Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2015 | Dec. 09, 2015 | |
Document And Entity Information | ||
Entity Registrant Name | Cabinet Grow, Inc. | |
Entity Central Index Key | 1,610,462 | |
Document Type | 10-Q/A | |
Document Period End Date | Sep. 30, 2015 | |
Amendment Flag | true | |
Current Fiscal Year End Date | --12-31 | |
Is Entity a Well-known Seasoned Issuer? | No | |
Is Entity a Voluntary Filer? | No | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 37,055,338 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2,015 | |
Amendment Description | Explanatory Note Cabinet Grow, Inc. (the Company) is filing this amendment on Form 10-Q/A (this Amendment) to amend its Quarterly Report on Form 10-Q for the three and nine months ended September 30, 2015, as filed on December 14, 2015 (the Original Filing), to restate (1) its condensed consolidated financial statements and footnotes as of and for the three and nine months ended September 30, 2015 and (2) Managements Discussion and Analysis of Financial Condition and Results of or Plan of Operation for the three and nine months ended September 30, 2015 compared to September 30, 2014, as a result of the Company not previously measuring and re-measuring the fair value of warrants issued to purchase common stock and convertible notes issued and to correct the per share value from $0.20 to $0.40 to reflect the fair value based on the most recent sale price of the Companys common stock at the time the shares were granted. See Note 11 Restated Financial Statements to the Companys restated condensed and consolidated financial statements. The certifications of the Companys Chief Executive Officer and Chief Financial Officer, are attached to this Amendment as Exhibits 31.1 and 32.1, respectively. |
CONDENSED BALANCE SHEETS (Unaud
CONDENSED BALANCE SHEETS (Unaudited) (Restated) - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 |
Current Assets: | ||
Cash and cash equivalents | $ 17,724 | $ 61,472 |
Accounts receivable, net | 11,515 | 9,280 |
Inventory | 49,336 | 48,761 |
Prepaid assets and other | 25,032 | 8,938 |
Total current assets | 103,608 | 128,451 |
Security deposit | 20,120 | 20,120 |
Property and equipment, net of accumulated depreciation of $34,744 (2015) and $13,026 (2014) | 52,945 | 70,640 |
Total assets | 176,672 | 219,211 |
Current Liabilities: | ||
Accounts payable and accrued expenses | 231,563 | 112,203 |
Accounts payable and accrued expenses, stockholder | 52,912 | 14,152 |
Customer deposits | 29,017 | |
Note payable, stockholder | 12,482 | 6,168 |
Derivative liabilities | 2,043,318 | 581,373 |
Total current liabilities | 2,369,293 | 713,896 |
Convertible notes payable, net of discount of $409,685 (2015) and $376,022 (2014) | 587,615 | 357,478 |
Total liabilities | 2,956,908 | 1,071,373 |
Stockholders' Deficit: | ||
Common stock, $0.001 par value; 300,000,000 shares authorized; 36,892,838 (2015) and 33,100,000 (2014) shares issued and outstanding | 36,893 | 33,100 |
Common stock to be issued, $0.001 par value, 95,000 (2015) and 352,242 (2014) shares to be issued | 95 | 352 |
Preferred stock, $0.001 par value; 10,000,000 shares authorized Series A preferred stock, $0.001 par value; 100 shares issued and authorized | ||
Additional paid-in capital | 2,422,248 | 831,890 |
Accumulated deficit | (5,239,472) | (1,717,505) |
Total stockholders' deficit | (2,780,236) | (852,163) |
Total liabilities and stockholders' deficit | $ 176,672 | $ 219,211 |
CONDENSED BALANCE SHEETS (Resta
CONDENSED BALANCE SHEETS (Restated) (Parenthetical) - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 |
Accumulated depreciation of property, furniture and fixtures and equipment | $ 34,744 | $ 13,026 |
Discount on convertible notes payable | $ 409,685 | $ 376,022 |
Common Stock, par value | $ 0.001 | $ 0.001 |
Common Stock, shares authorized | 300,000,000 | 300,000,000 |
Common Stock, shares issued | 36,892,838 | 33,100,000 |
