveryStory by encouraging and enabling acquisition of a financial interest in EveryStory by employees, consultants, and other key individuals. The Plan is intended to aid EveryStory in attracting and retaining key employees, to stimulate the efforts of such individuals and to strengthen their desire to remain with EveryStory. A maximum of 680,000 shares of EveryStory's Common Stock is reserved for issuance under stock options to be issued under the Plan. The Plan permits the grant of incentive stock options, non-statutory stock options and restricted stock awards. The Plan is administered by the Board of Directors or, at its direction, a Compensation Committee comprised of officers of EveryStory. Stock Purchase Options During the nine months ended September 30, 2016, EveryStory issued options to purchase a total of 106,100 valued at $63,678 with multiple vesting periods. EveryStory issued the options in conjunction with employment agreements. The price per share for Common Stock for the stock options was based on the relative fair market value of the Common Stock using the backsolve valuation method of applying the Option Pricing Method (OPM). During the year ended December 31, 2015, EveryStory issued options to purchase a total of 486,200 shares of Common Stock valued at $75,457 with multiple vesting periods. EveryStory issued 127,200 options in conjunction to a consulting agreement entered into in May 10, 2015 and 359,000 options issued in conjunction with employment agreements entered into during the year. The options were valued using the Black-Scholes options pricing model under the assumptions noted below. The price per share for Common Stock for the stock options was based on the relative fair market value of the Common Stock using the backsolve valuation method of applying the Option Pricing Method (OPM). The following table summarizes the changes in options outstanding of the Company during the nine months ending September 30, 2016: Number of Options Weighted Average Exercise Price $ Outstanding, December 31, 2015 486,200 0.67 Granted 106,100 0.67 Converted (592,300 ) – Outstanding, September 30, 2016 – – Exercisable, September 30, 2016 – – As of September 21, 2016 all EveryStory options were converted to the Company’s common stock as part of the share purchase agreement. As of September 30, 2016, the Company had $0 in unrecognized expense related to future vesting of stock options. |
12. Fair Value Measurements
12. Fair Value Measurements | 9 Months Ended |
Sep. 30, 2016 | |
Fair Value Disclosures [Abstract] | |
12. Fair Value Measurements | Liabilities measured at fair value on a recurring basis at September 30, 2016, are summarized as follows: Level 1 Level 2 Level 3 Total Fair value of options $ – $ – $ – $ – Fair value of derivatives $ – $ 191,949 $ – $ 191,949 Liabilities measured at fair value on a recurring basis at December 31, 2015, are summarized as follows: Level 1 Level 2 Level 3 Total Fair value of options $ – $ 75,457 $ – $ 75,457 Fair value of derivatives $ – $ – $ – $ – Fair value is calculated using the Black-Scholes options pricing model. |
13. Subsequent Events
13. Subsequent Events | 9 Months Ended |
Sep. 30, 2016 | |
Subsequent Events [Abstract] | |
13. Subsequent Events | In accordance with ASC 855, Company’s management reviewed all material events through the date of this filing and determined that there were the following material subsequent events to report: Reverse Stock Split; Conversion of Outstanding Knowledge Machine Series A Preferred Stock On November 2, 2016, a reverse stock split (the “Reverse Split”) of the Company’s common stock took effect. The ratio of the Reverse Split was 1:5.109375, meaning one new share for each 5.109375 old shares of the Company’s common stock. In lieu of issuing fractional shares, the Company’s transfer agent was instructed to round up to the nearest whole share. Immediately following the effectiveness of the Reverse Split, the Company’s 100,000 outstanding shares of Series A Preferred Stock were converted, pursuant to their terms, into 8,000,000 shares of post-Reverse Split common stock. Additionally, through the application of the Reverse Split, the 40,875,000 shares of common stock held by the legacy shareholders of Knowledge Machine following the closing of the EveryStory