Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Apr. 15, 2019 | Jun. 30, 2018 | |
Document And Entity Information | |||
Entity Registrant Name | INNERSCOPE HEARING TECHNOLOGIES, INC. | ||
Entity Central Index Key | 0001609139 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2018 | ||
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 | ||
Is Entity Emerging Growth Company? | true | ||
Elected Not To Use the Extended Transition Period | false | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business | true | ||
Entity Public Float | $ 4,752,400 | ||
Entity Common Stock, Shares Outstanding | 151,737,305 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2018 | ||
Entity Shell Company | false |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Current Assets: | ||
Cash and cash equivalents | $ 87,826 | $ 84,720 |
Accounts receivable, allowance for doubtful accounts $18,383 and $63,799 respectively | 6,112 | 12,950 |
Accounts receivable from related party | 203,325 | 73,996 |
Employee advances | 40,942 | |
Prepaid assets | 167,992 | 101,110 |
Inventory | 91,510 | 5,959 |
Total current assets | 597,707 | 278,735 |
Security deposit | 11,056 | |
Domain name | 3,000 | 3,000 |
Intangible assets, net of accumulated amortization of $2,168 (2018) | 1,010,840 | |
Property and equipment, net of accumulated depreciation of $4,705 (2018) and $1,068 (2017) | 43,450 | 1,583 |
Investment in undivided interest in real estate | 1,226,963 | 1,224,903 |
Total assets | 2,893,014 | 1,508,221 |
Current Liabilities: | ||
Accounts payable and accrued expenses | 1,233,653 | 161,919 |
Accounts payable to related party | 22,548 | 22,548 |
Notes payable - stockholder | 95,800 | 65,000 |
Advances payable, stockholders | 57,526 | 176,838 |
Current portion of convertible notes payable, net of discounts | 151,166 | 74,140 |
Current portion of notes payable, net of deferred loan fees | 29,270 | |
Current portion of note payable - undivided interest in real estate | 19,660 | 18,518 |
Customer deposits | 56,698 | |
Officer salaries payable | 188,942 | 47,248 |
Income tax payable | 23,998 | 33,682 |
Derivative liabilities | 1,807,404 | 540,965 |
Deferred revenue | 847,223 | |
Total current liabilities | 3,686,665 | 1,988,081 |
Long term portion of note payable- undivided interest in real estate | 964,847 | 982,176 |
Long term portion of convertible note payable, net of discounts | 12,587 | |
Total liabilities | 4,651,512 | 2,982,844 |
Commitments and contingencies | ||
Stockholders' Deficit: | ||
Preferred stock, $0.0001 par value; 25,000,000 shares authorized; Series A preferred stock, par value $0.0001, 9,510,000 shares authorized and -0- shares issued and outstanding; Series B preferred stock, par value $0.0001, 900,000 shares authorized and issued and outstanding (2018) | 90 | |
Common stock, $0.0001 par value; 490,000,000 shares authorized; 120,425,344 and 61,539,334 shares issued and outstanding December 31, 2018, and December 31, 2017, respectively | 12,042 | 6,153 |
Common stock to be issued, $0.0001 par value, 6,373,848 and 102,564 shares December 31, 2018, and December 31, 2017, respectively | 637 | 10 |
Additional paid-in capital | 4,836,557 | 331,227 |
Deferred stock compensation | (235,694) | (25,000) |
Accumulated deficit | (6,372,129) | (1,787,012) |
Total stockholders' deficit | (1,758,498) | (1,474,623) |
Total liabilities and stockholders' deficit | $ 2,893,014 | $ 1,508,221 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Accumulated depreciation of property, furniture and fixtures and equipment | $ (4,705) | $ (1,068) |
Allowance for doubtful accounts of accounts receivable | (18,383) | (63,799) |
Accumulated amortization of intangible assets | $ (2,168) | |
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 490,000,000 | 225,000,000 |
Common stock, shares issued | 120,425,344 | 61,539,334 |
Common stock, shares outstanding | 120,425,344 | 61,539,334 |
Preferred stock, par value | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 25,000,000 | 25,000,000 |
Preferred stock, shares issued | 900,000 | |
Preferred stock, shares outstanding | 900,000 | |
Common stock to be issued, shares | 6,373,848 | 102,564 |
Series A Preferred Stock | ||
Preferred stock, shares authorized | 9,150,000 | 9,150,000 |
Preferred stock, shares issued | ||
Preferred stock, shares outstanding | ||
Series B Preferred Stock | ||
Preferred stock, shares authorized | 900,000 | |
Preferred stock, shares issued | 900,000 | |
Preferred stock, shares outstanding | 900,000 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Revenues: | ||
Revenues, other | $ 242,857 | $ 384,177 |
Revenues, related party | 82,019 | 86,449 |
Total revenues | 324,876 | 470,626 |
Cost of sales | ||
Cost of sales, other | 156,909 | 256,918 |
Cost of sales, related | 24,779 | 36,303 |
Total cost of sales | 181,688 | 293,221 |
Gross profit | 143,188 | 177,405 |
Operating Expenses: | ||
Compensation and benefits (including stock- based fees of $785,702 (2018)) | 1,543,754 | 645,723 |
Advertising and promotion | 173,580 | |
Professional fees (including stock- based fees of $302,148 (2018) and $173,794 (2017)) | 651,216 | 391,177 |
Consulting fees, stockholder | 60,000 | |
Rent (including related party of $144,000 (2018) and $111,377 (2017)) | 186,700 | 111,377 |
Investor relations | 125,415 | 43,845 |
Bad debt expense, net of recoveries | 10,383 | 63,799 |
Other general and administrative | 160,753 | 87,974 |
Total operating expenses | 2,851,801 | 1,403,897 |
Loss from operations | (2,708,613) | (1,226,492) |
Other Income (Expense): | ||
Other income | 5,533 | |
Derivative expense | (2,436,951) | (265,674) |
Gain (loss) on investment in undivided interest in real estate | 2,060 | (1,378) |
Write off of deferred commissions | (508,334) | |
Gain on contract cancellations and settlements | 1,297,223 | 160,000 |
Gain on debt extinguishment | 530,468 | |
Interest income, including $228 (2017) from officer | 300 | |
Interest expense and finance charges | (1,269,305) | (77,287) |
Total other income (expense), net | (1,876,505) | (686,840) |
Net loss | $ (4,585,117) | $ (1,913,332) |
Basic and diluted loss per share | $ (0.06) | $ (0.03) |
Weighted average number of common shares outstanding Basic and diluted | 78,891,884 | 61,320,706 |
CONSOLIDATED STATEMENTS OF OP_2
CONSOLIDATED STATEMENTS OF OPERATIONS (Parenthetical) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Income Statement [Abstract] | ||
Stock-based fees included in compensation and benefits | $ 785,702 | |
Stock based fees included in professional fees | 302,148 | $ 173,794 |
Rent expense, related party | $ 144,000 | 111,377 |
Officer portion of interest income | $ 228 |
CONSOLIDATED STATEMENT OF CHANG
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) - USD ($) | Common Stock | Common Stock To Be Issued | Deferred stock Compensation | Series B Preferred Stock | Additional Paid-in Capital | Retained Earnings (deficit) | Total |
Beginning balance, shares at Dec. 31, 2016 | 60,906,000 | ||||||
Beginning balance, amount at Dec. 31, 2016 | $ 6,090 | $ 104,110 | $ 126,320 | $ 236,520 | |||
Common stock issued for services, shares | 633,334 | ||||||
Common stock issued for services, amount | $ 63 | (100,000) | 189,937 | 90,000 | |||
Reclassification of derivative liabilities upon payment of convertible debt | 28,215 | 28,215 | |||||
Stock based compensation, shares | 102,564 | ||||||
Stock based compensation, amount | $ 10 | 75,000 | 8,965 | 83,975 | |||
Net loss | (1,913,332) | (1,913,332) | |||||
Ending balance, shares at Dec. 31, 2017 | 61,539,334 | 102,564 | |||||
Ending balance, amount at Dec. 31, 2017 | $ 6,153 | $ 10 | (25,000) | 331,227 | (1,787,012) | (1,474,623) | |
Reclassification of derivative liabilities upon payment of convertible debt | 2,320,595 | 2,320,595 | |||||
Stock based compensation, shares | 5,117,867 | 3,535,284 | |||||
Stock based compensation, amount | $ 512 | $ 354 | (150,694) | 465,079 | 315,250 | ||
Stock issued from common stock to be issued, shares | 102,564 | (102,564) | |||||
Stock issued from common stock to be issued, amount | $ 10 | $ (10) | |||||
Issuance of Series B preferred stock, shares | 900,000 | ||||||
Issuance of Series B preferred stock, amount | $ 90 | 817,510 | 817,600 | ||||
Common stock issued or to be issued for convertible notes, shares | 53,325,227 | 1,838,564 | |||||
Common stock issued or to be issued for convertible notes, amount | $ 5,333 | $ 184 | 819,306 | 824,822 | |||
Common stock issued for asset purchase, shares | 340,352 | ||||||
Common stock issued for asset purchase, amount | $ 34 | 22,940 | 22,974 | ||||
Common stock to be issued for joint development project, shares | 1,000,000 | ||||||
Common stock to be issued for joint development project, amount | $ 100 | (60,000) | 59,900 | ||||
Net loss | (4,585,117) | (4,585,117) | |||||
Ending balance, shares at Dec. 31, 2018 | 120,425,344 | 6,373,848 | 900,000 | ||||
Ending balance, amount at Dec. 31, 2018 | $ 12,042 | $ 637 | $ (235,694) | $ 90 | $ 4,836,556 | $ (6,372,129) | $ (1,758,498) |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Cash flows from operating activities: | ||
Net loss | $ (4,585,117) | $ (1,913,332) |
Adjustments to reconcile net loss to net cash used in operations: | ||
Loss on fair value of derivatives | 2,436,949 | 265,674 |
Amortization of debt discounts | 6,025 | 63,434 |
Depreciation and amortization | 5,806 | 884 |
Stock compensation expense | 1,087,850 | 173,974 |
Non cash interest expense | 6,025 | 63,434 |
(Gain) loss on investment in undivided interest in real estate | (2,060) | 1,378 |
Gain on debt extinguishment | (530,468) | |
Gain on collections of bad debt | ||
Recognition of deferred revenues per settlement | (847,223) | |
Changes in operating assets and liabilities: | ||
Decrease (increase) in Interest receivable, related party | 146 | |
Decrease (increase) in Accounts receivable | 6,838 | (12,950) |
Decrease (increase) in Employee advances | (40,942) | |
Decrease (increase) in Inventory | (85,551) | (3,638) |
Decrease (increase) in Deferred commissions, stockholder | 133,334 | |
Decrease (increase) in Prepaid assets | (51,900) | (94,887) |
Decrease (increase) in Accounts receivable, related party | (129,329) | (73,996) |
Increase (decrease) in Accounts payable and accrued expenses | 265,298 | 114,179 |
Increase (decrease) in Income taxes payable | (9,684) | |
Increase (decrease) in Commissions payable, stockholder | (96,000) | |
Increase (decrease) in Officer salaries payable | 141,694 | 40,517 |
Increase (decrease) in Deferred revenue | 625,000 | |
Increase (decrease) in Customer deposits | 56,698 | |
Net cash used in operating activities | (1,165,526) | (776,283) |
Cash flows from investing activities: | ||
Payment of security deposit | (6,440) | |
Purchase of domain name | (3,000) | |
Purchase of office and computer equipment | (7,104) | |
Repayments of shareholder loans receivable | 17,938 | |
Investment in undivided interest in real estate | (218,351) | |
Purchase of technology | (183,200) | |
Net cash used in investing activities | (196,744) | (203,413) |
Cash flows from financing activities: | ||
Proceeds from issuance of note payable | 77,600 | |
Advances (repayments) to shareholder | (74,312) | 186,338 |
Proceeds from advances, shareholder | 36,800 | 65,000 |
Proceeds from issuances of convertible notes payable | 1,664,450 | 345,000 |
Repayments of note payable | (79,499) | (7,236) |
Repayments of advances, shareholder | (6,000) | |
Repayments of principal of convertible note payable | (253,663) | (18,200) |
Net cash provided by financing activities | 1,365,376 | 570,902 |
Net increase (decrease) in cash and cash equivalents | 3,106 | (408,794) |
Cash and cash equivalents, Beginning of period | 84,720 | 493,514 |
Cash and cash equivalents, End of period | 87,826 | 84,720 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | 102,203 | 4,521 |
Cash paid for income taxes | ||
Schedule of non-cash Investing or Financing Activity: | ||
Reclassification of derivative liabilities upon principal repayments of convertible notes | 2,320,595 | |
Intangible assets in accounts payable | 816,800 | |
Issuance of note payable for investment in undivided interest in real estate | 1,007,930 | |
Conversion of notes payable and accrued interest in common stock | 824,823 | |
Series B Preferred Stock issued for payment of related party liabilities | 45,000 | |
Acquisition of Assets | ||
Issuance of common stock as consideration for assets purchased | 22,974 | |
Assumed liabilities | 33,049 | |
Property and equipment | (38,400) | |
Other Assets | (4,616) | |
Customer base | (300) | |
Non- compete | (12,707) | |
Acquisition of assets, total |
ORGANIZATION
ORGANIZATION | 12 Months Ended |
Dec. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
ORGANIZATION | NOTE 1 - ORGANIZATION Business InnerScope Hearing Technologies, Inc. (“Company”, “InnerScope”) is a Nevada Corporation incorporated on June 15, 2012, with its principal place of business in Roseville, California. The Company was originally named InnerScope Advertising Agency, Inc. and was formed to provide advertising and marketing services to retail establishments in the hearing device industry. On August 25, 2017, the Company changed its name to InnerScope Hearing Technologies, Inc. to better reflect the Company’s current direction as a technology driven company with a scalable business model, encompassing; business to business (B2B) solutions, direct to consumer (DTC) sales and marketing and business to consumer (and B2C) solutions. The Company is a manufacturer and a DTC distributor/retailer of FDA (Food and Drug Administration) registered hearing aids, personal sound amplifier products (“PSAP’s”), hearing related treatment therapies doctor-formulated dietary hearing supplements and proprietary CDB oil for treating tinnitus. The Company also owns and operates audiological and retail hearing device clinics and plans to continue to open and acquire additional clinics. As of the date of this filing, the Company operates five retail hearing device clinics in California. On August 5, 2016, the Company along with Mark Moore (“Mark”, the Company’s Chairman of the Board), Matthew Moore (“Matthew”, the Company’s Chief Executive Officer) and Kim Moore (“Kim”, the Company’s Chief Financial Officer) entered into a Store Expansion Consulting Agreement (the “Expansion Agreement”) with a third party (the “Client”). Mark, Matthew and Kim are herein referred to collectively as the “Moores”. Pursuant to the Expansion Agreement, the Company and the Moores were responsible for all physical plant and marketing details for the Client’s new store openings during the initial term of six-months. The Expansion Agreement was cancelled on January 6, 2017. The Client decided to do their own marketing in-house and eliminate the out-sourced contract and decided to open only one location and delay the opening of any other new stores. Also, on August 5, 2016, the Company and the Moores entered into a Consulting Agreement (the “Consulting Agreement”) with the same Client as the store Expansion Agreement. Under the Consulting Agreement, including the Non-Compete provision covering a ten-mile radius of any retail store, the Company and the Moores were to provide unlimited licensing of the Intela-Hear brand name, exclusive access to the Aware Aural Rehab Program within 10 miles of retail stores, exclusive territory of all services within 10 miles of retail stores and up to 40 hours per month of various consulting services. The Consulting Agreement continues until January 31, 2019, unless terminated for cause, as defined in the Consulting Agreement. On May 26, 2017, the Company and the Moores were named in an action filed by the Client, that included a demand that all monies paid pursuant to the Consulting Agreement be returned. On August 13, 2018, the Client, InnerScope and the Moores executed a Settlement Agreement (See Note 13). |
Asset Purchase Acquisition of K
Asset Purchase Acquisition of Kathy L Amos Audiology | 12 Months Ended |
Dec. 31, 2018 | |
Business Combinations [Abstract] | |
Asset Purchase Acquisition of Kathy L Amos Audiology | NOTE 2 – Asset Purchase Acquisition of Kathy L Amos Audiology Effective September 10, 2018, the Company acquired all of the assets and assumed certain liabilities of Kathy L Amos Audiology (“Amos Audiology”) in exchange for 340,352 shares of common stock (the “Acquisition”). Amos Audiology provides retail hearing aid sales and audiological services in the East Bay area of San Francisco. Based on the fair value of the common stock issued of $22,974 and the assumed liabilities of $33,049, the total purchase consideration was $56,023. The following table summarizes the purchase price allocation of the fair value of assets acquired and liabilities assumed in the acquisition: Purchase Price Allocation Fair value of consideration for Acquisition $ 22,974 Liabilities assumed 33,049 Total purchase consideration $ 56,023 Tangible assets acquired $ 43,016 Intangible assets 13,007 $ 56,023 The total purchase price of $56,023 has been allocated to the tangible and intangible assets acquired and liabilities assumed based on estimated fair values as of the completion of the Acquisition. The fair value of Amos Audiology’s identifiable intangible assets was estimated primarily using the income approach which requires an estimate or forecast of all the expected future cash flows, either through the use of the relief-from-royalty method or the multi-period excess earnings method. The Company determined the identifiable intangible assets, consisting of a customer base and non-compete had fair values of $300 and $12,707, respectively. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES | NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES Basis of Presentation and Principles of Consolidation The accompanying consolidated financial statements are prepared in accordance with Generally Accepted Accounting Principles in the United States of America ("US GAAP"). The consolidated financial statements of the Company include the consolidated accounts of InnerScope and its’ wholly owned subsidiaries ILLC and Intela-Hear. All intercompany accounts and transactions have been eliminated in consolidation. Emerging Growth Companies The Company qualifies as an “emerging growth company” under the 2012 JOBS Act. Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. As an emerging growth company, the Company can delay the adoption of certain Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reported period. Actual results could differ from those estimates. Significant estimates include the fair value of the derivative liabilities. Cash and Cash Equivalents The Company considers all highly liquid investments with an original term of three months or less to be cash equivalents. These investments are carried at cost, which approximates fair value. The Company held no cash equivalents as of December 31, 2018 and 2017. Cash balances may, at certain times, exceed federally insured limits. If the amount of a deposit at any time exceeds the federally insured amount at a bank, the uninsured portion of the deposit could be lost, in whole or in part, if the bank were to fail. Accounts receivable The Company records accounts receivable at the time products and services are delivered. An allowance for losses is established through a provision for losses charged to expenses. Receivables are charged against the allowance for losses when management believes collectability is unlikely. The allowance (if any) is an amount that management believes will be adequate to absorb estimated losses on existing receivables, based on evaluation of the collectability of the accounts and prior loss experience. As of December 31, 2018, management’s evaluation required the establishment of an allowance for uncollectible receivables of $18,383. As of December 31, 2017, management’s evaluation did not require an allowance. Sales Concentration and Credit Risk Following is a summary of customers who accounted for more than ten percent (10%) of the Company’s revenues for the years ended December 31, 2018 and 2017, and accounts receivable balances as of December 31, 2018, and 2017: December 31, 2018 2017 Accounts Receivable as of Accounts Receivable as of % % December 31, 2018 December 31, 2017 Customer A — 16.4 % $ — $ 63,799 Customer B — 14.8 % $ — $ 4,000 Customer C, related 25.2 % 18.3 % $ 145,505 $ 81,193 Customer D — 27.6 % $ — — Inventory Inventory is valued at the lower of cost or net realizable value. Cost is determined using the first in first out (FIFO) method. Provision for potentially obsolete or slow-moving inventory is made based on management analysis or inventory levels and future sales forecasts. As of December 31, 2018, and 2017, management’s analysis did not require any provisions to be recognized. Intangible Assets Costs for intangible assets are accounted for through the capitalization of those costs incurred in connection with developing or obtaining such assets. Capitalized costs are included in intangible assets in the consolidated balance sheets. On October 3, 2018, the Company entered into a Manufacturing Design and Marketing Agreement (the “Agreement”) with Zounds Hearing, Inc., a Delaware corporation (“Zounds”), whereby, Zounds as the Subcontractor will provide design, technology, manufacturing and supply chain services to the Company (see Note 13) for a period of ten years . The Company will pay Zounds One Million ($1,000,000) for the right to use proprietary technology (the “Technology Access Fee”). As of December 31, 2018, the Company has capitalized the $1,000,000 Technology Access Fee as an intangible asset on the consolidated balance sheets. The Technology Access Fee will be amortized over the term of the Agreement. The Company also acquired intangible assets from an asset purchase agreement (see Note 2). www.innd.com Property and Equipment Property and equipment are stated at cost, and depreciation is provided by use of a straight-line method over the estimated useful l ives of the assets. The Company reviews property and equipment for potential impairment whenever events or changes in circumstances indicate that the carrying amounts of assets may not be recoverable. The estimated useful lives of property and equipment are as follows: Computer equipment 3 years Machinery and equipment 5 years Furniture and fixtures 5 years Leasehold improvements 3-5 years The Company's propert y and equipment consisted of the following at December 31, 2018, and 2017: December 31, December 31, Computer equipment $ 2,651 $ 2,651 Machinery and equipment 31,122 — Furniture and fixtures 2,160 — Leasehold improvements 12,222 — Accumulated depreciation (4,705 ) (1,068 ) Balance $ 43,450 $ 1,583 Depreciation expense of $3,638 and $884 was recorded for the years ended December 31, 2018 and 2017, respectively. Investment in Undivided Interest in Real Estate The Company accounts for its’ investment in undivided interest in real estate using the equity method, as the Company is severally liable only for the indebtedness incurred with its interest in the property. The Company includes its allocated portion of net income or loss in Other income (expense) in its Statement of Operations, with the offset to the equity investment account on the balance sheet. For the years ended December 31, 2018 and 2017, the Company recognized a gain of $2,060 and loss of $1,378, respectively. As of December 31, 2018, and 2017, the carrying value of the Company’s investment in undivided interest in real estate was $1,226,963 and $1,224,903, respectively (see Note 10). 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 mark et 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 asse ts and liabilities, such as cash, prepaid expenses, accounts receivable, accounts payable and accrued expenses, certain notes payable and notes payable - related party, approximate their fair values because of the short maturity of these instruments. The following table represents the Company’s financial instruments that are measured at fair value on a recurring basis as of December 31, 2018, and 2017, for each fair value hierarchy level: December 31, 2018 Derivative Liabilities Total Level I $ — $ — Level II $ — $ — Level III $ 1,807,404 $ 1,807,404 December 31, 2017 Level I $ — $ — Level II $ — $ — Level III $ 540,965 $ 540,965 Embedded Conversion Features The Company evaluates embedded conversion features within convertible debt under 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 Monte Carlo simulations 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 through the maturity of the debt. If a conversion of the underlying debt occurs prior to maturity a proportionate share of the unamortized amounts is immediately expensed. Any unamortized debt issue costs and debt discount are presented net of the related debt on the consolidated balance sheets. Original Issue Discount For certain convertible debt issued, the Company may provide the debt holder with an original issue discount. The original issue discount would be recorded to debt discount, reducing the face amount of the note and is amortized to interest expense through the maturity of the debt. If a conversion of the underlying debt occurs prior to maturity a proportionate share of the unamortized amounts is immediately expensed. Any unamortized original issue discounts are presented net of the related debt on the consolidated balance sheets. Revenue Recognition Effective January 1, 2018, the Company adopted ASC Topic 606, “Revenue from Contracts with Customers” (“ASC 606”) and all the related amendments. The Company elected to adopt this guidance using the modified retrospective method. The adoption of this guidance did not have a material effect on the Company’s financial position, results of operations or cash flows. The core principle of ASC 606 requires that an entity recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. ASC 606 defines a five-step process to achieve this core principle and, in doing so, it is possible more judgment and estimates may be required within the revenue recognition process than required under U.S. GAAP including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. The Company’s contracts with customers are generally on a purchase order basis and represent obligations that are satisfied at a point in time, as defined in the new guidance, generally upon delivery or has services are provided. Accordingly, revenue for each sale is recognized when the Company has completed its performance obligations, Any costs incurred before this point in time, are recorded as assets to be expensed during the period the related revenue is recognized. The Company accepts prepayments on hearing aids and records the amount received as customer deposits on its’ balance sheet. When the Company delivers the hearing aid to the customer, revenue is recognized as well as the corresponding cost of sales. As of December 31, 2018, the Company had received $56,698 of customer deposits, that will be recognized as revenue after December 31, 2018, when the hearing aids are delivered to the customer Income Taxes The Company accounts for income taxes in accordance with ASC 740-10, Income Taxes. Deferred tax assets and liabilities are recognized to reflect the estimated future tax effects, calculated at the tax rate expected to be in effect at the time of realization. A valuation allowance related to a deferred tax asset is recorded when it is more likely than not that some portion of the deferred tax asset will not be realized. Deferred tax assets and liabilities are adjusted for the effects of the changes in tax laws and rates of the date of enactment. ASC 740-10 prescribes a recognition threshold that a tax position is required to meet before being recognized in the financial statements and provides guidance on recognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure and transition issues. Interest and penalties are classified as a component of interest and other expenses. To date, the Company has not been assessed, nor paid, any interest or penalties. Uncertain tax positions are measured and recorded by establishing a threshold for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Only tax positions meeting the more-likely-than-not recognition threshold at the effective date may be recognized or continue to be recognized. Advertising and Marketing Expenses The Company expenses advertising and marketing costs as incurred. For the years ended December 31, 2018, advertising and marketing expenses were $173,580. The Company did not incur any advertising and marketing expenses for the year ended December 31, 2017. Earnings (Loss) Per Share The Company reports earnings (loss) per share in accordance with ASC 260, "Earnings per Share." Basic earnings (loss) per share is computed by dividing net income (loss) by the weighted-average number of shares of common stock outstanding during each period. Diluted earnings per share is computed by dividing net loss by the weighted-average number of shares of common stock, common stock equivalents and other potentially dilutive securities outstanding during the period. As of December 31, 2018, and 2017, the Company’s outstanding convertible debt is convertible into approximately 120,715,294 and 10,043,445 shares of common stock, respectively. This amount is not included in the computation of dilutive loss per share because their impact is antidilutive. Recent Accounting Pronouncements In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, “Leases (Topic 842)”. Under this guidance, an entity is required to recognize right-of-use assets and lease liabilities on its balance sheet and disclose key information about leasing arrangements. This guidance offers specific accounting guidance for a lessee, a lessor and sale and leaseback transactions. Lessees and lessors are required to disclose qualitative and quantitative information about leasing arrangements to enable a user of the financial statements to assess the amount, timing and uncertainty of cash flows arising from leases. This guidance is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period, and requires a modified retrospective adoption, with early adoption permitted. The Company is currently evaluating the impact the adoption of this standard will have on our consolidated financial statements. With the exception of the new standard discussed above, there have been no other recent accounting pronouncements or changes in accounting pronouncements during the year ended December 31, 2018, as compared to the recent accounting pronouncements described in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017, as filed on April 17, 2018, that are of significance or potential significance to the Company. |
GOING CONCERN AND MANAGEMENT'S
GOING CONCERN AND MANAGEMENT'S PLANS | 12 Months Ended |
Dec. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
GOING CONCERN AND MANAGEMENT'S PLANS | NOTE 4 – GOING CONCERN AND MANAGEMENT’S PLANS The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. which assumes the realization of assets and satisfaction of liabilities and commitments in the normal course of business. The Company experienced a net loss of $4,585,117 for the year ended December 31, 2018. At December 31, 2018, the Company had a working capital deficit of $3,088,957, and an accumulated deficit of $6,372,129. These factors raise substantial doubt about the Company’s ability to continue as a going concern and to operate in the normal course of business. These consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might result from this uncertainty. Management’s Plans The Company continues to implement an industry encompassing revenue strategy, including the current revenue model to other major sectors of the global hearing industry. On September 10, 2018, the Company acquired all of the assets and assumed certain liabilities of Amos Audiology (see Note 2). This transaction is part of management’s plans to expand the Company’s retail clinic business by opening multiple clinics in the next 12 months. During the year ended December 31, 2018, the Company opened 2 retail clinics, and during the three months ended March 31, 2019, the Company opened an additional 3 retail clinics. |
INTANGIBLE ASSETS, NET (OTHER T
INTANGIBLE ASSETS, NET (OTHER THAN GOODWILL) | 12 Months Ended |
Dec. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
INTANGIBLE ASSETS, NET (OTHER THAN GOODWILL) | NOTE 5 – INTANGIBLE ASSETS, NET (OTHER THAN GOODWILL) The Company’s intangible assets consist of a customer list and non-compete acquired from Kathy L Amos Audiology (see Note 2) and a Technology Access Fee required to be paid by the Company in connection with a manufacturing design and marketing agreement executed with a supplier (see Note 13). These intangible assets are amortized over their estimated useful lives as indicated below. The following is a summary of activity related to intangible assets for the year ended December 31, 2018: Customer List Non-compete Technology Access Fee Useful Lives 2 Years 2 Years 10 Years Total Carrying Value at December 31, 2017 $ — $ — $ — $ — Additions 300 12,708 1,000,000 1,013,008 Amortization (50 ) (2,118 ) (0 ) (2,168 ) Carrying Value at December 31, 2018 $ 250 $ 10,590 $ 1,000,000 $ 1,010,840 The Company recognized $2,168 of amortization expense during the year ended December 31, 2018. Future expected amortization of intangible assets is as follows: Fiscal Year Ending December 31, 2019 $ 106,504 2020 104,336 2021 100,000 2022 100,000 2023 100,000 Thereafter 500,000 $ 1,101,840 |
ADVANCES PAYABLE, SHAREHOLDERS
ADVANCES PAYABLE, SHAREHOLDERS | 12 Months Ended |
Dec. 31, 2018 | |
Advances Payable Shareholders | |
ADVANCES PAYABLE, SHAREHOLDERS | NOTE 6 – ADVANCES PAYABLE, STOCKHOLDERS Chief Executive Officer A summary of the activity for the years ended December 31, 2018, and 2017, representing amounts paid by the Company’s CEO (stockholder) on behalf of the Company and amounts reimbursed is as follows. December 31, 2018 December 31, Beginning Balance $ 138,637 $ -0- Amounts paid on Company’s behalf 589,524 149,370 Reimbursements (625,635 ) (10,733 ) Cancelled in exchange for Series B preferred stock (45,000 ) — Ending Balance $ 57,526 $ 138,637 The ending balances as of December 31, 2018, and 2017, are included in Advances payable, stockholders on the consolidated balance sheets included herein. These advances have no specific repayment terms. Director A summary of the activity for the years ended December 31, 2018, and 2017, representing amounts paid by the Company’s Chairman (stockholder) on behalf of the Company and amounts reimbursed is as follows. December 31, 2018 December 31, Beginning Balance $ 38,201 $ -0- Amounts paid on Company’s behalf 24,299 39,201 Reimbursements (62,500 ) (1,000 ) Ending Balance $ -0- $ 38,201 The ending balances as of December 31, 2017, is included in Advances payable, stockholders on the consolidated balance sheets included herein. These advances have no specific repayment terms. |
NOTE PAYABLE, STOCKHOLDER AND N
NOTE PAYABLE, STOCKHOLDER AND NOTE PAYABLE | 12 Months Ended |
Dec. 31, 2018 | |
Payables and Accruals [Abstract] | |
NOTE PAYABLE, STOCKHOLDER AND NOTE PAYABLE | NOTE 7 – NOTE PAYABLE, STOCKHOLDER A summary of the activity for the years ended December 31, 2018, and 2017, of amounts the Company’s CEO (stockholder) loaned the Company and amounts repaid is as follows: December 31, December 31, Beginning Balance $ 65,000 $ -0- Amounts loaned to the Company 36,800 65,000 Repaid (6,000 ) -0- Ending Balance $ 95,800 $ 65,000 The ending balance amount is due on demand, carries interest at 8% per annum and is included Notes payable, stockholder on the consolidated balance sheets included herein. NOTE 8 – NOTE PAYABLE On February 27, 2018, the Company entered into a Business Loan Agreement (the “February BLA”) for $43,358 with a third- party, whereby the Company received $32,600 on March 1, 2018, with a 33% interest rate and maturing on March 1, 2019. The February BLA requires the Company to make the first six monthly payments of principal and interest of $4,102 per month, and then $3,124 for months seven through twelve. The Company paid the note in full on August 28, 2018. On July 30, 2018, the Company entered into a Business Loan Agreement (the “July BLA”) for $11,020 with a third- party, whereby the Company received $9,500 on July 30, 2018, with a 16% interest rate and maturing on February 16, 2019. The July BLA requires the Company to make the first two monthly payments of principal and interest of $2,106 per month, and then $1,702 for months three through six. The Company paid the note in full on August 28, 2018. On October 8, 2018, the Company entered into a Business Loan Agreement (the “October BLA”) for $47,215 with a third- party, whereby the Company received $35,500 on October 10, 2018. The October BLA requires the Company to make the first six monthly payments of principal and interest of $4,467 per month, and then $3,402 for months seven through twelve. The note carries a 33% interest rate and matures on October 28, 2019. As of December 31, 2018, there was a balance of $38,280 on the October BLA, with a carrying value of $29,270, net of unamortized discounts of $9,011. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2018 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 9 – RELATED PARTY TRANSACTIONS The Company loaned the CEO $20,500 during the year ended December 31, 2013. The note and interest were paid in full during the year ended December 31, 2017. The Company recorded interest income of $228 for the year ended December 31, 2017. During the year ended December 31, 2018, and 2017, our CEO (stockholder) paid expenses and accounts payable on behalf of the Company (see Note 5). As of December 31, 2018, and 2017, the Company owed the CEO $57,526 and $138,637, respectively, which is included in Advances payable, stockholders on the consolidated balance sheets included herein. During the year ended December 31, 2018, and 2017, our Chairman (stockholder) paid expenses of the Company and accounts payable on behalf of the Company (see Note 5). As of December 31, 2018, and 2017, the Company owed the Chairman $0 and $38,201, respectively, which is included in Advances payable, stockholders on the consolidated balance sheets included herein. On August 8, 2016, in consideration of $128,000 (the “Cancellation Fee”), MFHC and the Company agreed to cancel the Marketing Agreement as a result of the sale by MFHC of substantially all of their assets. On August 11, 2016, MFHC paid $229,622 to the Company (inclusive of the balance owed as of June 30, 2016, the Cancellation Fee and other related party activity). Pursuant to a Marketing Agreement (cancelled August 5, 2016), the Company provided marketing programs to promote and sell hearing aid instruments and related devices to Moore Family Hearing Company (“MFHC”). MFHC owned and operated retail hearing aid stores. Based on common control of MFHC and the Company, all transactions with MFHC are classified as related party transactions. For the year ended December 31, 2016 (through August 5, 2016), there were 20 stores resulting in revenue of $458,667. The Company has offset the accounts receivable owed from MFHC for these services with expenses of the Company that have been paid by MFHC. As a result of these payments, in addition to MFHC’s payments to the Company through December 31, 2016, the balance due to MFHC as of December 31, 2018, and 2017, was $22,548, which is included in Accounts payable, related party, on the consolidated balance sheets included herein. Effective August 1, 2016, the Company agreed to compensation of $225,000 and $125,000 per year for the Company’s CEO and CFO, respectively. On November 15, 2016, the Company entered into employment agreements with its CEO and CFO, which includes their annual base salaries of $225,000 and $125,000, respectively. For the years ended December 31, 2018, and 2017, the Company recorded expenses to its officers in the following amounts: Year ended December 31, Description 2018 2017 CEO $ 225,193 $ 224,691 CFO 125,107 124,828 Total $ 350,300 $ 349,519 As of December 31, 2018, the Company owes the CEO and CFO $49,142 and $139,800, respectively, and as of December 31, 2017, the Company owed the CEO and CFO $4,327 and $40,385, respectively for accrued and unpaid wages. These amounts are included in Officer salaries payable on the balance sheets included herein. In September 2016, the officers and directors of the Company formed a California Limited Liability Company (“LLC1”), for the purpose of acquiring commercial real estate and other business activities. On December 24, 2016, LLC1 acquired two retail stores from the buyer of the MFHC stores. On March 1, 2017, the Company entered into a twelve-month Marketing Agreement with each of the stores to provide telemarketing and design and marketing services for $2,500 per month per store, resulting in $60,000 and $50,000, respectively, for the years ended December 31, 2018, and 2017. Additionally, for the year ended December 31, 2018, the Company invoiced LLC1 $20,226 for the Company’s production, printing and mailing services and $1,793 for sale of products. As of December 31, 2018, and December 31, 2017, LLC1 owes the Company $203,325 and $73,996, respectively, for the consulting fees and mailing services as well expenses of LLC1 paid by the Company. As of December 31, 2018, the Company is owed On June 14, 2017, the Company entered into a five-year lease with LLC1 for approximately 6,944 square feet and a monthly rent of $12,000. For the years ended December 31, 2018, and 2017, the Company expensed $144,000 and $111,377, respectively, related to this lease and is included in Rent, related party, on the consolidated statement of operations, included herein. As of December 31, 2018, the Company owed LLC1 $30,500 for unpaid rent. In November 2016, the Company’s Chairman formed a California Limited Liability Company (“LLC2”), for the purpose of providing consulting services to the Company. The Company entered into an agreement with LLC2, and paid LLC2 $375,000 during the year ended December 31, 2016, for services performed and to be performed. Of the $375,000 amount paid, $241,667 was recognized as consulting fees- stockholder for the year ended December 31, 2016, and the remaining $133,334 was recorded as deferred commissions- stockholder as of December 31, 2016. For the year ended December 31, 2017, the Company paid LLC2 an additional $771,000 ($96,000 of which reduced previous amounts owed) and expensed $808,334 ($60,000 as commissions for services performed and $748,334 as other expense). As of December 31, 2018, and 2017, the deferred commissions-stockholder is $-0-. On May 9, 2017, the Company and LLC1 purchased certain real property from an unaffiliated party. The Company and LLC1 have agreed that the Company purchased and owns 49% of the building and LLC1 purchased and owns 51% of the building. The contracted purchase price for the building was $2,420,000 and the total amount paid at closing was $2,501,783 including, fees, insurance, interest and real estate taxes. The Company paid for their building interest by delivering cash at closing of $209,971 and being a co-borrower on a note in the amount of $2,057,000, of which the Company has agreed with LLC1 to pay $1,007,930 (see Note 9). |
INVESTMENT IN UNDIVIDED INTERES
INVESTMENT IN UNDIVIDED INTEREST IN REAL ESTATE | 12 Months Ended |
Dec. 31, 2018 | |
Real Estate [Abstract] | |
INVESTMENT IN UNDIVIDED INTEREST IN REAL ESTATE | NOTE 10– INVESTMENT IN UNDIVIDED INTEREST IN REAL ESTATE On May 9, 2017, the Company and LLC1 purchased certain real property from an unaffiliated party. The Company and LLC1 have agreed that the Company purchased and owns 49% of the building and LLC1 purchased and owns 51% of the building. The contracted purchase price for the building was $2,420,000 and the total amount paid at closing was $2,501,783 including, fees, insurance, interest and real estate taxes. The Company paid for their building interest by delivering cash at closing of $209,971 and being a co-borrower on a note with and initial amount of $2,057,000, of which the Company has agreed with LLC1 to pay $1,007,930 (see Note 10). The Company accounts for its investment in undivided interest in real estate as an equity method investment and recognizes it’s proportionate share of profits and losses. For the years ended December 31, 2018, and 2017, a net gain of $2,060 and loss of $1,378, respectively, is included on the Statements of Operations. As of December 31, 2018, the carrying value of the Company’s investment in undivided interest in real estate was $1,226,963. The consolidated balance sheets as of December 31, 2018, and 2017 and the statement of operations for the years ended December 31, 2018, and 2017, for the real property is as follows: Current assets: 2018 2017 Cash $ 2,257 $ 8,331 Due from InnerScope 30,500 2,711 Prepaid expenses and other current assets 72,931 37,471 Total current assets 105,958 48,512 Land and Building, net 2,354,282 2,397,848 Other Assets, net 53,323 54,426 Total assets $ 2,513,563 $ 2,500,606 Current portion of mortgage payable $ 40,122 $ 37,792 Other current liabilities 48,551 10,560 Total current liabilities 88,673 48,352 Mortgage payable, long-term 1,969,076 2,004,440 Security deposits 13,064 9,268 Total liabilities 2,070,813 2,062,060 Total equity 442,750 438,546 Total liabilities and equity $ 2,513,563 $ 2,500,060 2018 2017 Rental income $ 285,976 $ 154,454 Expenses: Property taxes 26,583 16,752 Depreciation and amortization 43,566 27,229 Insurance 2,033 6,253 Repairs and maintenance 30,128 17,829 Utilities and other 40,066 15,083 Interest expense 139,416 74,120 Total expenses 281,772 157,226 Net income (loss) $ 4,204 $ (2,812 ) |
NOTE PAYABLE - UNDIVIDED INTERE
NOTE PAYABLE - UNDIVIDED INTEREST IN REAL ESTATE | 12 Months Ended |
Dec. 31, 2018 | |
Debt Disclosure [Abstract] | |
NOTE PAYABLE - UNDIVIDED INTEREST IN REAL ESTATE | NOTE 11– NOTE PAYABLE - UNDIVIDED INTEREST IN REAL ESTATE On May 9, 2017, the Company and LLC1 purchased certain real property from an unaffiliated party. The Company and LLC1 have agreed that the Company purchased and owns 49% of the building and LLC1 purchased and owns 51% of the building. The contracted purchase price for the building was $2,420,000 and the total amount paid at closing was $2,501,783 including, fees, insurance, interest and real estate taxes. The Company is a co-borrower on a $2,057,000 Small Business Administration Note (the “SBA Note”). The SBA Note carries a 25-year term, with an initial interest rate of 6% per annum, adjustable to the Prime interest rate plus 2% (6.75% as of December 31, 2018), and is secured by a first position Deed of Trust and business assets located at the property. The Company initially recorded a liability of $1,007,930 for its portion of the SBA Note, with the offset being to Investment in undivided interest in real estate on the consolidated balance sheets presented herein. As of December 31, 2018, the Company’s current and long-term portion of the SBA Note is $19,660 and $964,847, respectively. Future principal payments for the Company’s portion are: Twelve months ending December 31, Amount 2019 $ 19,660 2020 20,708 2021 22,150 2022 23,516 2023 24,966 Thereafter 873,507 Total $ 984,507 |
CONVERTIBLE NOTES PAYABLE
CONVERTIBLE NOTES PAYABLE | 12 Months Ended |
Dec. 31, 2018 | |
Debt Disclosure [Abstract] | |
CONVERTIBLE NOTES PAYABLE | NOTE 12– CONVERTIBLE NOTES PAYABLE On October 11, 2017, the Company completed the closing of a private placement financing transaction (the “Transaction”) with a third-party investor, pursuant to a Securities Purchase Agreement (the “Purchase Agreement”) dated October 5, 2017. Pursuant to the Purchase Agreement, the investor purchased a 12% Convertible Promissory Note (the “Note”), dated October 5, 2017, in the principal amount of $48,000. On October 11, 2017, the Company received proceeds of $45,000 which excluded transaction costs, fees, and expenses of $3,000. Principal and interest was due and payable July 15, 2018, and the Note was convertible into shares of the Company’s common stock at any time after one hundred eighty (180) days, at the average of the two lowest closing bid prices during the ten (10) prior trading days from which a notice of conversion is received by the Company multiplied by sixty-five percent (65%), representing a thirty-five percent (35%) discount. The embedded conversion feature included in the note resulted in an initial debt discount of $40,300, and an initial derivative liability of $40,300. For the years ended December 31, 2018, and 2017, amortization of the debt discount of $27,739 and $12,561, respectively, was charged to interest expense. The Company also recorded a discount for debt issuance costs of $3,000 and has amortized $2,065 and $935, respectively, to interest expense for the years ended December 31, 2018, and 2017. During the year ended December 31, 2018, the investor converted $48,000 of principal and $2,880 of accrued interest into 4,330,984 shares of common stock. As of December 31, 2018, and 2017, the note balance is $-0- and $48,000 with a December 31, 2017, carrying value of $18,196, net of unamortized discounts of $29,804, respectively. On November 10, 2017, the Company issued a convertible promissory note (the “Note”), with a face value of $299,000, maturing on January 12, 2019, and stated interest of 10% to a third-party investor. The note was convertible at any time after ninety (90) days of the funding of the note into a variable number of the Company's common stock, based on a conversion ratio of 65% of the lowest trading price for the 20 days prior to conversion. The note was funded on November 10, 2017, when the Company received proceeds of $250,000, after disbursements for the lender’s transaction costs, fees and expenses. The Note also required daily payments of $700 per day via ACH through January 12, 2019, when all unpaid principal and interest was due. The embedded conversion feature included in the note resulted in an initial debt discount of $250,000, an initial derivative expense of $213,549 and an initial derivative liability of $463,549. For the years ended December 31, 2018, and 2017, amortization of the debt discount of $208,583 and $41,417, respectively, was charged to interest expense. The Company also recorded an original issue discount and debt issue discount of $49,000 and amortized $40,883 and $8,118 to interest expense for the years ended December 31, 2018, and 2017, respectively. During the year ended December 31, 2018, the Company made principal payments of $81,900, and the investor converted $123,250 of principal and $21,843 of interest into 21,887,432 shares of common stock. On August 10, 2018, the investor sold $40,000 of the Note to a third party, and the investor also forgave $35,650 of principal. As of December 31, 2018, and 2017, the note balance is $-0- and $280,800, with a December 31, 2017, carrying value of $31,335, net of unamortized discounts of $249,465, respectively. On December 12, 2017, the Company completed the closing of a private placement financing transaction (the “Transaction”) when a third-party investor purchased a convertible note (the “Convertible Note”). The Convertible Note carries a 10% annual interest rate and is in the principal amount of $50,000. Principal and interest is due and payable December 12, 2018, and the Note was convertible into shares of the Company’s common stock at any time after one hundred eighty (180) days, at a conversion price (the “Conversion Price”) equal to seventy-five percent (75%) of the average closing price of the Company’s common stock for the ten (10) days immediately preceding the conversion, representing a twenty-five percent (25%) discount. The embedded conversion feature included in the note resulted in an initial debt discount of $13,207, and an initial derivative liability of $13,207. For the years ended December 31, 2018, and 2017, amortization of the debt discount of $12,803 and $404, respectively was charged to interest expense. As of December 31, 2018, and 2017, the note balance is $-0- and $50,000 with a carrying value as of December 31, 2017, of $37,197, net of unamortized discounts of $12,803. On February 1, 2018, the Company completed the closing of a private placement financing transaction (the “Transaction”) when a third-party investor purchased a convertible note (the “Convertible Note”). The Convertible Note carries a 10% annual interest rate and is in the principal amount of $35,000. Principal and interest was due and payable February 1, 2019, and the Note was convertible into shares of the Company’s common stock at any time after one hundred eighty (180) days, at a conversion price (the “Conversion Price”) equal to seventy-five percent (75%) of the average closing price of the Company’s common stock for the ten (10) days immediately preceding the conversion, representing a twenty-five percent (25%) discount. The embedded conversion feature included in the note resulted in an initial debt discount of $9,554, and an initial derivative liability of $9,554. For the year ended December 31, 2018, amortization of the debt discount of $9,554 was charged to interest expense. During the year ended December 31, 2018, the investor converted $35,000 of principal and $1,750 of interest into 2,085,106 shares of common stock. As of December 31, 2018, the note balance is $-0- On February 8, 2018, the Company completed the closing of a private placement financing transaction (the “Transaction”) with a third-party investor, pursuant to a Securities Purchase Agreement (the “Purchase Agreement”) dated February 8, 2018. Pursuant to the Purchase Agreement, the investor purchased a 12% Convertible Promissory Note (the “Note”), dated February 8, 2018, in the principal amount of $58,300. On February 8, 2018, the Company received proceeds of $50,000 which excluded transaction costs, fees, and expenses of $8,300. Principal and interest was due and payable November 8, 2018, and the Note was convertible into shares of the Company’s common stock at any time after one hundred eighty (180) days, at the average of the two lowest closing bid prices during the ten (10) prior trading days from which a notice of conversion is received by the Company multiplied by seventy-five percent (75%), representing a twenty-five percent (25%) discount. The embedded conversion feature included in the note resulted in an initial debt discount of $50,000, an initial derivative liability of $65,525 and an initial derivative expense of $15,525. For the year ended December 31, 2018, amortization of the debt discount of $50,000 was charged to interest expense. The Company also recorded a debt issue discount of $8,300 and has amortized $8,300 to interest expense for the year ended December 31, 2018. During the year ended December 31, 2018, the Company made principal payments of $46,121, and the investor converted $12,179 of principal into 2,925,932 shares of common stock. As of December 31, 2018, the note balance is $-0-. On March 2, 2018, the Company completed the closing of a private placement financing transaction (the “Transaction”) when a third-party investor purchased a convertible note (the “Convertible Note”). The Convertible Note carries a 10% annual interest rate and is in the principal amount of $50,000. Principal and interest was due and payable March 2, 2019, and the Note is convertible into shares of the Company’s common stock at any time after one hundred eighty (180) days, at a conversion price (the “Conversion Price”) equal to seventy-five percent (75%) of the average closing price of the Company’s common stock for the ten (10) days immediately preceding the conversion, representing a twenty-five percent (25%) discount. The embedded conversion feature included in the note resulted in an initial debt discount of $13,399, and an initial derivative liability of $13,399. For the year ended December 31, 2018, amortization of the debt discount of $11,166 was charged to interest expense. As of December 31, 2018, the note balance is $50,000, with a carrying value of $47,767, net of unamortized discounts of $2,233. On March 26, 2018, the Company completed the closing of a private placement financing transaction (the “Transaction”) when a third-party investor purchased a convertible note (the “Convertible Note”). The Convertible Note carries a 10% annual interest rate and is in the principal amount of $50,000. Principal and interest was due and payable March 26, 2019, and the Note was convertible into shares of the Company’s common stock at any time after one hundred eighty (180) days, at a conversion price (the “Conversion Price”) equal to seventy-five percent (75%) of the average closing price of the Company’s common stock for the ten (10) days immediately preceding the conversion, representing a twenty-five percent (25%) discount. The embedded conversion feature included in the note resulted in an initial debt discount of $13,420, and an initial derivative liability of $13,420. For the year ended December 31, 2018, amortization of the debt discount of $13,420 was charged to interest expense. During the year ended December 31, 2018, the investor converted $50,000 of principal and $1,205 of interest into 844,870 shares of common stock. As of December 31, 2018, the note balance is $-0-. On March 27, 2018, the Company completed the closing of a private placement financing transaction (the “Transaction”) when a third-party investor purchased a convertible note (the “Convertible Note”). The Convertible Note carries a 10% annual interest rate and is in the principal amount of $25,000. Principal and interest was due and payable March 27, 2019, and the Note is convertible into shares of the Company’s common stock at any time after one hundred eighty (180) days, at a conversion price (the “Conversion Price”) equal to On April 8, 2018, the Company issued a convertible promissory note (the “Note”), with a face value of $95,450, maturing on July 8, 2019, and stated interest of 10% to a third-party investor. The note was convertible at any time after ninety (90) days of the funding of the note into a variable number of the Company's common stock, based on a conversion ratio of 65% of the lowest trading price for the 20 days prior to conversion. The note was funded on April 11, 2018, when the Company received proceeds of $75,000, after disbursements for the lender’s transaction costs, fees and expenses. The Note also requires daily payments of $375 per day via ACH through July 8, 2019, when all unpaid principal and interest is due. The embedded conversion feature included in the note resulted in an initial debt discount of $75,000, an initial derivative expense of $77,108 and an initial derivative liability of $152,108. For the year ended December 31, 2018, amortization of the debt discount of $75,000 was charged to interest expense. The Company also recorded an original issue discount and debt issue discount of $20,450 and amortized $20,450 to interest expense for the year ended December 31, 2018. During the year ended December 31, 2018, the Company made principal payments of $20,625, the investor converted $76,700 of principal and $3,962 of interest into 2,354,393 shares of common stock and the investor also forgave $1,875 of principal. As of December 31, 2018, the note balance is $-0-. On May 11, 2018, the Company issued a convertible promissory note (the “Note”), with a face value of $100,000, maturing on May 11, 2019, and stated interest of 10% to a third-party investor. The note is convertible at any time after the funding of the note into a variable number of the Company's common stock, based on a conversion ratio of 62% of the lowest trading price for the 20 days prior to conversion. The note was funded on May 16, 