Common Stock, shares outstanding | 36,892,838 | 33,100,000 |
Common Stock, to be issued | 95,000 | 352,242 |
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | ||
Series A Preferred Stock | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 100 | 100 |
Preferred stock, shares issued | 100 | 100 |
CONDENSED STATEMENTS OF OPERATI
CONDENSED STATEMENTS OF OPERATIONS (Unaudited) (Restated) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Income Statement [Abstract] | ||||
Sales | $ 192,938 | $ 134,876 | $ 574,319 | $ 447,612 |
Cost of sales | 137,099 | 101,925 | 404,003 | 319,790 |
Gross profit | 55,839 | 32,952 | 170,316 | 127,822 |
Operating Expenses: | ||||
Salaries and management fees (including stock compensation of $547,900 and $554,900 for the three and nine months ended September 30, 2015, respectively, and $37,500 and $559,250 for the three and nine months ended September 30, 2014) | 699,308 | 176,307 | 924,962 | 767,663 |
Advertising and marketing | 92,010 | 59,253 | 256,247 | 119,885 |
Investor relations | 36,055 | 51,687 | ||
Merchant processing fees | 7,073 | 2,580 | 15,280 | 9,936 |
Professional fees (including stock compensation for the six months ended June 30 of $47,000 (2015) and $150,000 (2014) | 218,643 | 14,231 | 317,818 | 182,517 |
Rent | 8,502 | 6,980 | 25,431 | 14,855 |
Research and development | 5,529 | 9,267 | 22,667 | 25,339 |
Depreciation and amortization | 7,239 | 3,053 | 21,718 | 4,072 |
Other general and administrative | 48,851 | 61,820 | 106,463 | 91,616 |
Total operating expenses | 1,123,209 | 333,491 | 1,742,274 | 1,215,883 |
Loss from operations | (1,067,370) | (300,539) | (1,571,958) | (1,088,061) |
Other income (expenses): | ||||
Other income and interest income | 5,000 | 58 | 5,744 | 89 |
Other expense | (4,371) | (4,371) | ||
Interest expense, other | (353,058) | (89,382) | (676,536) | (110,228) |
Interest expense, related party | (245) | (229) | (703) | (669) |
Derivative liability expense | (1,300,908) | (1,274,144) | ||
Total other expense, net | (1,653,581) | (89,553) | (1,950,010) | (110,809) |
Net loss | $ (2,720,951) | $ (390,092) | $ (3,521,968) | $ (1,198,871) |
Basic and diluted loss per share | $ (0.08) | $ (0.01) | $ (.10) | $ (0.04) |
Weighted average number of common shares outstanding Basic and diluted | 36,094,306 | 33,000,000 | 34,631,287 | 31,533,088 |
CONDENSED STATEMENTS OF OPERAT5
CONDENSED STATEMENTS OF OPERATIONS (Restated) (Parenthetical) - USD ($) | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2015 | Sep. 30, 2014 | |
Income Statement [Abstract] | |||
Stock compensation expense - salaries and management fees | $ 547,900 | $ 783,875 | $ 709,250 |
Stock compensation expense - salaries and management fees | $ 188,975 | $ 228,975 | $ 150,000 |
CONDENSED STATEMENTS OF CASH FL
CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) (Restated) - USD ($) | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Cash flows from operating activities | ||
Net loss | $ (3,521,968) | $ (1,198,871) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation | 21,718 | 4,072 |
Amortization of discounts on convertible notes | 613,137 | 15,109 |
Change in fair value of derivative liabilities | 1,274,144 | |
Amortization of deferred financing fees | 2,002 | 6,601 |
Stock compensation expense | 783,875 | 709,250 |
Change in operating assets and liabilities: | ||
(Increase) decrease in accounts receivable | (2,235) | (3,337) |
(Increase) decrease in inventory | (575) | (43,404) |
(Increase) decrease in prepaid assets and other | (18,096) | 736 |
Increase (decrease) in accounts payable and accrued expenses | 169,634 | 58,936 |
Increase (decrease) in accounts payable and accrued expenses, stockholder | 38,760 | 10,669 |
Increase (decrease) in customer deposits | 29,017 | (917) |
Net cash used in operating activities | (610,588) | (370,382) |
Cash flows from investing activities: | ||
Purchase of computers and software and furniture and fixtures | (2,677) | (46,241) |