Transaction and immediately prior to the Reverse Split became 8,000,000 shares of common stock. Accordingly, the legacy shareholders of Knowledge Machine International, including the holders of the shares of Series A Preferred Stock, owned an aggregate of 16,000,000 shares of the Company’s common stock. The shares of the Company’s common stock held by the former EveryStory Shareholders went from 77,377,712 to 15,144,262 shares by virtue of the Reverse Split, with an additional 8,855,738 shares of the Company’s common stock reserved for issuance to the holders of EveryStory convertible instruments, including convertible notes, options, and other derivative securities. Following the Reverse Split, the Company had 35,853,007 shares of common stock outstanding, consisting of 27,853,007 shares outstanding resulting from the Reverse Split, and the 8,000,000 shares of the Company’s common stock issued on conversion of the prior KMI Series A Preferred Stock immediately following the Reverse Split. The Reverse Split was approved by the Board of Directors and the shareholders of the Company prior to the closing of the EveryStory Transaction, which approval was included in the closing conditions to the EveryStory Transaction. Name Change; Ticker Symbol Change Requested In connection with the closing of the EveryStory Transaction and the divestiture of the prior business and operations of the Company, as well as the new focus of the Company on the digital therapeutics and reminiscence therapy focus of the Company, the Board of Directors and the majority shareholders of the Company immediately following the closing of the EveryStory Transaction approved an amendment to the Company’s Articles of Incorporation to change the name of the Company (the “Name Change”) from Knowledge Machine International, Inc., to Dthera Sciences. The Name Change took effect at the same time as the Reverse Split on November 2, 2016. In connection with the Name Change, and to help current shareholders and new investors better understand the business of the Company, the Company requested that a new ticker symbol be assigned to the Company. The Company has requested “DTHR” as the new ticker symbol, which will take effect twenty business days following the effectiveness of the Reverse Split (per FINRA rules). New Website Additionally, the Company launched a new website, www.dthera.com, to provide information about the Company, its business and operations, and additional information about digital therapeutics and reminiscence therapy. The link provided is for informational purposes only, and no information contained on the Company’s website should be deemed to be part of this or any filing of the Company. Commencement of Clinical Trial During November 2016, the University of California at San Diego began the previously disclosed clinical trial of the use of the EveryStory Platform as a Digital Therapeutic and Reminiscence Therapy treatment for patients with Alzheimer’s disease and other diagnoses of dementia. The Company anticipates that the clinical trial will be completed during the first quarter of 2017, and the Company will announce the results of the trial upon its completion. |
3. Summary of Significant Acc19
3. Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2016 | |
Accounting Policies [Abstract] | |
Nature of Business | Nature of Business The Company offers a subscription-based service that captures, shares, and stores photos and audio in cloud. It offers the EveryStory platform, which enables users to preserve and share memories, and will initially target a Quality of Life benefit in certain patient populations, principally patients suffering from Alzheimer’s disease and dementia. On September 21, 2016, the Company acquired a new operating subsidiary, EveryStory, Inc., a Delaware corporation (“EveryStory”). Following the acquisition (referred to herein as the “EveryStory Transaction”), the Company’s business is to develop a Digital Therapeutic technology designed to deliver Reminiscence Therapy to certain patient populations, principally patients suffering from Alzheimer’s disease and dementia with the goal of a Quality of Life benefit and reduction in anxiety in those populations. As of the date of this Report, EveryStory was our only subsidiary. In connection