2018, when the Company received proceeds of $75,825, after disbursements to vendors and for the lender’s transaction costs, fees and expenses. The embedded conversion feature included in the note resulted in an initial debt discount of $95,000, an initial derivative expense of $60,635 and an initial derivative liability of $155,635. For the year ended December 31, 2018, amortization of the debt discount of $77,980 was charged to interest expense. The Company also recorded a debt issue discount of $5,000 and amortized $4,105 to interest expense for the year ended December 31, 2018. During the year ended December 31, 2018, the investor converted $50,000 of principal and $1,831 of interest into 5,184,572 shares of common stock. As of December 31, 2018, the note balance is $50,000, with a carrying value of $32,085, net of unamortized discounts of $17,915. On May 23, 2018, the Company issued a convertible promissory note (the “Note”), with a face value of $60,000, maturing on February 22, 2019, and stated interest of 12% to a third-party investor. The note is convertible at any time after the funding of the note into a variable number of the Company's common stock, based on a conversion ratio of 65% of the lowest trading price for the 20 days prior to conversion. The note was funded on May 30, 2018, when the Company received proceeds of $57,000, after the lender’s transaction costs, fees and expenses. The embedded conversion feature included in the note resulted in an initial debt discount of $57,000, an initial derivative expense of $48,033 and an initial derivative liability of $105,033. For the year ended December 31, 2018, amortization of the debt discount of $45,708 was charged to interest expense. The Company also recorded a debt issue discount of $3,000 and amortized $2,406 to interest expense for the year ended December 31, 2018. During the year ended December 31, 2018, the investor converted $14,750 of principal into 1,500,000 shares of common stock. As of December 31, 2018, the note balance is $51,275, with a carrying value of $39,389, net of unamortized discounts of $11,886. On June 12, 2018, the Company issued a convertible promissory note (the “Note”), with a face value of $88,000, maturing on March 12, 2019, and stated interest of 10% to a third-party investor. The note was convertible at any time after the funding of the note into a variable number of the Company's common stock, based on a conversion ratio of 65% of the lowest trading price for the 25 days prior to conversion. The note was funded on June 14, 2018, when the Company received proceeds of $80,250, after the lender’s transaction costs, fees and expenses. The embedded conversion feature included in the note resulted in an initial debt discount of $80,250, an initial derivative expense of $93,150 and an initial derivative liability of $173,400. For the year ended December 31, 2018, amortization of the debt discount of $80,250 was charged to interest expense. The Company also recorded a debt issue discount of $7,750 and amortized $7,750 to interest expense for the year ended December 31, 2018. During the year ended December 31, 2018, the Company made principal payments of $45,817, and the investor converted $42,183 of principal and $3,134 of interest into 2,618,122 shares of common stock. As of December 31, 2018, the note balance is $-0-. On June 26, 2018, the Company issued a convertible promissory note (the “Note”), with a face value of $92,000, maturing on September 26, 2019, and stated interest of 10% to a third-party investor. The note is convertible at any time after ninety (90) days of the funding of the note into a variable number of the Company's common stock, based on a conversion ratio of 65% of the lowest trading price for the 20 days prior to conversion. The Company recorded an initial note balance of $42,000 on June 27, 2018, when the Company received proceeds of $25,000 (the initial funding), after disbursements for the lender’s transaction costs, fees and expenses. The embedded conversion feature included in the note resulted in an initial debt discount of $25,000, an initial derivative expense of $31,685 and an initial derivative liability of $56,685. For the year ended December 31, 2018, amortization of the debt discount of $25,000 was charged to interest expense. The Company also recorded an original issue discount and debt issue discount of $17,000 and amortized $17,000 to interest expense for the year ended December 31, 2018. During the year ended December 31, 2018, the Company made principal payments of $900 and the investor converted $41,100 of principal and $1,354 of interest into 1,239,161 shares of common stock. As of December 31, 2018, the note balance of the initial funding is $-0-. On June 26, 2018, the Company completed the closing of a private placement financing transaction (the “Transaction”) with a third-party investor, pursuant to a Securities Purchase Agreement (the “Purchase Agreement”). Pursuant to the Purchase Agreement, the investor purchased a 12% Convertible Promissory Note (the “Note”), in the principal amount of $58,300, maturing on April 15, 2019. On June 29, 2018, the Company received proceeds of $50,000 which excluded transaction costs, fees, and expenses of $8,300. The Note was convertible into shares of the Company’s common stock at any time after one hundred eighty (180) days, at the average of the two lowest closing bid prices during the twenty (20) prior trading days from which a notice of conversion is received by the Company multiplied by seventy-five percent (75%), representing a twenty-five percent (25%) discount. The embedded conversion feature included in the note resulted in an initial debt discount of $50,000, an initial derivative liability of $116,550 and an initial derivative expense of $66,550. For the year ended December 31, 2018, amortization of the debt discount of $50,000 was charged to interest expense. The Company also recorded an original issue discount and debt issue discount of $8,300 and amortized $8,300 to interest expense for the year ended December 31, 2018. During the year ended December 31, 2018, the Company paid the principal of $58,300 and interest of $3,840. As of December 31, 2018, the note balance is $-0-. On August 7, 2018, the Company issued a convertible promissory note (the “Note”), with a face value of $88,250, maturing on November 7, 2019, and stated interest of 10% to a third-party investor. The note was convertible at any time after ninety (90) days of the funding of the note into a variable number of the Company's common stock, based on a conversion ratio of 65% of the lowest trading price for the 20 days prior to conversion. The note was funded on August 7, 2018, when the Company received proceeds of $80,250, after disbursements for the lender’s transaction costs, fees and expenses. The embedded conversion feature included in the note resulted in an initial debt discount of $80,250, an initial derivative expense of $86,207 and an initial derivative liability of $166,457. For the year ended December 31, 2018, amortization of the debt discount of $80,250 was charged to interest expense. The Company also recorded a debt issue discount of $8,000 and amortized $8,000 to interest expense for the year ended December 31, 2018. During the year ended December 31, 2018, the investor converted $88,250 of principal and $1,910 of interest into 2,631,647 shares of common stock. As of December 31, 2018, the note balance is $-0-. On August 10, 2018, the Company issued a convertible promissory note (the “Note”), with a face value of $110,000, maturing on November 10, 2019, and stated interest of 10% to a third-party investor. The note was convertible at any time after ninety (90) days of the funding of the note into a variable number of the Company's common stock, based on a conversion ratio of 65% of the lowest trading price for the 20 days prior to conversion. The note was funded on August 10, 2018, when the Company received proceeds of $100,000, after disbursements for the lender’s transaction costs, fees and expenses. The embedded conversion feature included in the note resulted in an initial debt discount of $100,000, an initial derivative expense of $113,173 and an initial derivative liability of $213,173. For the year ended December 31, 2018, amortization of the debt discount of $100,000 was charged to interest expense. The Company also recorded a debt issue discount of $10,000 and amortized $10,000 to interest expense for the year ended December 31, 2018. During the year ended December 31, 2018, the investor converted $110,000 of principal and $2,290 of interest into 3,277,595 shares of common stock. As of December 31, 2018, the note balance is $-0-. On August 10, 2018, an investor purchased a $40,000 portion of a convertible promissory note issued on November 10, 2017. During the year ended December 31, 2018, the investor converted $40,000 of the face value into 3,209,283 shares of common stock. As of December 31, 2018, the outstanding principal amount of the purchased note was $-0-. On November 2, 2018, the Company issued a convertible redeemable note with a face value of $280,500 and a back-end convertible redeemable note for $280,500 (the “Notes”), maturing on November 2, 2019, and a stated interest of 8% to a third-party investor. The notes are convertible at any time after funding of the note into a variable number of the Company's common stock, based on a conversion ratio of 70% of the lowest closing bid price for the 15 days prior to conversion. The first note was funded on November 2, 2018, when the Company received proceeds of $255,000, after disbursements for the lender’s transaction costs, fees and expenses. The embedded conversion feature included in the first note resulted in an initial debt discount of $250,000, an initial derivative expense of $148,544 and an initial derivative liability of $398,544. For the year ended December 31, 2018, amortization of the debt discount of $41,667 was charged to interest expense. The Company also recorded a debt issue discount of $30,500 and amortized $5,083 to interest expense for the year ended December 31, 2018. As of December 31, 2018, the first note balance is $280,500, with a carrying value of $46,750, net of unamortized discounts of $233,750. On December 26, 2018, the investor partially funded $187,000 of the back-end note, when the Company received proceeds of $166,667, after disbursements for the lender’s transaction costs, fees and expenses. The embedded conversion feature included in the partial funding of the back-end note resulted in an initial debt discount of $166,667, an initial derivative expense of $100,081 and an initial derivative liability of $266,748. For the year ended December 31, 2018, amortization of the debt discount of $2,608 was charged to interest expense. The Company also recorded a debt issue discount of $20,333 and amortized $318 to interest expense for the year ended December 31, 2018. As of December 31, 2018, the back-end note balance is $187,000, with a carrying value of $2,926, net of unamortized discounts of $184,074. On December 4, 2018, the Company issued a convertible redeemable note (the “Note”) with a face value of $158,333 maturing on December 4, 2019, and a stated interest of 8% to a third-party investor. The note is convertible at any time after funding of the note into a variable number of the Company's common stock, based on a conversion ratio of 70% of the lowest closing bid price for the 15 days prior to conversion. The note was funded on December 4, 2018, when the Company received proceeds of $137,250, after disbursements for the lender’s transaction costs, fees and expenses. The embedded conversion feature included in the note resulted in an initial debt discount of $137,500, an initial derivative expense of $87,293 and an initial derivative liability of $224,793. For the year ended December 31, 2018, amortization of the debt discount of $11,458 was charged to interest expense. The Company also recorded a debt issue discount of $20,833 and amortized $1,736 to interest expense for the year ended December 31, 2018. As of December 31, 2018, the note balance is $158,333, with a carrying value of $13,194, net of unamortized discounts of $145,139. On December 4, 2018, the Company issued to a third-party investor a convertible redeemable note (the “Note”) with a face value of $230,000 and a back-end convertible redeemable note for $230,000. The notes mature on December 4, 2019, have a stated interest of 8% and each note is convertible at any time following the funding of such note into a variable number of the Company's common stock, based on a conversion ratio of 70% of the lowest closing bid price for the 15 days prior to conversion. The note was funded on December 4, 2018, when the Company received proceeds of $210,000, after disbursements for the lender’s transaction costs, fees and expenses. The embedded conversion feature included in the note resulted in an initial debt discount of $210,000, an initial derivative expense of $108,922 and an initial derivative liability of $318,292. For the year ended December 31, 2018, amortization of the debt discount of $17,500 was charged to interest expense. The Company also recorded a debt issue discount of $20,000 and amortized $1,667 to interest expense for the year ended December 31, 2018. As of December 31, 2018, the note balance is $230,000, with a carrying value of $19,167, net of unamortized discounts of $210,833. On December 24, 2018, the Company issued to a third-party investor a convertible redeemable note (the “Note”) with a face value of $195,000 and a back-end convertible redeemable note for $195,000. The notes mature on December 24, 2019, have a stated interest of 8% and each note is convertible at any time following the funding of such note into a variable number of the Company's common stock, based on a conversion ratio of 70% of the lowest closing bid price for the 15 days prior to conversion. The note was funded on December 26, 2018, when the Company received proceeds of $177,000, after disbursements for the lender’s transaction costs, fees and expenses. The embedded conversion feature included in the note resulted in an initial debt discount of $177,000, an initial derivative expense of $92,464 and an initial derivative liability of $269,464. For the year ended December 31, 2018, amortization of the debt discount of $2,360 was charged to interest expense. The Company also recorded a debt issue discount of $18,000 and amortized $240 to interest expense for the year ended December 31, 2018. As of December 31, 2018, the note balance is $195,000, with a carrying value of $2,600, net of unamortized discounts of $192,400. A summary of the convertible note balances as of December 31, 2018, and 2017, is as follows: December 31, 2018 December 31, 2017 Principal balance $ 1,277,108 $ 378,800 Unamortized discounts (1,125,942 ) (292,073 ) Ending balance, net $ 151,166 $ 86,727 A summary of the balance sheet classification of the short-term and long-term portions of convertible note balances as of December 31, 2017, is as follows: Current portion Long-term portion Total Principal balance $ 266,000 $ 112,800 $ 378,800 Unamortized discount (191,860 ) (100,213 ) (292,073 ) Ending balance, net $ 74,140 $ 12,587 $ 86,727 The following is a roll-forward of the Company’s convertible notes and related discounts for the years ended December 31, 2018, and 2017: Principal Balance Debt Discounts Total Balances January 1, 2017 $ — $ — $ — New issuances 397,000 (355,507 ) 41,493 Cash payments (18,200 ) — (18,200 ) Amortization — 63,434 63,434 Balance at December 31, 2017 378,800 $ (292,073 ) $ 86,727 New issuances 1,961,133 (1,943,459 ) 17,674 Liquidated damages added to note 6,025 — 6,025 Conversions (781,412 ) — (781,412 ) Cash payments (253,633 ) — (253,663 Debt forgiveness (33,775 ) — (33,775 ) Amortization — 1,109,590 1,109,590 Balance at December 31, 2018 $ 1,277,108 $ (1,125,942 ) $ 151,166 |
DERIVATIVE LIABILITIES
DERIVATIVE LIABILITIES | 12 Months Ended |
Dec. 31, 2018 | |
Notes to Financial Statements | |
DERIVATIVE LIABILITIES | NOTE 13 – DERIVATIVE LIABILITES The Company determined that the conversion features of the convertible notes represented embedded derivatives since the Notes are convertible into a variable number of shares upon conversion. Accordingly, the notes are not considered to be conventional debt under EITF 00-19 and the embedded conversion feature is bifurcated from the debt host and accounted for as a derivative liability. Accordingly, the fair value of these derivative instruments is recorded as liabilities on the consolidated balance sheet with the corresponding amount recorded as a discount to each Note, with any excess of the fair value of the derivative component over the face amount of the note recorded as an expense on the issue date. Such discounts are amortized from the date of issuance to the maturity dates of the Notes. The change in the fair value of the derivative liabilities are recorded in other income or expenses in the condensed consolidated statements of operations at the end of each period, with the offset to the derivative liabilities on the balance sheet. See Note 12. The Company valued the derivative liabilities at issuance, December 31, 2018, and December 31, 2017, at $1,807,404 and $540,965, respectively. The Company used the Monte Carlo simulation valuation model with the following assumptions for new notes issued during the nine months ended December 31, 2018, risk-free interest rates from 1.82% to 2.71% and volatility of 303% to 432%, and as of December 31, 2018, risk-free interest rates from 2.56% to 2.62% and volatility of 355% to 391%. A summary of the activity related to derivative liabilities for the years ended December 31, 2018, and 2017, is as follows: December 31, 2018 December 31, 2017 Beginning Balance $ 540,965 $ — Initial derivative liability 2,821,437 517,046 Fair value change 1,262,290 52,125 Reclassification for principal payments and conversions (2,817,288 ) (28,216 ) Ending Balance $ 1,807,404 $ 540,965 Derivative liability expense of $2,436,951 for the year ended December 31, 2018, consisted of the initial derivative expense of $1,174,661 and the above fair value change of $1,262,290. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 14– COMMITMENTS AND CONTINGENCIES Lease Agreements On June 14, 2017, the company entered into a five-year lease with LLC1 for approximately 6,944 square feet and a monthly rent of $12,000. On September 10, 2018, pursuant to the Amos Audiology acquisition, the Company assumed a lease dated December 1, 2017 and expiring April 30, 2023, in Walnut Creek, California. Lease payments in the first year of the lease are $3, 988 per month and increase by 3% on December 1 each new lease year. As of December 31, 2018, the Company was in arrears of $25,182 (including late fees) in lease payments and has agreed with the landlord to pay the arrears in seven monthly payments of $3,597 in addition to the monthly lease payments for January 2019 through July 2019. On October 15, 2018, the Company entered into lease to operate a retail hearing aid clinic in Roseville, California expiring December 31, 2023. Initial lease payments of $3,102 begin on January 1, 2019, and increase by 3% on January 1 each new lease year. On December 1, 2018, the Company entered into lease to operate a retail hearing aid clinic in Sacramento, California expiring March 31, 2024. Initial lease payments of $3,002 begin on April 1, 2019, and increase by 3.33% on April 1, 2020 and 2021, and by 3% on April 1, 2022. On February 1, 2019, the Company entered into lease to operate a retail hearing aid clinic in Elk Grove, California expiring January 31, 2024. Initial lease payments of $2,307 begin on February 1, 2019, and increase by an average of 2.6% on February 1, each new lease year. On February 1, 2019, the Company entered into lease to operate a retail hearing aid clinic in Fremont, California expiring February 28, 2021. Initial lease payments of $2,019 begin on March 1, 2019, and increases by 3% on March 1, 2020. Future principal payments for the Company’s portion are: For the twelve months ending December 31, Amount 2019 $ 326,089 2020 320,805 2021 304,064 2022 232,774 2023 127,261 Thereafter 12,423 Total $ 1,323,816 The Company is using the straight line method for expensing monthly rent based on the total monthly payments due under each lease divided by the number of months of each lease, and accordingly, rent expense for the year ended December 31, 2018, was $186,700 ($144,000 related) and $111,377 ($109,500 related) for the year ended December 31, 2017. Consulting Agreements On August 5, 2016, the Company along with Mark Moore (“Mark”, the Company’s chairman), Matthew Moore (“Matthew”, the Company’s Chief Executive Officer) and Kim Moore (“Kim”, the Company’s Chief Financial Officer) entered into a Store Expansion Consulting Agreement (the “Expansion Agreement”) Mark, Matthew and Kim are herein referred to collectively as the Moores. Pursuant to the Expansion Agreement, the Company and the Moores were responsible for all physical plant and marketing details for new store openings during the initial term of six-months. The Expansion Agreement was cancelled on January 6, 2017. The Company’s client has decided to do their own marketing in-house and eliminate this out-sourced contract and has decided to delay the opening of any new stores. Also, on August 5, 2016, the Company and the Moores entered into a Consulting Agreement (the “Consulting Agreement”) with the same party as the store Expansion Agreement. Under the Consulting Agreement, including the Non-Compete provision covering a ten- mile radius of any retail store, the Company and the Moores were to provide unlimited licensing of the Intela-Hear brand name, exclusive access to the Aware Aural Rehab Program within 10 miles of retail stores, exclusive territory of all services within 10 miles of retail stores and 40 hours per month of various consulting services. The Consulting Agreement was to continue until January 31, 2019, unless terminated for cause, as defined in the Consulting Agreement. On May 2, 2017, the Company received a demand letter threatening litigation unless all monies paid pursuant to the Consulting Agreement are returned. On May 26, 2017, a complaint (the “Complaint”) was filed against the Company and the Moores, which includes a request for rescission of the Consulting Agreement. The Company filed a countersuit against this third party for breach of contract so that it may recover the amounts owed under the Consulting Agreement, however, effective January 1, 2017, the Company had not recognized revenue from the Consulting Agreement, and accordingly, $847,223 was classified as deferred revenue on the December 31, 2017, consolidated balance sheets presented herein. On August 13, 2018, Helix, the Company and the Moores signed a Settlement Agreement, whereby, the Company received $450,000 and all parties dismissed all claims against the other party with prejudice. Accordingly, the Company recognized Other income of $1,297,223 for the year ended December 31, 2018, comprised of the deferred revenues for amounts previously received and the $450,000 settlement amount. Effective December 1, 2017, the Company entered into a one-year Marketing Services Agreement (the “MSA”). Pursuant to the terms of the MSA, the Company will receive consulting and advisory services regarding the implementation of marketing programs, including the design and creation of commercial websites and commercialization of products through social media or other marketing methods. The Company will pay consideration for the services of $5,000 cash and $5,000 of common stock each month. The Company will issue the number of shares of common stock equal to a twenty-five percent (25%) discount to the lowest closing price of the common stock for the five (5) last trading days of the common stock for that month. The parties agreed to terminate the services and contract effective June 30, 2018. For the year ended December 31, 2018, the Company recorded $30,000 of consulting expense and recorded $38,512 of stock-based compensation expense (pursuant to the terms of the MSA) from the issuance of 925,130 shares of common stock. On February 27, 2018, the Company issued 102,564 shares of common stock that were previously recorded as common stock to be issued.as of December 31, 2017. On August 9, 2018, the Company entered into a monthly Consulting Services Master Agreement (the “CSMA”). The CSMA requires a two- month minimum and a 30- day termination notice. Pursuant to the CSMA, the Company is to compensate the consultant $12,500 per month by the issuance of restricted shares of common stock, based on the average closing trading prices for the three days prior to each monthly payment. On August 10, 2018, the Company entered into a one- year Consulting, Public Relations and Marketing Agreement (the “CPRM Agreement”), which can be cancelled by either party with a 30- day notice to the other party. Pursuant to the terms of the CPTM Agreement the Company is to issue 100,000 shares of restricted common stock each month. The parties agreed to terminate the CPRM Agreement on October 23, 2018. On August 15, 2018, the Company entered into a six-month Consulting Agreement (the “CA”). Pursuant to the CA, the Company agreed to issue 2,500,000 shares of restricted common stock to the consultant. On October 3, 2018, the Company entered into a Manufacturing Design and Marketing Agreement (the “Agreement”) with Zounds, whereby, Zounds will provide design, technology, manufacturing and supply chain services to the Company, to enable the Company to manufacture comparable hearing aids and related components and accessories to be sold under the Company’s exclusive brand names (the “Manufacturer’s Products”) through the Company’s various marketing and distribution channels. The Company will pay Zounds One Million ($1,000,000) (the “Technology Access Fee”). The Technology Access Fee, as amended will be paid in eight (8) installments of $75,000 each, in four- week intervals until $600,000 is paid and $400,000 is to be paid as Product Surcharges based on $200 per unit manufactured for up to the first 2,000 units. Once $400,000 of Product Surcharges are paid said per unit surcharge will be discontinued. As of December 31, 2018, the Company has paid $183,200 towards the Technology Access Fee and as of December 31, 2018, $816,800 is included in accounts payable and accrued expenses. On October 10, 2018, the Company executed an engagement letter with The Crone Law Group (“Crone”). Crone will provide certain SEC filing services for a fee of $2,500 per month. Additionally, the Company has agreed to issue Crone 500,000 shares of common stock. The Company valued the shares at $36,400, based on the market price of the common stock on the date of the agreement, and is included in professional fees, as stock- based compensation for the year ended December 31, 2108. On October 31, 2018, the Company entered into a three-year Joint Development Agreement (the “JD Agreement”) and an Exclusive Distribution Agreement (the “ED Agreement”) with Erchonia Corporation (“Erchonia”). As part of the JD Agreement, the Company and Erchonia will conduct FDA clinical research and trials for the purposes of obtaining 510k FDA Clearances for devices, technologies, methods and techniques used in the treatment of hearing relating conditions and disorders such as Tinnitus, Sensorineural hearing Loss, dizziness and other disorders. The agreements give the Company the exclusive worldwide rights for all designs and any newly developed Erchonia 3LT lasers and related technologies and gives the Company the rights to license and distribute such products worldwide. Pursuant to the JD Agreement, the Company has agreed to issue 1,000,000 shares of common stock. The Company valued the common stock to be issued at $60,000, based on the market price of the common stock on the date of the JD Agreement, to be amortized over the three-year term.. As of December 31, 2018, there remains $60,000 of deferred stock compensation on the consolidated balance sheet, to be amortized over the three-year contract term. On December 7, 2018, the Company entered into a one- year consulting agreement (the “Media Consulting Agreement”) with a third- party consultant (the “Consultant”). The Consultant will provide communication and broadcast services, as well as strategic planning services. Pursuant to the Media Consulting Agreement, the Company has agreed to issue the Consultant 3,125,000 shares of restricted common stock. On December 7, 2018, the Company recorded 3,125,000 shares of common stock to be issued. The company valued the common stock to be issued at $125,000 based on the market price of the common stock on the date of the Media Consulting Agreement, to be amortized over the term of the agreement. The Company amortized $7,639 for the year ended December 31, 2018, and is included in Professional fees on the consolidated Statement of operations. As of December 31, 2018, there remains $117,361 of deferred stock compensation on the consolidated balance sheet, to be amortized in 2019. Legal Matters On May 26, 2017, Helix Hearing Care (California), Inc. a California corporation (“Helix”), filed a complaint (the “Complaint”) against the InnerScope and the Moores, in the Circuit Court of the 11 th all parties dismissed all claims against the other party with prejudice and Matthew, Mark and Kimberly have been released from their covenant not to compete agreement signed in August 2016 with Helix. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | NOTE 15 – INCOME TAXES The Company has deferred tax assets and liabilities as shown in the following: 2018 2017 Deferred Tax Assets: Stock based compensation $ 369,560 $ 102,400 Net operating losses 555,279 575,408 Deferred Tax Liabilities Derivative liabilities (257,716 ) (101,000 ) Net deferred tax assets 667,123 576,808 Valuation Allowance (667,123 ) (576,808 ) $ — $ — A valuation allowance has been recognized to offset the deferred tax assets because realization of such assets is uncertain. The income tax provision differs from the amount of income tax determined by applying the U.S. federal and state income statutory tax rates to pretax inco me (loss) from continuing operations as follows: 2018 2017 Statutory federal income tax rate -21.00 % -34.00 % State taxes, net of federal income tax -8.84 % -8.84 % Effect of change in valuation allowance 1.97 % 28.48 % Non deductible expenses and other 27.87 % 14.36 % 0.00 % 0.00 % As of December 31, 2018, the Company has approximately $2,016,000 net operating loss carryforwards to reduce future taxable income. The NOL deduction for a tax year is equal to the lesser of (1) the aggregate of the NOL carryovers to such year, plus the NOL carry-backs to such year, or (2) 80% of taxable income (determined without regard to the deduction). Generally, NOLs can no longer be carried back but are allowed to be carried forward indefinitely. The special extended carryback provisions are generally repealed, except for certain farming and insurance company losses. The amendments incorporating the 80% limitation apply to losses arising in tax years beginning after Dec. 31, 2017. As of December 31, 2018, and 2017, the Company has no material unrecognized tax benefits which would favorably affect the effective income tax rate in future periods, and does not believe that there will be any significant increases or decreases of unrecognized tax benefits within the next twelve months. No interest or penalties relating to income tax matters have been imposed on the Company during the years ended December 31, 2018 and 2017, and no provision for interest and penalties is deemed necessary as of December 31, 2018, and 2017. The U.S. Tax Cuts and Jobs Act (Tax Act) was enacted on December 22, 2017 and introduces significant changes to U.S. income tax law. Effective in 2018, the Tax Act reduces the U.S. statutory tax rate from 35% to 21% and creates new taxes on certain foreign-sourced earnings and certain related-party payments, which are referred to as the global intangible low-taxed income tax and the base erosion tax, respectively. The Tax Act requires the Company to pay U.S. income taxes on accumulated foreign subsidiary earnings not previously subject to U.S. income tax at a rate of 15.5% to the extent of foreign cash and certain other net current assets and 8% on the remaining earnings. Due to the timing of the enactment and the complexity involved in applying the provisions of the Tax Act, the Company has not recorded any adjustments according to Tax Act. As the Company collects and prepares necessary data, and interprets the Tax Act and any additional guidance issued by the U.S. Treasury Department, the IRS, and other standard-setting bodies, the Company may make adjustments to the provisional amounts. The accounting for the tax effects of the Tax Act will be completed in 2019. |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 12 Months Ended |
Dec. 31, 2018 | |
Stockholders' Equity Note [Abstract] | |
STOCKHOLDERS' EQUITY | NOTE 16 – STOCKHOLDERS’ EQUITY Preferred Stock The Company has 25,000,000 authorized shares of $0.0001 preferred stock. Series A Preferred Stock On June 4, 2018, the Company filed in the State of Nevada a Certificate of Designation of a series of preferred stock, the Series A Preferred Stock. 9,510,000 shares were designated as Series A Preferred Stock. The Series A Preferred Stock has mandatory conversion rights, whereby each share of Series A Preferred Stock will convert two (2) shares of common stock upon the Company filing Amended and Restated Articles of Incorporation with the Secretary of State of Nevada, increasing the authorized shares of common stock. The Series A Preferred Stock has voting rights on an is if converted basis. The Series A Preferred Stock does not have any right to dividends. On June 4, 2018 the Company issued 3,170,000 shares of Series A Preferred Stock each to Matthew, Mark and Kimberly, in exchange for each of them cancelling and returning to treasury 6,340,000 shares of common stock. The issuances were made in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act, and Rule 506(b) promulgated thereunder, as the 1shareholders are accredited investors, there was no general solicitation, and the transaction did not involve a public offering. As of December 31, 2018, there were no shares of Series A Preferred Stock issued and outstanding. Series B Preferred Stock On June 4, 2018, the Company also filed in the State of Nevada a Certificate of Designat1ion of a series of preferred stock, the Series B Preferred Stock. 900,000 shares were designated as Series B Preferred Stock. The Series B Preferred Stock is not convertible into common stock, nor does the Series B Preferred Stock have any right to dividends and any liquidation preference. The Series B Preferred Stock entitles its holder to a number of votes per share equal to 1,000 votes. On June 4, 2018, the Company issued 300,000 shares of its Series B Preferred Stock each to Matthew, Mark and Kimberly, in consideration of $45,000 of accrued expenses, the Company’s failure to timely pay current and past salaries, and the willingness to accrue unpaid payroll and non-reimbursement of business expenses without penalty or action for all amounts. The issuances were made in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act, and Rule 506(b) promulgated thereunder, as the shareholders are accredited investors, there was no general solicitation, and the transaction did not involve a public offering. As of December 31, 2018, there were 900,000 shares of Series B Preferred Stock issued and outstanding. Common Stock The Company has 490,000,000 authorized shares of $0.0001 common stock. As of December 31, 2018, and December 31, 2017, there are 120,425,344 and 61,539,334, respectively, shares of common stock outstanding. During the year ended December 31, 2018, the Company issued 925,131 shares of common stock to a marketing consultant (see Note 14) and recorded $38,512 of stock-based compensation, based on the market price of the common stock on the date the Company agreed to issue the shares. On February 23, 2018, the Company issued 10,397 shares of common stock to an employee. The shares were valued at $728, based on the market price of the common stock on January 31, 2018, the date the Company agreed to issue the shares. On February 27, 2018, the Company issued 102,564 shares of common stock that were classified as common stock to be issued as of December 31, 2017. On June 4, 2018, Matthew, Mark and Kimberly, each cancelled and returned to treasury 6,340,000 shares of common stock, in exchange for the issuance of 3,170,000 shares of Series A Preferred Stock to each. On August 8, 2018, Matthew, Mark and Kim each converted 3,170,000 shares of Series A Preferred Stock for 6,340,000 shares of common stock. The common stock issued replaced the 19,020,000 shares in the aggregate that the Moore’s cancelled in June 2018. During the year ended December 31, 2018, the Company issued 200,000 shares of restricted common stock to a consultant pursuant to the CPRM Agreement (See Note 14). The shares were valued at $15,430 of stock-based compensation expense (based on the market price of the common stock on that date of issuance). This agreement was terminated in October 2018. During the year ended December 31, 2018, the Company issued 770,601 shares of restricted common stock pursuant to the CSMA (See Note 14). The shares were valued at $50,000 based on the average closing price for the three days prior to the month of service, pursuant to the CSMA. On August 27, 2018, the Company issued 2,500,000 shares of restricted common stock pursuant to the CA (See Note 14). The shares were valued at $175,000 based on the market price of the common stock, and were recorded as deferred stock compensation on the consolidated balance sheet presented herein, and will be amortized to stock compensation expense over the term of the CA. For the year ended December 31, 2018, the Company amortized $116,167 to stock compensation expense. On September 5, 2018, the Company recorded 340,352 shares of common stock to be issued pursuant to the APA related to Amos Audiology (See Note 2). The shares were issued on November 27, 2018. Effective October 10, 2018, the Company issued 500,000 shares of common stock to MEC Consulting, pursuant to the Crone Law Group engagement (see Note 14). The shares were valued at $36,400, based on the market price of the common stock on the date of the engagement. During the year ended December 31, 2018,, the Company issued 42,937 shares of common stock each to two employees as part of their compensation. The Company agreed to issue $20,000 of stock over a six- month period starting November 2018 based on continual employment, to each, based on the average closing price of the Company’s common stock for the 3 days prior to employment, and accordingly recorded stock-based compensation of $6,697, included in Compensation and benefits in the consolidated statement of operations, included herein. During the year ended December 31, 2018, the Company issued 25,176 shares of common stock to an employee as part of their compensation. The Company agreed to issue $10,000 of stock, over a six- month period starting November 2018 based on continual employment, based on the average closing price of the Company’s common stock for the 3 days prior to employment, and accordingly recorded stock-based compensation of $1,490, included in Compensation and benefits in the consolidated statement of operations, included herein. On December 12, 2018, the Company issued 34,722 shares of common stock to an employee as part of their compensation. The Company agreed to issue $20,000 of stock, over a six- month period based on continual employment, based on the highest closing price of the Company’s common stock for the 5 days prior to employment, and accordingly recorded stock-based compensation of $1,250, included in Compensation and benefits in the consolidated statement of operations, included herein. On December 26, 2018, the Company issued 12,588 shares of common stock to an employee as part of their compensation. The Company agreed to issue $10,000 of stock, over a six- month period based on continual employment, based on the average closing price of the Company’s common stock for the 3 days prior to employment, and accordingly recorded stock-based compensation of $745, included in Compensation and benefits in the consolidated statement of operations, included herein. On December 26, 2018, the Company issued 28,090 shares of common stock to an employee as part of their compensation. The Company agreed to issue $10,000 of stock, over a six- month period based on continual employment, based on the average closing price of the Company’s common stock for the 3 days prior to employment, and accordingly recorded stock-based compensation of $1,685, included in Compensation and benefits in the consolidated statement of operations, included herein. On December 26, 2018, the Company issued 37,879 shares of common stock to an employee as part of their compensation. The Company agreed to issue $20,000 of stock, over a six- month period based on continual employment, based on the highest closing price of the Company’s common stock for the 5 days prior to employment, and accordingly recorded stock-based compensation of $1,250, included in Compensation and benefits in the consolidated statement of operations, included herein. During the year ended December 31, 2018, the Company issued 53,325,227 shares of common stock for conversion of $681,412 of principal and $40,954 of accrued interest, for a total of $722,366. Common Stock to be issued As of December 31, 2018, the Company recorded 1,838,564 shares of common stock to be issued for the conversion of $100,000 of principal and $2,456 of accrued interest, for a total of $102,456. On October 13, 2018, the Company recorded 1,000,000 shares of restricted common stock to be issued to Erchonia (see Note 14). On December 7, 2018, the Company recorded 3,125,000 shares of common stock to be issued pursuant to the Media Consulting Agreement (see Note 14). On December 31, 2018, the Company recorded 410,284 shares of common stock to be issued pursuant to the CSMA (see Note 14). As of December 31, 2018, there are 6,373,848 share s of common stock to be issued. |