with the EveryStory transaction, the Company dissolved its other former subsidiary entity and terminated its prior business operations. Acquisition of EveryStory; EveryStory Transaction On September 21, 2016, the Company entered into an Amended and Restated Acquisition and Share Exchange Agreement (the “A&R Agreement”) with EveryStory, Inc., a Delaware corporation (“EveryStory”), and each of its shareholder (the “Shareholders”), and closed the acquisition (the “Acquisition”) of the ownership of EveryStory (the “Closing”). The Company acquired all of the outstanding shares of EveryStory, and agreed to issue an aggregate of 77,377,712 shares of the Company’s common stock to the EveryStory holders, with the understanding that an additional 45,247,288 shares were to be reserved for issuance to holders of EveryStory derivative securities which are convertible or exercisable into shares of EveryStory common stock (collectively, the “Exchange Shares”). Additionally, prior to Closing, the parties agreed that certain shares of the Company’s common stock were to be returned to the Company for cancellation, resulting in the current Company’s shareholders owning an aggregate of 40,875,000 shares of the Company’s common stock immediately prior to the Closing. Pursuant to the A&R Agreement, the 122,625,000 Exchange Shares issued or to be issued to the EveryStory constituted 75% of the total issued and outstanding shares of the Company’s common stock, and the legacy Company shareholders (who were the owners of the Company’s common stock immediately prior to the Closing) owned an aggregate of 40,875,000 shares, which constituted 25% of the total outstanding Company common stock. The Company’s and EveryStory’s management agreed, and the A&R Agreement provides, that following the Closing, the Company will conduct a reverse stock split (discussed in more detail below), following which the outstanding shares of the Company’s Series A Preferred Stock will convert into a total of 8,000,000 post-reverse-split common stock. Following such conversion, the EveryStory owners will own or have the right to receive shares of the Company’s common stock equal to 60% of the then-outstanding Company common stock, and the Company legacy shareholders will own shares of the Company’s common stock equal to 40% of the then-outstanding Company common stock, consisting of 8,000,000 shares of Company common stock issued on conversion of the Company’s Series A Preferred Stock (20%) and 8,000,000 shares of the Company’s common stock owned by the other legacy Company shareholders (20%). As a result of the Closing of the A&R Agreement, EveryStory became a wholly owned subsidiary of the Company. Additionally, the directors and officers of the Company immediately prior to the Closing appointed the EveryStory management to become officers and directors of the Company, and then resigned from their positions with the Company. In addition, the Company terminated its pre-Closing business operations and agreed to dissolve its other wholly owned subsidiary, Knowledge Machine, Inc. Immediately prior to the Closing, there were 40,875,000 shares of the Company’s common stock. In connection with the Closing, the Company issued an aggregate of 77,377,712 shares to the EveryStory shareholders, and 45,247,288 shares were reserved for issuance to the holders of EveryStory options and convertible debt instruments, and the parties to the A&R Agreement understand and anticipate that all such holders would exercise and convert their securities into the reserved shares of the Company. On November 2, 2016, a reverse stock split (the “Reverse Split”) of the Company’s common stock took effect. The ratio of the Reverse Split was 1:5.109375, meaning one new share for each 5.109375 old shares of the Company’s common stock. All share numbers provided in this Quarterly Report are given on a post-reverse-split basis. |
Accounting Basis | Accounting Basis The Company’s financial statements are prepared using the accrual basis of accounting in accordance with U.S. GAAP. As disclosed in a Current Report on Form 8-K filed November 17, 2016, the Company recently changed to a December 31 fiscal year end. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with U.S. 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 dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Significant estimates are made in relation to the allowance for doubtful accounts and the fair value of certain financial instruments. |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements include the accounts of Dthera Sciences and its subsidiaries. All significant inter-Company accounts and transactions have been eliminated. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company measures assets and liabilities at fair value based on an expected exit price as defined by the authoritative guidance on fair value measurements, which represents the amount that would be received on the sale of an asset or paid to transfer a liability, as the case may be, in an orderly transaction between market participants. As such, fair value may be based on assumptions that market participants would use in pricing an asset or liability. The authoritative guidance on fair value measurements establishes a consistent framework for measuring fair value on either a recurring or nonrecurring basis whereby inputs, used in valuation techniques, are assigned a hierarchical level. The following are the hierarchical levels of inputs to measure fair value: Level 1 - Observable inputs that reflect quoted market prices in active markets for identical assets or liabilities. Level 2 - Inputs reflect quoted prices for identical assets or liabilities in markets that are not active; quoted prices for similar assets or liabilities in active markets; inputs other than quoted prices that are observable for the assets or liabilities; or inputs that are derived principally from or corroborated by observable market data by correlation or other means. Level 3 - Unobservable inputs reflecting the Company's assumptions incorporated in valuation techniques used to determine fair value. These assumptions are required to be consistent with market participant assumptions that are reasonably available. The carrying amounts of the Company's financial assets and liabilities, such as cash, prepaid expenses, other current assets, accounts payable & accrued expenses, certain notes payable and notes payable - related party, approximate their fair values because of the short maturity of these instruments. The Company accounts for its derivative liabilities, at fair value, on a recurring basis under level 2. |
Embedded Conversion Features | Embedded Conversion Features The Company evaluates embedded conversion features within convertible debt under Accounting Standards Codification (“ASC”) 815, "Derivatives and Hedging" to determine whether the embedded conversion feature(s) should be bifurcated from the host instrument and accounted for as a derivative at fair value with changes in fair value recorded in earnings. If the conversion feature does not require derivative treatment under ASC 815, the instrument is evaluated under ASC 470-20 "Debt with Conversion and Other Options" for consideration of any beneficial conversion feature. |
Derivative Financial Instruments | Derivative Financial Instruments The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates all of it financial instruments, including stock purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported as charges or credits to income. For option-based simple derivative financial instruments, the Company uses the Black-Scholes option-pricing model to value the derivative instruments at inception and subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period. |
Debt Issue Costs and Debt Discount | Debt Issue Costs and Debt Discount The Company may record debt issue costs and/or debt discounts in connection with raising funds through the issuance of debt. These costs may be paid in the form of cash, or equity (such as warrants). These costs are amortized to interest expense over the life of the debt. If a conversion of the underlying debt occurs, a proportionate share of the unamortized amounts is immediately expensed. |