SUBSEQUENT EVENT
SUBSEQUENT EVENT | 12 Months Ended |
Dec. 31, 2018 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENT | NOTE 17 – SUBSEQUENT EVENTS From January 1, 2019, through April 15, 2019, the Company received conversion notices for the issuance of 24,010,637 shares of common stock for conversion of $235,675 of principal and $17,864 of accrued interest on convertible notes. The Company also issued 870,826 to employees and consultants as well as 730,863 shares for additional consideration for notes previously converted. From January 1, 2019, through April 15, 2019, the Company issued 3,550,893 shares from the common stock to be issued as of December 31, 2018. On January 22, 2019, the Company issued to a third-party investor a convertible redeemable note (the “Note”) with a face value of $122,500 and a back-end convertible redeemable note for $122,500. The notes mature on January 22, 2020, have a stated interest of 8% and each note is convertible at any time following the funding of such note into a variable number of the Company's common stock, based on a conversion ratio of 70% of the lowest closing bid price for the 15 days prior to conversion. The notes were funded on January 22, 2019, when the Company received proceeds of $220,000, after disbursements for the lender’s transaction costs, fees and expenses. On January 29, 2019, the Company received proceeds of $83,333, after disbursements for the lender’s transaction costs, fees and expenses of the remaining balance due of the $280,500 back-end note dated December 24, 2018 On both February 12, 2019, and March 1, 2019, the Company received proceeds of $105,000, after disbursements for the lender’s transaction costs, fees and expenses of the $230,000 back-end note dated December 4, 2018 On February 22, 2019, the Company issued to a third-party investor a convertible redeemable note (the “Note”) with a face value of $116,667. The note matures on February 22, 2020, has a stated interest of 8% and is convertible at any time following the funding of such note into a variable number of the Company's common stock, based on a conversion ratio of 70% of the lowest closing bid price for the 15 days prior to conversion. The note was funded on February 22, 2019, when the Company received proceeds of $100,000, after disbursements for the lender’s transaction costs, fees and expenses. On March 8, 2019, the Company issued to a third-party investor a convertible redeemable note (the “Note”) with a face value of $133,333. The notes mature on March 8, 2020, have a stated interest of 8% and each note is convertible at any time following the funding of such note into a variable number of the Company's common stock, based on a conversion ratio of 70% of the lowest closing bid price for the 15 days prior to conversion. The note was funded on March 8, 2019, when the Company received proceeds of $114,000, after disbursements for the lender’s transaction costs, fees and expenses. On March 20, 2019, the Company issued to a third-party investor a convertible redeemable note (the “Note”) with a face value of $89,085 and a back-end convertible redeemable note for $89,085. The notes mature on March 20, 2020, have a stated interest of 8% and each note is convertible at any time following the funding of such note into a variable number of the Company's common stock, based on a conversion ratio of 70% of the lowest closing bid price for the 15 days prior to conversion. The note was funded on March 20, 2019, when the Company received proceeds of $79,875, after disbursements for the lender’s transaction costs, fees and expenses. In addition, on March 2 0, 2019, the Company issued to a third-party investor a convertible redeemable note (the “Note”) with a face value of $89,085 and a back-end convertible redeemable note for $89,085. The notes mature on March 20, 2020, have a stated interest of 8% and each note is convertible at any time following the funding of such note into a variable number of the Company's common stock, based on a conversion ratio of 70% of the lowest closing bid price for the 15 days prior to conversion. The note was funded on March 20, 2019, when the Company received proceeds of $79,875, after disbursements for the lender’s transaction costs, fees and expenses. The Notes issued by the Company accrue interest at a rate of 8% per annum with an increase to 24% in the event of a default and, mature on the one year anniversary of their respective issue date, subject to acceleration in the event of default. Principal and interest on the Notes are convertible into Common Stock of the Company at a price of 70% of the lowest closing bid price of the common stock as reported on the OTCQB exchange or any exchange upon which the Common Stock may be traded in the future, as calculated during the 15- trading day period just prior to the date of notice of conversion. On March 29, 2019, the Company issued 625,000 shares of restricted common stock in settlement of $25,000 of accounts payable owed. On April 3, 2019, the Company entered into a Consulting Agreement for marketing services pertaining to strategic marketing and public relations campaigns. Pursuant to the agreement the Company ahs agreed to issue 1,000,000 shares of restricted common stock. On April 12, 2019, the Company issued to third party investors, two convertible redeemable notes, each with a face value of $208,000. The notes mature on April 12, 2020, have a stated interest rate of 8% and each note is convertible at any time following the funding of such note into a variable number of shares of the Compnay’s common stock, based on a conversion ratio of 70% of the lowest closing bid price for the 15 days prior to conversion. The notes were funded on April 12, 2019, when the Company received proceeds of $350,000 in the aggregate, after disbursements for the lender’s transaction costs, fees and expenses. The Company has evaluated subsequent events through the date the financial statements were issued and filed with the Securities and Exchange Commission. The Company has determined that there are no other such events that warrant disclosure or recognition in the financial statements, except as stated herein. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
Summary Of Significant Accounting Principles | |
Basis of Presentation and Principles of Consolidation | Basis of Presentation and Principles of Consolidation The accompanying consolidated financial statements are prepared in accordance with Generally Accepted Accounting Principles in the United States of America ("US GAAP"). The consolidated financial statements of the Company include the consolidated accounts of InnerScope and its’ wholly owned subsidiaries ILLC and Intela-Hear. All intercompany accounts and transactions have been eliminated in consolidation. |
Emerging Growth Companies | Emerging Growth Companies The Company qualifies as an “emerging growth company” under the 2012 JOBS Act. Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. As an emerging growth company, the Company can delay the adoption of certain |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reported period. Actual results could differ from those estimates. Significant estimates include the fair value of the derivative liabilities. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid investments with an original term of three months or less to be cash equivalents. These investments are carried at cost, which approximates fair value. The Company held no cash equivalents as of December 31, 2018 and 2017. Cash balances may, at certain times, exceed federally insured limits. If the amount of a deposit at any time exceeds the federally insured amount at a bank, the uninsured portion of the deposit could be lost, in whole or in part, if the bank were to fail. |
Accounts receivable | Accounts receivable The Company records accounts receivable at the time products and services are delivered. An allowance for losses is established through a provision for losses charged to expenses. Receivables are charged against the allowance for losses when management believes collectability is unlikely. The allowance (if any) is an amount that management believes will be adequate to absorb estimated losses on existing receivables, based on evaluation of the collectability of the accounts and prior loss experience. As of December 31, 2018, management’s evaluation required the establishment of an allowance for uncollectible receivables of $18,383. As of December 31, 2017, management’s evaluation did not require an allowance. |
Sales Concentration and Credit Risk | Sales Concentration and Credit Risk Following is a summary of customers who accounted for more than ten percent (10%) of the Company’s revenues for the years ended December 31, 2018 and 2017, and accounts receivable balances as of December 31, 2018, and 2017: December 31, 2018 2017 Accounts Receivable as of Accounts Receivable as of % % December 31, 2018 December 31, 2017 Customer A — 16.4 % $ — $ 63,799 Customer B — 14.8 % $ — $ 4,000 Customer C, related 25.2 % 18.3 % $ 145,505 $ 81,193 Customer D — 27.6 % $ — — |
Inventory | Inventory Inventory is valued at the lower of cost or net realizable value. Cost is determined using the first in first out (FIFO) method. Provision for potentially obsolete or slow-moving inventory is made based on management analysis or inventory levels and future sales forecasts. As of December 31, 2018, and 2017, management’s analysis did not require any provisions to be recognized. |
Intangible Assets | Intangible Assets Costs for intangible assets are accounted for through the capitalization of those costs incurred in connection with developing or obtaining such assets. Capitalized costs are included in intangible assets in the consolidated balance sheets. On October 3, 2018, the Company entered into a Manufacturing Design and Marketing Agreement (the “Agreement”) with Zounds Hearing, Inc., a Delaware corporation (“Zounds”), whereby, Zounds as the Subcontractor will provide design, technology, manufacturing and supply chain services to the Company (see Note 13) for a period of ten years . The Company will pay Zounds One Million ($1,000,000) for the right to use proprietary technology (the “Technology Access Fee”). As of December 31, 2018, the Company has capitalized the $1,000,000 Technology Access Fee as an intangible asset on the consolidated balance sheets. The Technology Access Fee will be amortized over the term of the Agreement. The Company also acquired intangible assets from an asset purchase agreement (see Note 2). www.innd.com |
Property and Equipment | Property and Equipment Property and equipment are stated at cost, and depreciation is provided by use of a straight-line method over the estimated useful l ives of the assets. The Company reviews property and equipment for potential impairment whenever events or changes in circumstances indicate that the carrying amounts of assets may not be recoverable. The estimated useful lives of property and equipment are as follows: Computer equipment 3 years Machinery and equipment 5 years Furniture and fixtures 5 years Leasehold improvements 3-5 years The Company's propert y and equipment consisted of the following at December 31, 2018, and 2017: December 31, December 31, Computer equipment $ 2,651 $ 2,651 Machinery and equipment 31,122 — Furniture and fixtures 2,160 — Leasehold improvements 12,222 — Accumulated depreciation (4,705 ) (1,068 ) Balance $ 43,450 $ 1,583 Depreciation expense of $3,638 and $884 was recorded for the years ended December 31, 2018 and 2017, respectively. |
Investment in Undivided Interest in Real Estate | Investment in Undivided Interest in Real Estate The Company accounts for its’ investment in undivided interest in real estate using the equity method, as the Company is severally liable only for the indebtedness incurred with its interest in the property. The Company includes its allocated portion of net income or loss in Other income (expense) in its Statement of Operations, with the offset to the equity investment account on the balance sheet. For the years ended December 31, 2018 and 2017, the Company recognized a gain of $2,060 and loss of $1,378, respectively. As of December 31, 2018, and 2017, the carrying value of the Company’s investment in undivided interest in real estate was $1,226,963 and $1,224,903, respectively (see Note 10). |
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 mark et 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 asse ts and liabilities, such as cash, prepaid expenses, accounts receivable, accounts payable and accrued expenses, certain notes payable and notes payable - related party, approximate their fair values because of the short maturity of these instruments. The following table represents the Company’s financial instruments that are measured at fair value on a recurring basis as of December 31, 2018, and 2017, for each fair value hierarchy level: December 31, 2018 Derivative Liabilities Total Level I $ — $ — Level II $ — $ — Level III $ 1,807,404 $ 1,807,404 December 31, 2017 Level I $ — $ — Level II $ — $ — Level III $ 540,965 $ 540,965 |
Embedded Conversion Features | Embedded Conversion Features The Company evaluates embedded conversion features within convertible debt under 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 Monte Carlo simulations 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 through the maturity of the debt. If a conversion of the underlying debt occurs prior to maturity a proportionate share of the unamortized amounts is immediately expensed. Any unamortized debt issue costs and debt discount are presented net of the related debt on the consolidated balance sheets. |
Original Issue Discount | Original Issue Discount For certain convertible debt issued, the Company may provide the debt holder with an original issue discount. The original issue discount would be recorded to debt discount, reducing the face amount of the note and is amortized to interest expense through the maturity of the debt. If a conversion of the underlying debt occurs prior to maturity a proportionate share of the unamortized amounts is immediately expensed. Any unamortized original issue discounts are presented net of the related debt on the consolidated balance sheets. |
Revenue Recognition | Revenue Recognition Effective January 1, 2018, the Company adopted ASC Topic 606, “Revenue from Contracts with Customers” (“ASC 606”) and all the related amendments. The Company elected to adopt this guidance using the modified retrospective method. The adoption of this guidance did not have a material effect on the Company’s financial position, results of operations or cash flows. The core principle of ASC 606 requires that an entity recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. ASC 606 defines a five-step process to achieve this core principle and, in doing so, it is possible more judgment and estimates may be required within the revenue recognition process than required under U.S. GAAP including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. The Company’s contracts with customers are generally on a purchase order basis and represent obligations that are satisfied at a point in time, as defined in the new guidance, generally upon delivery or has services are provided. Accordingly, revenue for each sale is recognized when the Company has completed its performance obligations, Any costs incurred before this point in time, are recorded as assets to be expensed during the period the related revenue is recognized. The Company accepts prepayments on hearing aids and records the amount received as customer deposits on its’ balance sheet. When the Company delivers the hearing aid to the customer, revenue is recognized as well as the corresponding cost of sales. As of December 31, 2018, the Company had received $56,698 of customer deposits, that will be recognized as revenue after December 31, 2018, when the hearing aids are delivered to the customer |
Income Taxes | Income Taxes The Company accounts for income taxes in accordance with ASC 740-10, Income Taxes. Deferred tax assets and liabilities are recognized to reflect the estimated future tax effects, calculated at the tax rate expected to be in effect at the time of realization. A valuation allowance related to a deferred tax asset is recorded when it is more likely than not that some portion of the deferred tax asset will not be realized. Deferred tax assets and liabilities are adjusted for the effects of the changes in tax laws and rates of the date of enactment. ASC 740-10 prescribes a recognition threshold that a tax position is required to meet before being recognized in the financial statements and provides guidance on recognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure and transition issues. Interest and penalties are classified as a component of interest and other expenses. To date, the Company has not been assessed, nor paid, any interest or penalties. Uncertain tax positions are measured and recorded by establishing a threshold for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Only tax positions meeting the more-likely-than-not recognition threshold at the effective date may be recognized or continue to be recognized. |