Stock-Based Compensation | Stock-Based Compensation The Company accounts for share based payments in accordance with ASC 718, Compensation - Stock Compensation, which requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on the grant date fair value of the award. In accordance with ASC 718-10-30-9, Measurement Objective – Fair Value at Grant Date, the Company estimates the fair value of the award using a valuation technique. For this purpose, the Company uses the Black-Scholes option pricing model. The Company believes this model provides the best estimate of fair value due to its ability to incorporate inputs that change over time, such as volatility and interest rates, and to allow for actual exercise behavior of option holders. Compensation cost is recognized over the requisite service period which is generally equal to the vesting period. Upon exercise, shares issued will be newly issued shares from authorized common stock. ASC 505, "Compensation-Stock Compensation", establishes standards for the accounting for transactions in which an entity exchanges its equity instruments to non-employees for goods or services. Under this transition method, stock compensation expense includes compensation expense for all stock-based compensation awards granted on or after January 1, 2006, based on the grant-date fair value estimated in accordance with the provisions of ASC 505. |
Loss Per Share | Loss Per Share Basic loss per Common Share is computed by dividing losses attributable to Common shareholders by the weighted-average number of shares of Common Stock outstanding during the period. Diluted loss per Common Share is computed by dividing loss attributable to Common shareholders by the weighted-average number of Shares of Common Stock outstanding during the period increased to include the number of additional Shares of Common Stock that would have been outstanding if the potentially dilutive securities had been issued. Potentially dilutive securities include outstanding convertible Preferred Stock, stock options, warrants, and convertible debt. The dilutive effect of potentially dilutive securities is reflected in diluted earnings per share by application of the treasury stock method. Under the treasury stock method, an increase in the fair market value of the Company’s Common Stock can result in a greater dilutive effect from potentially dilutive securities. For the nine months ended September 30, 2016 and 2015, all of the Company’s potentially dilutive securities (warrants, options, convertible preferred stock, and convertible debt) were excluded from the computation of diluted earnings per share as they were anti-dilutive. The total number of potentially dilutive Common Shares that were excluded were 240,886 and 0 at nine months ended September 30, 2016 and 2015, respectively. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Management has considered all other recent accounting pronouncements issued since the last audit of our consolidated financial statements. The Company’s management believes that these recent pronouncements will not have a material effect on the Company’s consolidated financial statements. |
4. Property and Equipment (Tabl
4. Property and Equipment (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Property, Plant and Equipment [Abstract] | |
Property and equipment schedule | September 30, 2016 December 31, 2015 Computer & Equipment 2,816 2,816 Less: Accumulated Depreciation (1,880 ) (1,168 ) Net Property and Equipment $ 936 $ 1,648 |
5. Asset Acquisition (Tables)
5. Asset Acquisition (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Business Combinations [Abstract] | |
Consideration transferred | Consideration paid: $ Common Stock 58,960 Consideration received: $ Intangible assets 58,960 Net value of assets purchased: 58,960 |
6. Intangible Assets (Tables)
6. Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible assets | September 30, 2016 December 31, 2015 Technology asset purchase $ 58,960 $ 7,100 Less: Accumulated Amortization – – Less: Impairment (58,960 ) (7,100 ) Net Intangible Assets $ – $ – |
7. Loans Payable (Tables)
7. Loans Payable (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Debt Disclosure [Abstract] | |
Notes payable - related parties | Balance December 31, 2015 $ 61,064 Cash additions 94,000 Expense additions 20,627 Cash payments (80,100 ) Conversions (95,591 ) Balance September 30, 2016 $ – Notes Payable Notes payable consisted of the following as of September 30, 2016, and December 31, 2015: Balance December 31, 2015 $ – Cash additions 20,000 Expense additions – Cash payments – Conversions – Balance September 30, 2016 $ 20,000 Convertible Notes Payable – Related Parties Convertible notes payable due to related parties consisted of the following as of September 30, 2016, and December 31, 2015: Balance December 31, 2015 $ 60,000 Cash additions – Expense additions – Conversions (60,000 ) Debt discount from debt issuance costs – Balance September 30, 2016 $ – Convertible Notes Payable Notes payable due to non-related parties consisted of the following as of September 30, 2016, and December 31, 2015: Balance December 31, 2015 $ 465,000 Cash additions 340,000 Conversions (565,000 ) Debt discount (228,822 ) Balance September 30, 2016 $ 11,178 |
8. Derivative Liabilities (Tabl
8. Derivative Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative liability - Level 2 | Balance at December 31, 2015 $ – Issuances 260,197 Change in Fair Value of Derivative (68,248 ) Balance at September 30, 2016 $ 191,949 |
Assumptions | September 30, 2016 Expected term in years 1.00 - 0.95 years Risk-free interest rates 0.56 - 0.63% Volatility 103.83 - 176.59% Dividend yield 0% |
11. Stock Purchase Options (Tab
11. Stock Purchase Options (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Option activity | Number of Options Weighted Average Exercise Price $ Outstanding, December 31, 2015 486,200 0.67 Granted 106,100 0.67 Converted (592,300 ) – Outstanding, September 30, 2016 – – Exercisable, September 30, 2016 – – |
12. Fair Value Measurements (Ta
12. Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Liabilities measured at fair value on a recurring basis at September 30, 2016, are summarized as follows: Level 1 Level 2 Level 3 Total Fair value of options $ – $ – $ – $ – Fair value of derivatives $ – $ 191,949 $ – $ 191,949 Liabilities measured at fair value on a recurring basis at December 31, 2015, are summarized as follows: Level 1 Level 2 Level 3 Total Fair value of options $ – $ 75,457 $ – $ 75,457 Fair value of derivatives $ – $ – $ – $ – Fair value is calculated using the Black-Scholes options pricing model. |
2. Going Concern (Details Narra
2. Going Concern (Details Narrative) - USD ($) | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
Accumulated deficit | $ (1,440,008) | $ (783,596) | |
Working capital | $ (240,620) | ||
Antidilutive securities excluded from EPS | 240,886 | 0 |
3. Summary of Significant Acc28
3. Summary of Significant Accounting Policies (Details Narrative) - shares | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Accounting Policies [Abstract] | ||
Antidilutive shares excluded from EPS | 240,886 | 0 |
4. Property and Equipment (Deta
4. Property and Equipment (Details) - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 |
Property, Plant and Equipment [Abstract] | ||
Computer and equipment | $ 2,816 | $ 2,816 |
Less: Accumulated depreciation | (1,880) | (1,168) |
Net property and equipment | $ 936 | $ 1,648 |
5. Asset Acquisition (Details)
5. Asset Acquisition (Details) | 9 Months Ended |
Sep. 30, 2016USD ($) | |
Business Combinations [Abstract] | |
Consideration paid, stock value | $ 58,960 |
Consideration received, intangible assets | 58,960 |
Net value of assets purchased | $ 58,960 |
6. Intangible Assets (Details)
6. Intangible Assets (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |||||
Technology asset purchase | $ 58,960 | $ 58,960 | $ 7,100 | ||
Less: Accumulated Amortization | 0 | 0 | 0 | ||
Less: Impairment | 0 | $ 0 | (58,960) | $ 0 | (7,100) |
Net Intangible Assets | $ 0 | $ 0 | $ 0 |
7. Loans Payable (Details)
7. Loans Payable (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Cash additions | $ 20,000 | $ 0 |
Notes Payable - Related Parties [Member] | ||
Balance, beginning | 61,064 | |
Cash additions | 94,000 | |
Cash payments | (80,100) | |
Conversions | (95,591) | |
Balance, ending | 0 | |
Notes Payable [Member] | ||
Balance, beginning | 0 | |
Cash additions | 20,000 | |
Expense additions | 0 | |
Cash payments | 0 | |
Conversions | 0 | |
Balance, ending | 20,000 | |
Convertible Notes Payable - Related Parties [Member] | ||
Balance, beginning | 60,000 | |
Cash additions | 0 | |
Expense additions | 0 | |
Cash payments | 0 | |
Conversions | (60,000) | |
Debt discount from debt issuance costs | 0 | |
Balance, ending | 0 | |
Convertible Notes Payable [Member] | ||
Balance, beginning | 465,000 | |
Cash additions | 340,000 | |