Advertising and Marketing Expenses | Advertising and Marketing Expenses The Company expenses advertising and marketing costs as incurred. For the years ended December 31, 2018, advertising and marketing expenses were $173,580. The Company did not incur any advertising and marketing expenses for the year ended December 31, 2017. |
Earnings (Loss) Per Share | Earnings (Loss) Per Share The Company reports earnings (loss) per share in accordance with ASC 260, "Earnings per Share." Basic earnings (loss) per share is computed by dividing net income (loss) by the weighted-average number of shares of common stock outstanding during each period. Diluted earnings per share is computed by dividing net loss by the weighted-average number of shares of common stock, common stock equivalents and other potentially dilutive securities outstanding during the period. As of December 31, 2018, and 2017, the Company’s outstanding convertible debt is convertible into approximately 120,715,294 and 10,043,445 shares of common stock, respectively. This amount is not included in the computation of dilutive loss per share because their impact is antidilutive. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, “Leases (Topic 842)”. Under this guidance, an entity is required to recognize right-of-use assets and lease liabilities on its balance sheet and disclose key information about leasing arrangements. This guidance offers specific accounting guidance for a lessee, a lessor and sale and leaseback transactions. Lessees and lessors are required to disclose qualitative and quantitative information about leasing arrangements to enable a user of the financial statements to assess the amount, timing and uncertainty of cash flows arising from leases. This guidance is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period, and requires a modified retrospective adoption, with early adoption permitted. The Company is currently evaluating the impact the adoption of this standard will have on our consolidated financial statements. With the exception of the new standard discussed above, there have been no other recent accounting pronouncements or changes in accounting pronouncements during the year ended December 31, 2018, as compared to the recent accounting pronouncements described in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017, as filed on April 17, 2018, that are of significance or potential significance to the Company. |
Asset Purchase Acquisition of_2
Asset Purchase Acquisition of Kathy L Amos Audiology (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Business Combinations [Abstract] | |
Purchase price allocation of fair value of assets acquired and liabilities assumed | Purchase Price Allocation Fair value of consideration for Acquisition $ 22,974 Liabilities assumed 33,049 Total purchase consideration $ 56,023 Tangible assets acquired $ 43,016 Intangible assets 13,007 $ 56,023 |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Summary Of Significant Accounting Prouncements Tables Abstract | |
Concentration of customer revenues and accounts receivable balance | December 31, 2018 2017 Accounts Receivable as of Accounts Receivable as of % % December 31, 2018 December 31, 2017 Customer A — 16.4 % $ — $ 63,799 Customer B — 14.8 % $ — $ 4,000 Customer C, related 25.2 % 18.3 % $ 145,505 $ 81,193 Customer D — 27.6 % $ — — |
Property and equipment | December 31, December 31, Computer equipment $ 2,651 $ 2,651 Machinery and equipment 31,122 — Furniture and fixtures 2,160 — Leasehold improvements 12,222 — Accumulated depreciation (4,705 ) (1,068 ) Balance $ 43,450 $ 1,583 |
Financial instruments measured at fair value on a recurring basis | December 31, 2018 Derivative Liabilities Total Level I $ — $ — Level II $ — $ — Level III $ 1,807,404 $ 1,807,404 December 31, 2017 Level I $ — $ — Level II $ — $ — Level III $ 540,965 $ 540,965 |
INTANGIBLE ASSETS, NET (OTHER_2
INTANGIBLE ASSETS, NET (OTHER THAN GOODWILL) (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Summary of activity related to intangible assets | Customer List Non-compete Technology Access Fee Useful Lives 2 Years 2 Years 10 Years Total Carrying Value at December 31, 2017 $ — $ — $ — $ — Additions 300 12,708 1,000,000 1,013,008 Amortization (50 ) (2,118 ) (0 ) (2,168 ) Carrying Value at December 31, 2018 $ 250 $ 10,590 $ 1,000,000 $ 1,010,840 |
Future expected amortization of intangible assets | Fiscal Year Ending December 31, 2019 $ 106,504 2020 104,336 2021 100,000 2022 100,000 2023 100,000 Thereafter 500,000 $ 1,101,840 |
ADVANCES PAYABLE, SHAREHOLDERS
ADVANCES PAYABLE, SHAREHOLDERS (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Advances Payable Shareholders | |
Advances from shareholders | Chief Executive Officer December 31, 2018 December 31, Beginning Balance $ 138,637 $ -0- Amounts paid on Company’s behalf 589,524 149,370 Reimbursements (625,635 ) (10,733 ) Cancelled in exchange for Series B preferred stock (45,000 ) — Ending Balance $ 57,526 $ 138,637 Director December 31, 2018 December 31, Beginning Balance $ 38,201 $ -0- Amounts paid on Company’s behalf 24,299 39,201 Reimbursements (62,500 ) (1,000 ) Ending Balance $ -0- $ 38,201 |
NOTE PAYABLE, STOCKHOLDER AND_2
NOTE PAYABLE, STOCKHOLDER AND NOTE PAYABLE (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Note Payable Stockholder And Note Payable | |
Amounts loaned by stockholder | December 31, December 31, Beginning Balance $ 65,000 $ -0- Amounts loaned to the Company 36,800 65,000 Repaid (6,000 ) -0- Ending Balance $ 95,800 $ 65,000 |
RELATED PARTY TRANSACTIONS (Tab
RELATED PARTY TRANSACTIONS (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Related Party Transactions [Abstract] | |
Expenses to officers | Year ended December 31, Description 2018 2017 CEO $ 225,193 $ 224,691 CFO 125,107 124,828 Total $ 350,300 $ 349,519 |
INVESTMENT IN UNDIVIDED INTER_2
INVESTMENT IN UNDIVIDED INTEREST IN REAL ESTATE (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Investment In Undivided Interest In Real Estate | |
Condensed balance sheet and condensed statement of operations for the real property | Current assets: 2018 2017 Cash $ 2,257 $ 8,331 Due from InnerScope 30,500 2,711 Prepaid expenses and other current assets 72,931 37,471 Total current assets 105,958 48,512 Land and Building, net 2,354,282 2,397,848 Other Assets, net 53,323 54,426 Total assets $ 2,513,563 $ 2,500,606 Current portion of mortgage payable $ 40,122 $ 37,792 Other current liabilities 48,551 10,560 Total current liabilities 88,673 48,352 Mortgage payable, long-term 1,969,076 2,004,440 Security deposits 13,064 9,268 Total liabilities 2,070,813 2,062,060 Total equity 442,750 438,546 Total liabilities and equity $ 2,513,563 $ 2,500,060 2018 2017 Rental income $ 285,976 $ 154,454 Expenses: Property taxes 26,583 16,752 Depreciation and amortization 43,566 27,229 Insurance 2,033 6,253 Repairs and maintenance 30,128 17,829 Utilities and other 40,066 15,083 Interest expense 139,416 74,120 Total expenses 281,772 157,226 Net income (loss) $ 4,204 $ (2,812 ) |
NOTE PAYABLE - UNDIVIDED INTE_2
NOTE PAYABLE - UNDIVIDED INTEREST IN REAL ESTATE (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Debt Disclosure [Abstract] | |
Future principal payments for Company's portion of SBA Note | Twelve months ending December 31, Amount 2019 $ 19,660 2020 20,708 2021 22,150 2022 23,516 2023 24,966 Thereafter 873,507 Total $ 984,507 |
CONVERTIBLE NOTES PAYABLE (Tabl
CONVERTIBLE NOTES PAYABLE (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Debt Disclosure [Abstract] | |
Summary of convertible notes payable balance | December 31, 2018 December 31, 2017 Principal balance $ 1,277,108 $ 378,800 Unamortized discounts (1,125,942 ) (292,073 ) Ending balance, net $ 151,166 $ 86,727 |
Summary of the balance sheet classification of the short-term and long-term portions of convertible note balances | Current portion Long-term portion Total Principal balance $ 266,000 $ 112,800 $ 378,800 Unamortized discount (191,860 ) (100,213 ) (292,073 ) Ending balance, net $ 74,140 $ 12,587 $ 86,727 |
Roll-forward of Company's convertible notes and related discounts | Principal Balance Debt Discounts Total Balances January 1, 2017 $ — $ — $ — New issuances 397,000 (355,507 ) 41,493 Cash payments (18,200 ) — (18,200 ) Amortization — 63,434 63,434 Balance at December 31, 2017 378,800 $ (292,073 ) $ 86,727 New issuances 1,961,133 (1,943,459 ) 17,674 Liquidated damages added to note 6,025 — 6,025 Conversions (781,412 ) — (781,412 ) Cash payments (253,633 ) — (253,663 Debt forgiveness (33,775 ) — (33,775 ) Amortization — 1,109,590 1,109,590 Balance at December 31, 2018 $ 1,277,108 $ (1,125,942 ) $ 151,166 |
DERIVATIVE LIABILITIES (Tables)
DERIVATIVE LIABILITIES (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Notes to Financial Statements | |
Summary of activity related to derivative liabilities | December 31, 2018 December 31, 2017 Beginning Balance $ 540,965 $ — Initial derivative liability 2,821,437 517,046 Fair value change 1,262,290 52,125 Reclassification for principal payments and conversions (2,817,288 ) (28,216 ) Ending Balance $ 1,807,404 $ 540,965 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Commitments And Contingencies | |
Future principal payments for Company's portion of lease agreements | For the twelve months ending December 31, Amount 2019 $ 326,089 2020 320,805 2021 304,064 2022 232,774 2023 127,261 Thereafter 12,423 Total $ 1,323,816 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Deferred tax assets and liabilities | 2018 2017 Deferred Tax Assets: Stock based compensation $ 369,560 $ 102,400 Net operating losses 555,279 575,408 Deferred Tax Liabilities Derivative liabilities (257,716 ) (101,000 ) Net deferred tax assets 667,123 576,808 Valuation Allowance (667,123 ) (576,808 ) $ — $ — |
Effective income tax rate reconciliation | 2018 2017 Statutory federal income tax rate -21.00 % -34.00 % State taxes, net of federal income tax -8.84 % -8.84 % Effect of change in valuation allowance 1.97 % 28.48 % Non deductible expenses and other 27.87 % 14.36 % 0.00 % 0.00 % |
ORGANIZATION (Details Narrative
ORGANIZATION (Details Narrative) - USD ($) | 12 Months Ended | 48 Months Ended | ||
Dec. 31, 2017 | Nov. 01, 2017 | Nov. 01, 2013 | Jun. 20, 2012 | |
ILLC acquisition | ||||
Ownership or equity interest acquired | 100.00% | |||
Intela-Hear acquisition | ||||
Ownership or equity interest acquired | 100.00% | |||
Shares exchanged for Intela-Hear acquisition | 27,000,000 | |||
Income from one new store | ||||
Income recognized | $ 100,000 | |||
Payments received for Expansion Agreement pursuant to cancellation | ||||
Income recognized | 160,000 | |||
Additional payment received for cancellation of Store Expansion Agreement and marketing agreement | ||||
Income recognized | $ 30,000 |
Asset Purchase Acquisition of_3
Asset Purchase Acquisition of Kathy L Amos Audiology - Purchase price allocation of fair value of assets acquired and liabilities assumed (Details) | 12 Months Ended |
Dec. 31, 2018USD ($) | |
Business Combinations [Abstract] | |
Fair value of consideration for Acquisition | $ 22,974 |
Liabilities assumed | 33,049 |
Total purchase consideration | 56,023 |
Tangible assets acquired | 43,016 |
Intangible assets | 13,007 |
Total assets acquired | $ 56,023 |
Asset Purchase Acquisition of_4
Asset Purchase Acquisition of Kathy L Amos Audiology (Details Narrative) | 12 Months Ended |
Dec. 31, 2018shares | |
Business Combinations [Abstract] | |
Shares issued in exchange in Acquisition | 340,352 |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES - Concentration of customer revenues and accounts receivable balance (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Customer A | ||
Revenue concentration | 16.40% | |
Accounts receivable balance | $ 63,799 | |
Customer B | ||
Revenue concentration | 14.80% | |
Accounts receivable balance | $ 4,000 | |
Customer C, related | ||
Revenue concentration | 25.20% | 18.30% |
Accounts receivable balance | $ 145,505 | $ 81,193 |
Customer D | ||
Revenue concentration | 27.60% | |
Accounts receivable balance |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES - Property and equipment (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Summary Of Significant Accounting Principles - Property And Equipment | ||
Computer equipment | $ 2,651 | $ 2,651 |
Machinery and equipment | 31,122 | |
Furniture and fixtures | 2,160 | |
Leasehold improvements | 12,222 | |
Accumulated depreciation | (4,705) | (1,068) |
Balance | $ 43,450 | $ 1,583 |
SUMMARY OF SIGNIFICANT ACCOUN_6
SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES - Financial instruments measured at fair value on a recurring basis (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Derivative liability | $ 1,807,404 | $ 540,965 |
Level I | ||
Derivative liability | ||
Level II | ||
Derivative liability | ||
Level III | ||
Derivative liability | $ 1,807,404 | $ 540,965 |
SUMMARY OF SIGNIFICANT ACCOUN_7
SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Summary Of Significant Accounting Principles Details Narrative Abstract | ||
Depreciation expense | $ (3,638) | $ (884) |
Allocated portion of net income (loss) from investment in undivided interest in real estate | 2,060 | (1,378) |
Carrying value of equity method investment | 1,226,963 | 1,224,903 |
Advertising and marketing expenses | $ 173,580 | |
Antidilutive shares excluded from computation of earnings per share | 120,715,294 | 10,043,445 |
GOING CONCERN AND MANAGEMENT'_2
GOING CONCERN AND MANAGEMENT'S PLANS (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Going Concern And Managements Plans | ||
Net loss | $ (4,585,117) | $ (1,913,332) |
Working capital deficit | (3,088,957) | |
Accumulated deficit | $ (6,372,129) | $ (1,787,012) |
INTANGIBLE ASSETS, NET (OTHER_3
INTANGIBLE ASSETS, NET (OTHER THAN GOODWILL) - Summary of activity related to intangible assets (Details) | 12 Months Ended |
Dec. 31, 2018USD ($) | |
Customer List - 2 Years | |
Carrying value, beginning | |
Additions | 300 |
Amortization | (50) |
Carrying value, ending | 250 |
Non-compete - 2 Years | |
Carrying value, beginning | |
Additions | 12,708 |
Amortization | (2,118) |
Carrying value, ending | 10,590 |
Technology Access Fee - 10 Years | |
Carrying value, beginning | |
Additions | 1,000,000 |
Amortization | 0 |
Carrying value, ending | 1,000,000 |
Total | |
Carrying value, beginning | |
Additions | 1,013,008 |
Amortization | (2,168) |
Carrying value, ending | $ 1,010,840 |
INTANGIBLE ASSETS, NET (OTHER_4
INTANGIBLE ASSETS, NET (OTHER THAN GOODWILL) - Future expected amortization of intangible assets (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
2019 | $ 106,504 | |
2020 | 104,336 | |
2021 | 100,000 | |
2022 | 100,000 | |
2023 | 100,000 | |
Thereafter | 500,000 | |
Total | $ 1,010,840 |
INTANGIBLE ASSETS, NET (OTHER_5
INTANGIBLE ASSETS, NET (OTHER THAN GOODWILL) (Details Narrative) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Accumulated amortization of intangible assets | $ (2,168) |
ADVANCES PAYABLE, SHAREHOLDER_2
ADVANCES PAYABLE, SHAREHOLDERS - Advances from shareholders (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Chief Executive Officer | ||
Beginning Balance | $ 138,637 | |
Amounts paid on Company's behalf | 589,524 | 149,370 |
Reimbursements | (625,635) | (10,733) |
Cancelled in exchange for Series B preferred stock | (45,000) | |
Ending Balance | 57,526 | 138,637 |
Director | ||
Beginning Balance | 38,201 | |
Amounts paid on Company's behalf | 24,299 | 39,201 |
Reimbursements | (62,500) | (1,000) |
Ending Balance | $ 38,201 |
NOTE PAYABLE, STOCKHOLDER AND_3
NOTE PAYABLE, STOCKHOLDER AND NOTE PAYABLE - Amounts loaned by stockholder (Details) - Chief Executive Officer - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Beginning Balance | $ 65,000 | |
Amounts loaned to the Company | 36,800 | 65,000 |
Repaid | (6,000) | |
Ending Balance | $ 95,800 | $ 65,000 |
NOTE PAYABLE, STOCKHOLDER AND_4
NOTE PAYABLE, STOCKHOLDER AND NOTE PAYABLE (Details Narrative) | 12 Months Ended |
Dec. 31, 2018USD ($) | |
February BLA | |
Business Loan Agreement with third party, principal amount | $ 43,358 |
Business Loan Agreement, proceeds received | 32,600 |
Required monthly payments of principal and interest, first period | 4,102 |
Required monthly payments of principal and interest, second period | $ 3,124 |
BLA interest rate | 33.00% |
BLA maturity date | Mar. 1, 2019 |
Balance of BLA note | |
July BLA | |
Business Loan Agreement with third party, principal amount | 11,020 |
Business Loan Agreement, proceeds received | 9,500 |
Required monthly payments of principal and interest, first period | 2,106 |
Required monthly payments of principal and interest, second period | $ 1,702 |
BLA interest rate | 16.00% |
BLA maturity date | Feb. 16, 2019 |
Balance of BLA note | |
October BLA | |
Business Loan Agreement with third party, principal amount | 47,215 |
Business Loan Agreement, proceeds received | 35,500 |
Required monthly payments of principal and interest, first period | 4,467 |
Required monthly payments of principal and interest, second period | $ 3,402 |
BLA interest rate | 33.00% |
BLA maturity date | Oct. 28, 2019 |
Balance of BLA note | $ 38,280 |
Carrying value of BLA note | 29,270 |
Unamortized discounts on BLA note | $ 9,011 |
RELATED PARTY TRANSACTIONS - Ex
RELATED PARTY TRANSACTIONS - Expenses to officers (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Expenses recorded to officers | $ 350,300 | $ 349,519 |
Chief Executive Officer | ||
Expenses recorded to officers | 225,193 | 224,691 |
Chief Financial Officer | ||
Expenses recorded to officers | $ 125,107 | $ 124,828 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) | 12 Months Ended | 14 Months Ended | 57 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2017 | Dec. 31, 2013 | |
Loans to President | $ 20,500 | |||||
Interest income recorded | $ 228 | |||||
Monthly fee from retail location | $ 3,200 | |||||
Revenue from stores | $ 458,667 | |||||
Balance due to MFHC per Marketing Agreement | 22,548 | 22,548 | $ 22,548 | $ 22,548 | ||
LLC1 Marketing Agreement per store monthly service revenue | 2,500 | |||||
Revenues from LLC1 Marketing Agreement | 60,000 | 50,000 | ||||
Amounts invoiced to LLC1 for Company's production, printing and mailing services | 20,226 | |||||
Amounts invoiced to LLC1 for Company's sale of products | 1,794 | |||||
Amounts owed to Company by LLC1 | 203,325 | 73,996 | ||||
Expenses related to LLC1 lease | 144,000 | 111,377 | ||||
Amounts paid to LLC2 by Company for consulting services | 771,000 | 375,000 | ||||
Amounts expensed by LLC2 for services performed | 808,334 | 241,667 | ||||
Amounts recorded as deferred commissions - stockholder | $ 133,334 | |||||
MFHC (1) | ||||||
Rent expenses | 1,500 | |||||
Monthly rent per sublease agreement with MFHC | $ 1,500 | |||||
Chief Executive Officer | ||||||
Officer compensation, annual base salary | 225,000 | |||||
Officer compensation, unpaid wages owed | 49,142 | 4,327 | ||||
Chief Financial Officer | ||||||
Officer compensation, annual base salary | $ 125,000 | |||||
Officer compensation, unpaid wages owed | $ 139,800 | $ 40,385 |
INVESTMENT IN UNDIVIDED INTER_3
INVESTMENT IN UNDIVIDED INTEREST IN REAL ESTATE - Condensed balance sheet and condensed statement of operations for the real property (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Current assets: | ||
Cash | $ 2,257 | $ 8,331 |
Due from InnerScope | 30,500 | 2,711 |
Prepaid expenses and other current assets | 72,931 | 37,471 |
Total current assets | 105,958 | 48,512 |
Land and Building, net | 2,354,282 | 2,397,848 |
Other assets, net | 53,323 | 54,426 |
Total assets | 2,513,563 | 2,500,606 |
Current portion of mortgage payable | 40,122 | 37,792 |
Other current liabilities | 48,551 | 10,560 |
Total current liabilities | 88,673 | 48,352 |
Mortgage payable, long-term | 1,969,076 | 2,004,440 |
Security deposits | 13,064 | 9,268 |
Total liabilities | 2,070,813 | 2,062,060 |
Total equity | 442,750 | 438,546 |
Total liabilities and equity | 2,513,563 | 2,500,060 |
Rental income | 285,976 | 154,454 |
Expenses: | ||
Property taxes | 26,583 | 16,752 |