Conversions | (565,000) | |
Debt discount from debt issuance costs | (228,822) | |
Balance, ending | $ 11,178 |
7. Loans Payable (Details Narra
7. Loans Payable (Details Narrative) - USD ($) | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | |
Proceeds from related party | $ 94,000 | $ 0 | |
Cash payments | 80,100 | 58,033 | |
Proceeds from convertible debt | 330,000 | $ 140,000 | |
Chief Executive Officer [Member] | EveryStory Series A Preferred Stock [Member] | |||
Debt converted, amount | 10,000 | ||
Interest converted, amount | 1,003 | ||
Chief Executive Officer [Member] | Common Stock [Member] | |||
Debt converted, amount | 50,000 | ||
Interest converted, amount | 6,231 | ||
Notes Payable - Related Parties [Member] | |||
Debt converted, amount | 95,591 | ||
Notes Payable - Related Parties [Member] | Founder and CEO [Member] | |||
Proceeds from related party | 88,000 | $ 110,000 | |
Expense additions | 20,627 | 68,904 | |
Cash payments | 66,000 | 75,000 | |
Notes Payable - Related Parties [Member] | Founder and CEO [Member] | Accrued Expenses [Member] | |||
Debt converted, amount | 6,096 | ||
Notes Payable - Related Parties [Member] | Founder and CEO [Member] | Related Party Loans [Member] | |||
Debt converted, amount | 95,591 | ||
Notes Payable - Related Parties [Member] | Founder and CEO [Member] | Convertible Notes Payable [Member] | |||
Debt converted, amount | 10,000 | ||
Notes Payable - Related Parties [Member] | Founder and CEO [Member] | Accrued Interest [Member] | |||
Debt converted, amount | $ 1,003 | ||
Notes Payable - Related Parties [Member] | Founder and CEO [Member] | EveryStory Series A Preferred Stock [Member] | |||
Stock issued for conversion of debt, shares issued | 112,690 | ||
Notes Payable - Related Parties [Member] | Founder and CTO [Member] | |||
Proceeds from related party | $ 6,000 | 25,000 | |
Expense additions | 0 | 595 | |
Cash payments | 14,100 | $ 73,153 | |
Notes Payable [Member] | |||
Expense additions | 0 | ||
Debt converted, amount | $ 0 | ||
Notes Payable [Member] | Unrelated Individual [Member] | |||
Stock issued in lieu of interest, shares | 10,000 | ||
Stock issued in lieu of interest, value | $ 6,700 | ||
Convertible Notes Payable - Related Parties [Member] | |||
Expense additions | 0 | ||
Debt converted, amount | $ 60,000 | ||
Convertible Notes Payable - Related Parties [Member] | Two Individuals [Member] | |||
Debt issuance date | Jun. 29, 2015 | ||
Proceeds from convertible debt | $ 30,000 | ||
Debt maturity date | Dec. 31, 2016 | ||
Debt stated interest rate | 12.00% | ||
Convertible Notes Payable - Related Parties [Member] | Two Individuals [Member] | |||
Debt issuance date | Nov. 18, 2015 | ||
Proceeds from convertible debt | $ 30,000 | ||
Debt maturity date | Nov. 18, 2017 | ||
Debt stated interest rate | 12.00% | ||
Convertible Notes Payable [Member] | |||
Debt converted, amount | $ 565,000 | ||
Convertible Notes Payable [Member] | Note Offering [Member] | |||
Debt issuance date | Sep. 13, 2016 | ||
Proceeds from convertible debt | $ 240,000 | ||
Convertible Notes Payable [Member] | Unrelated Individual [Member] | |||
Debt converted, amount | $ 5,000 | ||
Debt issuance date | Oct. 20, 2015 | ||
Proceeds from convertible debt | $ 5,000 | ||
Debt maturity date | Oct. 20, 2017 | ||
Debt stated interest rate | 12.00% | ||
Convertible Notes Payable [Member] | Ten Individuals [Member] | |||
Debt converted, amount | $ 195,000 | ||
Debt issuance date | Jun. 29, 2015 | ||
Proceeds from convertible debt | $ 195,000 | ||
Debt maturity date | Dec. 31, 2016 | ||
Debt stated interest rate | 12.00% | ||
Convertible Notes Payable [Member] | Unrelated Individual [Member] | |||
Debt converted, amount | $ 100,000 | ||
Debt issuance date | Feb. 9, 2016 | ||
Proceeds from convertible debt | $ 100,000 | ||
Debt maturity date | Feb. 9, 2018 | ||
Debt stated interest rate | 0.00% | ||
Convertible Notes Payable [Member] | 28 Note Holders Total [Member] | EveryStory Transaction [Member] | |||
Stock issued for conversion of debt, shares issued | 566,503 | ||
Debt converted, amount | $ 565,000 | ||
Interest converted, amount | $ 56,256 | ||
Convertible Notes Payable [Member] | Total Conversions [Member] | |||
Stock issued for conversion of debt, shares issued | 635,033 | ||
Debt converted, amount | $ 625,000 | ||
Interest converted, amount | $ 63,713 |
8. Derivative Liabilities (Deta
8. Derivative Liabilities (Details - Level 2) - Convertible Notes [Member] | 9 Months Ended |
Sep. 30, 2016USD ($) | |
Derivative liability, beginning balance | $ 0 |
Issuances | 260,197 |
Change in Fair Value of Derivative | $ (68,248) |
8. Derivative Liabilities (De35
8. Derivative Liabilities (Details - Assumptions) | 9 Months Ended |
Sep. 30, 2016 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Expected term in years | 0.95-.1 years |
Risk-free interest rates | 0.56-0.63% |
Volatility | 106.33 -176.59% |
Dividend yield | 0.00% |
10. Common Stock (Details Narra
10. Common Stock (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | |
Common stock outstanding | 40,000,000 | 40,000,000 | 14,353,091 | ||
Gain on extinguishment of debt | $ 34,875 | $ 0 | $ 34,875 | $ 0 | |
EveryStory | Common Stock [Member] | |||||
Stock issued for services, shares | 436,321 | ||||
Stock issued for services, value | $ 41,875 | ||||
Gain on extinguishment of debt | $ 34,875 | ||||
Stock issued for patent, shares | 614,340 | ||||
Stock issued for patent, value | $ 58,960 | ||||
Dthera Sciences [Member] | Common Stock [Member] | |||||
Stock exchanged, shares | 16,000,000 | ||||
Conversion value | $ 56,355 | ||||
Pre-Split Shares [Member] | |||||
Common stock outstanding | 5,729,722 | 5,729,722 | 40,000,000 | ||
Pre-Split Shares [Member] | EveryStory | |||||
Stock issued for services, shares | 500,000 | ||||
Stock issued for services, value | $ 33,500 | ||||
Conversion of debt, stock issued | 635,055 | ||||
Conversion of debt, amount converted | $ 730,174 | ||||
Options converted, options converted | 592,300 | ||||
Options converted, shares issued | 592,300 | ||||
Stock issued new, shares | 900,000 | ||||
Stock issued new, value | $ 10,000 | ||||
Pre-Split Shares [Member] | EveryStory | Interest Converted [Member] | |||||
Conversion of debt, stock issued | 10,000 | ||||
Conversion of debt, amount converted | $ 6,700 | ||||
Post-Split Shares [Member] | |||||
Common stock outstanding | 2,050,000 | 2,050,000 | 14,311,341 | ||
Post-Split Shares [Member] | EveryStory | |||||
Stock issued for services, shares | 349,057 | ||||
Conversion of debt, stock issued | 4,433,255 | ||||
Options converted, shares issued | 4,134,930 | ||||
Stock issued new, shares | 6,283,028 | ||||
Post-Split Shares [Member] | EveryStory | Interest Converted [Member] | |||||
Conversion of debt, stock issued | 69,811 |
11. Stock Purchase Options (Det
11. Stock Purchase Options (Details - Option activity) - Options [Member] | 9 Months Ended |
Sep. 30, 2016$ / sharesshares | |
Number of Options | |
Options outstanding, beginning balance | 486,200 |
Options granted | 106,100 |
Options converted | (592,300) |
Options outstanding, ending balance | 0 |
Options exercisable | 0 |
Weighted Average Exercise Price | |
Weighted average exercise price, options outstanding, beginning balance | $ / shares | $ 0.67 |
Weighted average exercise price, options granted | $ / shares | 0.67 |
Weighted average exercise price, options outstanding, ending balance | $ / shares | 0 |
Weighted average exercise price, options exercisable | $ / shares | $ 0 |
11. Stock Purchase Options (D38
11. Stock Purchase Options (Details Narrative) - Options [Member] - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2016 | Dec. 31, 2015 | |
Options granted | 106,100 | |
EveryStory | ||
Shares reserved for issuance | 680,000 | |
Options granted | 106,100 | 486,200 |
Options granted, value | $ 63,678 | $ 75,457 |
Options issued for services, options issued | 127,200 | |
Options issued for employment agreements, options issued | 359,000 |
12. Fair Value Measurements (De
12. Fair Value Measurements (Details) - Fair Value, Measurements, Recurring [Member] - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 | Sep. 30, 2015 |
Fair value of options | $ 75,457 | $ 0 | |
Fair value of derivatives | 0 | $ 191,949 | |
Fair Value, Inputs, Level 1 [Member] | |||
Fair value of options | $ 0 | 0 | |
Fair value of derivatives | 0 | 0 | |
Fair Value, Inputs, Level 2 [Member] | |||
Fair value of options | 0 | 75,457 | |
Fair value of derivatives | 191,949 | 0 | |
Fair Value, Inputs, Level 3 [Member] | |||
Fair value of options | 0 | 0 | |
Fair value of derivatives | $ 0 | $ 0 |