Depreciation and amortization | 43,566 | 27,229 |
Insurance | 2,033 | 6,253 |
Repairs and maintenance | 30,128 | 17,829 |
Utilities and other | 40,066 | 15,083 |
Interest expense | 139,416 | 74,120 |
Total expenses | 281,772 | 157,226 |
Net income (loss) | $ 4,204 | $ (2,812) |
INVESTMENT IN UNDIVIDED INTER_4
INVESTMENT IN UNDIVIDED INTEREST IN REAL ESTATE (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Sep. 30, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | May 09, 2017 | |
Real Estate [Abstract] | ||||
Purchase price of building | $ 2,420,000 | |||
Amount paid at closing | $ 2,501,783 | |||
Cash delivered at closing | 209,971 | |||
Note amount on which Company is co-borrower | 2,057,000 | |||
Amount of note Company has agreed to pay | $ 1,007,930 | |||
Net income (loss) from equity method investment, included in other income (expense), net | $ 2,060 | (1,378) | ||
Carrying value of equity method investment | $ 1,226,963 | $ 1,224,903 |
NOTE PAYABLE - UNDIVIDED INTE_3
NOTE PAYABLE - UNDIVIDED INTEREST IN REAL ESTATE - Future principal payments for Company's portion of SBA Note (Details) | Dec. 31, 2018USD ($) |
Debt Disclosure [Abstract] | |
2019 | $ 19,660 |
2020 | 20,708 |
2021 | 22,150 |
2022 | 23,516 |
2023 | 24,966 |
Thereafter | 873,507 |
Total | $ 984,507 |
NOTE PAYABLE - UNDIVIDED INTE_4
NOTE PAYABLE - UNDIVIDED INTEREST IN REAL ESTATE (Details Narrative) | 12 Months Ended |
Dec. 31, 2018USD ($) | |
Debt Disclosure [Abstract] | |
Note term | 25 years |
Interest per annum | 6.00% |
Initial liability recorded for SBA Note | $ 1,007,930 |
Current portion of SBA Note | 19,660 |
Long term portion of SBA Note | $ 964,847 |
CONVERTIBLE NOTES PAYABLE - Sum
CONVERTIBLE NOTES PAYABLE - Summary of convertible notes payable balance (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Principal balance | $ 378,800 | |
Unamortized note discounts | (292,073) | |
Ending balance, net | 86,727 | |
Total | ||
Principal balance | $ 1,277,108 | 378,800 |
Unamortized note discounts | (1,125,942) | (292,073) |
Ending balance, net | $ 151,166 | $ 86,727 |
CONVERTIBLE NOTES PAYABLE - S_2
CONVERTIBLE NOTES PAYABLE - Summary of the balance sheet classification of the short-term and long-term portions of convertible note balances (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Principal balance | $ 378,800 | |
Unamortized discount | (292,073) | |
Ending balance, net | 86,727 | |
Current portion | ||
Principal balance | 266,000 | |
Unamortized discount | (191,860) | |
Ending balance, net | 74,140 | |
Long-term portion | ||
Principal balance | 112,800 | |
Unamortized discount | (100,213) | |
Ending balance, net | 12,587 | |
Total | ||
Principal balance | $ 1,277,108 | 378,800 |
Unamortized discount | (1,125,942) | (292,073) |
Ending balance, net | $ 151,166 | $ 86,727 |
CONVERTIBLE NOTES PAYABLE - Rol
CONVERTIBLE NOTES PAYABLE - Roll-forward of Company's convertible notes and related discounts (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Principal Balance | ||
Beginning balance | $ 378,800 | |
New issuances | 1,961,133 | 397,000 |
Liquidated damages added to note | 6,025 | |
Conversions | (781,412) | |
Cash payments | (253,633) | (18,200) |
Debt forgiveness | (33,775) | |
Amortization | ||
Ending balance | 1,277,108 | 378,800 |
Debt Discounts | ||
Beginning balance | (292,073) | |
New issuances | (1,943,459) | (355,507) |
Liquidated damages added to note | ||
Conversions | ||
Cash payments | ||
Debt forgiveness | ||
Amortization | 1,109,590 | 63,434 |
Ending balance | (1,125,942) | (292,073) |
Total | ||
Beginning balance | 86,727 | |
New issuances | 17,674 | 41,493 |
Liquidated damages added to note | 6,025 | |
Conversions | (781,412) | |
Cash payments | (253,663) | (18,200) |
Debt forgiveness | (33,775) | |
Amortization | 1,109,590 | 63,434 |
Ending balance | $ 151,166 | $ 86,727 |
CONVERTIBLE NOTES PAYABLE (Deta
CONVERTIBLE NOTES PAYABLE (Details Narrative) - USD ($) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2018 | Aug. 10, 2018 | Aug. 07, 2018 | Jun. 26, 2018 | Jun. 12, 2018 | May 23, 2018 | May 11, 2018 | Apr. 08, 2018 | Mar. 27, 2018 | Mar. 26, 2018 | Mar. 02, 2018 | Feb. 08, 2018 | Feb. 01, 2018 | Dec. 31, 2017 | Dec. 12, 2017 | Nov. 10, 2017 | Oct. 11, 2017 | |
Convertible Notes Payable (1) | |||||||||||||||||
Principal amount | $ 48,000 | ||||||||||||||||
Interest rate | 12.00% | ||||||||||||||||
Net proceeds received | $ 45,000 | ||||||||||||||||
Transaction costs, fees, and expenses | $ 3,000 | ||||||||||||||||
Due date | Jul. 15, 2018 | ||||||||||||||||
Initial debt discount | $ 40,300 | ||||||||||||||||
Initial derivative liability | 40,300 | ||||||||||||||||
Amortization of debt discount | 27,739 | ||||||||||||||||
Debt issue discount recorded | 3,000 | ||||||||||||||||
Debt issue discount amortized to interest expense | $ 2,065 | ||||||||||||||||
Conversion of notes, shares issued | 4,330,984 | ||||||||||||||||
Conversion of notes, principal amount | $ 48,000 | ||||||||||||||||
Conversion of notes, accrued interst | 2,880 | ||||||||||||||||
Note balance | $ 48,000 | ||||||||||||||||
Convertible Notes Payable (2) | |||||||||||||||||
Principal amount | $ 299,000 | ||||||||||||||||
Interest rate | 10.00% | ||||||||||||||||
Net proceeds received | $ 250,000 | ||||||||||||||||
Due date | Jan. 12, 2019 | ||||||||||||||||
Initial debt discount | $ 250,000 | ||||||||||||||||
Initial derivative expense | 213,549 | ||||||||||||||||
Initial derivative liability | 463,549 | ||||||||||||||||
Amortization of debt discount | 208,583 | ||||||||||||||||
Original issue discount recorded | 49,000 | ||||||||||||||||
Debt issue discount recorded | 49,000 | ||||||||||||||||
Debt issue discount amortized to interest expense | $ 40,883 | ||||||||||||||||
Conversion of notes, shares issued | 21,887,432 | ||||||||||||||||
Conversion of notes, principal amount | $ 123,250 | ||||||||||||||||
Conversion of notes, accrued interst | 21,843 | ||||||||||||||||
Principal payments made | (81,900) | ||||||||||||||||
Note balance | 280,800 | ||||||||||||||||
Daily ACH payments requried until note is fully satisfied | 700 | ||||||||||||||||
Portion of note sold to third party by investor | 40,000 | ||||||||||||||||
Principal amount forgiven by investor | $ (35,650) | ||||||||||||||||
Convertible Notes Payable (3) | |||||||||||||||||
Principal amount | $ 50,000 | ||||||||||||||||
Interest rate | 10.00% | ||||||||||||||||
Due date | Dec. 12, 2018 | ||||||||||||||||
Initial debt discount | $ 13,207 | ||||||||||||||||
Initial derivative liability | 13,207 | ||||||||||||||||
Amortization of debt discount | 9,905 | ||||||||||||||||
Note balance | 50,000 | $ 50,000 | |||||||||||||||
Carrying value | 47,102 | ||||||||||||||||
Unamortized discounts | $ 2,898 | ||||||||||||||||
Convertible Notes Payable (4) | |||||||||||||||||
Principal amount | $ 35,000 | ||||||||||||||||
Interest rate | 10.00% | ||||||||||||||||
Due date | Feb. 1, 2019 | ||||||||||||||||
Initial debt discount | $ 9,554 | ||||||||||||||||
Initial derivative liability | 9,554 | ||||||||||||||||
Amortization of debt discount | $ 9,554 | ||||||||||||||||
Conversion of notes, shares issued | 2,085,106 | ||||||||||||||||
Conversion of notes, principal amount | $ 35,000 | ||||||||||||||||
Conversion of notes, accrued interst | 1,750 | ||||||||||||||||
Note balance | |||||||||||||||||
Convertible Notes Payable (5) | |||||||||||||||||
Principal amount | $ 58,300 | ||||||||||||||||
Interest rate | 12.00% | ||||||||||||||||
Net proceeds received | $ 50,000 | ||||||||||||||||
Transaction costs, fees, and expenses | $ 8,300 | ||||||||||||||||
Due date | Nov. 8, 2018 | ||||||||||||||||
Initial debt discount | $ 50,000 | ||||||||||||||||
Initial derivative expense | 15,525 | ||||||||||||||||
Initial derivative liability | 65,525 | ||||||||||||||||
Amortization of debt discount | 50,000 | ||||||||||||||||
Debt issue discount recorded | 8,300 | ||||||||||||||||
Debt issue discount amortized to interest expense | $ 8,300 | ||||||||||||||||
Conversion of notes, shares issued | 2,925,932 | ||||||||||||||||
Conversion of notes, principal amount | $ 12,179 | ||||||||||||||||
Principal payments made | (46,121) | ||||||||||||||||
Note balance | |||||||||||||||||
Convertible Notes Payable (6) | |||||||||||||||||
Principal amount | $ 50,000 | ||||||||||||||||
Interest rate | 10.00% | ||||||||||||||||
Due date | Mar. 2, 2019 | ||||||||||||||||
Initial debt discount | $ 13,399 | ||||||||||||||||
Initial derivative liability | 3,399 | ||||||||||||||||
Amortization of debt discount | 7,816 | ||||||||||||||||
Note balance | 50,000 | ||||||||||||||||
Carrying value | 44,417 | ||||||||||||||||
Unamortized discounts | $ 5,583 | ||||||||||||||||
Convertible Notes Payable (7) | |||||||||||||||||
Principal amount | $ 50,000 | ||||||||||||||||
Interest rate | 10.00% | ||||||||||||||||
Due date | Mar. 26, 2019 | ||||||||||||||||
Initial debt discount | $ 13,420 | ||||||||||||||||
Initial derivative liability | 13,420 | ||||||||||||||||
Amortization of debt discount | $ 13,420 | ||||||||||||||||
Conversion of notes, shares issued | 844,870 | ||||||||||||||||
Conversion of notes, principal amount | $ 50,000 | ||||||||||||||||
Conversion of notes, accrued interst | 1,205 | ||||||||||||||||
Note balance | |||||||||||||||||
Convertible Notes Payable (8) | |||||||||||||||||
Principal amount | $ 25,000 | ||||||||||||||||
Interest rate | 10.00% | ||||||||||||||||
Due date | Mar. 27, 2019 | ||||||||||||||||
Initial debt discount | $ 6,736 | ||||||||||||||||
Initial derivative liability | 6,736 | ||||||||||||||||
Amortization of debt discount | 3,424 | ||||||||||||||||
Note balance | 25,000 | ||||||||||||||||
Carrying value | 21,688 | ||||||||||||||||
Unamortized discounts | 3,312 | ||||||||||||||||
Convertible Notes Payable (9) | |||||||||||||||||
Principal amount | $ 95,450 | ||||||||||||||||
Interest rate | 10.00% | ||||||||||||||||
Net proceeds received | $ 75,000 | ||||||||||||||||
Due date | Jul. 8, 2019 | ||||||||||||||||
Initial debt discount | $ 75,000 | ||||||||||||||||
Initial derivative expense | 77,108 | ||||||||||||||||
Initial derivative liability | 152,108 | ||||||||||||||||
Amortization of debt discount | 45,049 | ||||||||||||||||
Original issue discount recorded | 20,450 | ||||||||||||||||
Debt issue discount recorded | 20,450 | ||||||||||||||||
Debt issue discount amortized to interest expense | 12,262 | ||||||||||||||||
Principal payments made | (20,625) | ||||||||||||||||
Note balance | 76,700 | ||||||||||||||||
Carrying value | 38,561 | ||||||||||||||||
Unamortized discounts | 38,139 | ||||||||||||||||
Daily ACH payments requried until note is fully satisfied | 375 | ||||||||||||||||
Convertible Notes Payable (10) | |||||||||||||||||
Principal amount | $ 100,000 | ||||||||||||||||
Interest rate | 10.00% | ||||||||||||||||
Net proceeds received | $ 75,825 | ||||||||||||||||
Due date | May 11, 2019 | ||||||||||||||||
Initial debt discount | $ 95,000 | ||||||||||||||||
Initial derivative expense | 60,635 | ||||||||||||||||
Initial derivative liability | 155,635 | ||||||||||||||||
Amortization of debt discount | 50,271 | ||||||||||||||||
Debt issue discount recorded | 5,000 | ||||||||||||||||
Debt issue discount amortized to interest expense | $ 1,946 | ||||||||||||||||
Conversion of notes, shares issued | 4,125,055 | ||||||||||||||||
Conversion of notes, principal amount | $ 14,000 | ||||||||||||||||
Conversion of notes, accrued interst | 322 | ||||||||||||||||
Note balance | 86,000 | ||||||||||||||||
Carrying value | 38,217 | ||||||||||||||||
Unamortized discounts | 47,783 | ||||||||||||||||
Convertible Notes Payable (11) | |||||||||||||||||
Principal amount | $ 60,000 | ||||||||||||||||
Interest rate | 12.00% | ||||||||||||||||
Net proceeds received | $ 57,000 | ||||||||||||||||
Due date | Feb. 22, 2019 | ||||||||||||||||
Initial debt discount | $ 57,000 | ||||||||||||||||
Initial derivative expense | 48,033 | ||||||||||||||||
Initial derivative liability | 105,033 | ||||||||||||||||
Amortization of debt discount | 26,794 | ||||||||||||||||
Debt issue discount recorded | 3,000 | ||||||||||||||||
Debt issue discount amortized to interest expense | 1,410 | ||||||||||||||||
Note balance | 60,000 | ||||||||||||||||
Carrying value | 28,204 | ||||||||||||||||
Unamortized discounts | 31,796 | ||||||||||||||||
Convertible Notes Payable (12) | |||||||||||||||||
Principal amount | $ 88,000 | ||||||||||||||||
Interest rate | 10.00% | ||||||||||||||||
Net proceeds received | $ 80,250 | ||||||||||||||||
Due date | Mar. 12, 2019 | ||||||||||||||||
Initial debt discount | $ 80,250 | ||||||||||||||||
Initial derivative expense | 93,150 | ||||||||||||||||
Initial derivative liability | 173,400 | ||||||||||||||||
Amortization of debt discount | 32,188 | ||||||||||||||||
Debt issue discount recorded | 7,750 | ||||||||||||||||
Debt issue discount amortized to interest expense | 3,109 | ||||||||||||||||
Note balance | 88,000 | ||||||||||||||||
Carrying value | 35,297 | ||||||||||||||||
Unamortized discounts | 52,703 | ||||||||||||||||
Convertible Notes Payable (13) | |||||||||||||||||
Principal amount | $ 92,000 | ||||||||||||||||
Interest rate | 10.00% | ||||||||||||||||
Net proceeds received | $ 25,000 | ||||||||||||||||
Due date | Sep. 26, 2019 | ||||||||||||||||
Initial debt discount | $ 25,000 | ||||||||||||||||
Initial derivative expense | 31,685 | ||||||||||||||||
Initial derivative liability | 56,685 | ||||||||||||||||
Amortization of debt discount | 5,158 | ||||||||||||||||
Original issue discount recorded | 17,000 | ||||||||||||||||
Debt issue discount recorded | 17,000 | ||||||||||||||||
Debt issue discount amortized to interest expense | 3,508 | ||||||||||||||||
Principal payments made | (900) | ||||||||||||||||
Note balance | 41,100 | ||||||||||||||||
Carrying value | 7,766 | ||||||||||||||||
Unamortized discounts | 33,334 | ||||||||||||||||
Convertible Notes Payable (14) | |||||||||||||||||
Principal amount | $ 58,300 | ||||||||||||||||
Interest rate | 12.00% | ||||||||||||||||
Net proceeds received | $ 50,000 | ||||||||||||||||
Transaction costs, fees, and expenses | $ 8,300 | ||||||||||||||||
Due date | Apr. 15, 2019 | ||||||||||||||||
Initial debt discount | $ 50,000 | ||||||||||||||||
Initial derivative expense | 66,550 | ||||||||||||||||
Initial derivative liability | 116,550 | ||||||||||||||||
Amortization of debt discount | 16,091 | ||||||||||||||||
Original issue discount recorded | 8,300 | ||||||||||||||||
Debt issue discount recorded | 8,300 | ||||||||||||||||
Debt issue discount amortized to interest expense | 2,671 | ||||||||||||||||
Note balance | 58,300 | ||||||||||||||||
Carrying value | 18,762 | ||||||||||||||||
Unamortized discounts | 39,538 | ||||||||||||||||
Convertible Notes Payable (15) | |||||||||||||||||
Principal amount | $ 88,250 | ||||||||||||||||
Interest rate | 10.00% | ||||||||||||||||
Net proceeds received | 80,250 | ||||||||||||||||
Initial debt discount | 80,250 | ||||||||||||||||
Initial derivative expense | 86,207 | ||||||||||||||||
Initial derivative liability | 166,457 | ||||||||||||||||
Amortization of debt discount | 16,558 | ||||||||||||||||
Debt issue discount recorded | 8,000 | ||||||||||||||||
Debt issue discount amortized to interest expense | 1,651 | ||||||||||||||||
Note balance | 88,250 | ||||||||||||||||
Carrying value | 18,209 | ||||||||||||||||
Unamortized discounts | 70,441 | ||||||||||||||||
Convertible Notes Payable (16) | |||||||||||||||||
Principal amount | $ 110,000 | ||||||||||||||||
Interest rate | 10.00% | ||||||||||||||||
Net proceeds received | 100,000 | ||||||||||||||||
Initial debt discount | 100,000 | ||||||||||||||||
Initial derivative expense | 113,173 | ||||||||||||||||
Initial derivative liability | 213,173 | ||||||||||||||||
Amortization of debt discount | 20,633 | ||||||||||||||||
Debt issue discount recorded | 10,000 | ||||||||||||||||
Debt issue discount amortized to interest expense | 2,063 | ||||||||||||||||
Note balance | 110,000 | ||||||||||||||||
Carrying value | 22,696 | ||||||||||||||||
Unamortized discounts | $ 87,304 |
DERIVATIVE LIABILITIES - Summar
DERIVATIVE LIABILITIES - Summary of activity related to derivative liabilities (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Notes to Financial Statements | ||
Beginning Balance | $ 540,965 | |
Initial Derivative Liability | 2,821,437 | 517,046 |
Fair Value Change | 1,262,290 | 52,125 |
Reclassification for principal payments and conversions | (2,817,288) | (28,216) |
Ending Balance | $ 1,807,404 | $ 540,965 |
DERIVATIVE LIABILITIES (Details
DERIVATIVE LIABILITIES (Details Narrative) | 12 Months Ended |
Dec. 31, 2018USD ($) | |
Risk free interest rate as of March 31, 2018, minimum | 2.56% |
Risk free interest rate as of March 31, 2018, maximum | 2.62% |
Volatility as of December 31, 2018, minimum | 355.00% |
Volatility as of December 31, 2018, maximum | 391.00% |
Derivative liability expense | $ 2,436,951 |
Initial derivative expense | 1,174,661 |
Fair value change | $ 1,262,290 |
Minimum | |
Risk free interest rate | 1.82% |
Volatility | 303.00% |
Maximum | |
Risk free interest rate | 2.71% |
Volatility | 432.00% |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - Future principal payments for Company's portion of lease agreements (Details) | Dec. 31, 2018USD ($) |
Commitments And Contingencies - Future Principal Payments For Companys Portion Of Lease Agreements | |
2019 | $ 326,089 |
2020 | 320,805 |
2021 | 304,064 |
2022 | 232,774 |
2023 | 127,261 |
Thereafter | 12,423 |
Total | $ 1,323,816 |
COMMITMENTS AND CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($) | 12 Months Ended | 13 Months Ended | 19 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2018 | |
Lease Agreements | ||||
Monthly lease amount | $ 12,000 | |||
Rent expense | $ 186,700 | $ 111,377 | ||
Consulting Agreements | ||||
Consulting expense recorded | 30,000 | |||
Stock-based compensation expense from issuance of common shares | $ 38,512 | |||
Common stock issued, shares | 925,130 | |||
Stock-based compensation expense | $ 39,147 | |||
Legal Matters | ||||
Amounts received from settlement agreement | $ 450,000 | |||
Marketing Services Agreement (MSA) | ||||
Consulting Agreements | ||||
Monthly compensation expense | $ 5,000 | |||
Monthly stock compensation, value | $ 5,000 | |||
Common stock issued, shares | 102,564 | |||
Common stock issued previously recorded as to be issued | 102,564 |
INCOME TAXES (Details Narrative
INCOME TAXES (Details Narrative) | Dec. 31, 2018USD ($) |
Income Tax Disclosure [Abstract] | |
Net operating loss carryforwards | $ 2,016,000 |
STOCKHOLDERS' EQUITY (Details N
STOCKHOLDERS' EQUITY (Details Narrative) | 12 Months Ended |
Dec. 31, 2018USD ($)shares | |
Issued to consultant (1) | |
Common stock issued, shares | 925,131 |
Stock compensation expense recorded | $ | $ 38,512 |
Issued to consultant (2) | |
Common stock issued, shares | 10,397 |
Common stock issued, value | $ | $ 728 |
Previously classified as to be issued | |
Common stock issued, shares | 102,564 |
Cancellation and return of treasury stock | |
Common stock cancelled and returned to treasury | 19,020,000 |
Series A Preferred Stock issued in exchange for cancellation | 9,510,000 |
Series A Preferred Stock converted | 9,510,000 |
Common stock issued in conversion of Series A Preferred Stock | 19,020,000 |
Issued to a consultant pursuant to CPRM Agreement | |
Common stock issued, shares | 200,000 |
Common stock issued, value | $ | $ 15,430 |
Issued pursuant to CSMA | |
Common stock issued, shares | 770,601 |
Common stock issued, value | $ | $ 50,000 |
Issued pursuant to CA | |
Common stock issued, shares | 2,500,000 |
Common stock issued, value | $ | $ 175,000 |
Conversions | |
Conversion, common stock shares issued | 53,325,227 |
Conversion, total amount | $ | $ 722,366 |
To be issued pursuant to APA | |
Common stock to be issued, shares | 340,352 |
To be issued to consultant pursuant to CSMA | |
Common stock to be issued, shares | 410,284 |
To be issued for conversion | |
Common stock to be issued, shares | 6,373,848 |