Payment of security deposit | (20,120) | |
Leasehold improvements | (1,346) | (30,962) |
Net cash used in investing activities | (4,023) | (97,323) |
Cash flows from financing activities: | ||
Proceeds from issuance of convertible debt | 363,750 | 560,000 |
Proceeds from sale of Series A preferred stock | 100 | |
Amount from advances and credit card charges from stockholder | 6,314 | 52,748 |
Repayments of advances and credit card charges to stockholder | (104,324) | |
Proceeds from sale of common stock | 200,800 | 500 |
Payment of deferred financing costs | (2,500) | |
Net cash provided by financing activities | 570,864 | 506,524 |
Net increase (decrease) in cash and cash equivalents | (43,748) | 38,819 |
Cash and cash equivalents, Beginning | 61,472 | 10,485 |
Cash and cash equivalents, Ending | 17,724 | 49,304 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | 32,800 | 1,019 |
Cash paid for income taxes | ||
Schedule of non-cash financing activities | ||
Included in issuances of convertible promissory notes for fees | 23,300 | 63,500 |
Common stock issued in settlement of convertible notes and accrued interest | $ 180,750 |
ORGANIZATION
ORGANIZATION | 9 Months Ended |
Sep. 30, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
ORGANIZATION | NOTE 1 - ORGANIZATION BUSINESS Cabinet Grow, Inc. (the Company or CG-NV) began operations in California in 2008, doing business as Universal Hydro (Hydro). Prior to April 2014, the Company was a sole proprietorship owned by its current chief operating officer and stockholder. On April 28, 2014, the Company registered with the Secretary of State of California as Cabinet Grow, Inc. (CG-CA), and all of the business, assets and liabilities of Hydro were assigned to CG-CA. On May 14, 2014, the Company filed Articles of Incorporation with the Nevada Secretary of State. On May 15, 2014, CG-CA merged with CG-NV, with CG-NV being the surviving entity. The Companys common stock is quoted on the OTC Market Group, Inc.s OTCQB Marketplace under the symbol CBNT. The Company is a manufacturer and distributor of cabinet-based horticultural systems. The Companys design and production of hydroponic and soil grow cabinets makes the process of growing in a self-contained cabinet automated and simplified. The Companys mission is to make hydroponic and soil growing simpler, more efficient and a better value than other products found on the market. Substantially all of the Companys sales are to individuals in the United States via the Companys website. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2015 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF PRESENTATION The accompanying unaudited condensed financial statements have been prepared by the Company without audit. In the opinion of management, all adjustments necessary to present the financial position, results of operations and cash flows for the stated periods have been made. Except as described below, these adjustments consist only of normal and recurring adjustments. Certain information and note disclosures normally included in the Companys annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) have been condensed or omitted. These condensed financial statements should be read in conjunction with the Companys financial statements and notes thereto included in the Companys annual report for the year ended December 31, 2014 on Form 10-K. Interim results of operations for the three and nine months ended September 30, 2015 are not necessarily indicative of future results for the full year. Certain amounts from the 2014 period have been reclassified to conform to the presentation used in the current period. EMERGING GROWTH COMPANY We qualify as an emerging growth company under the Jumpstart Our Business Startups Act of 2012 (the 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 of 1933, as amended (the Securities Act), for complying with new or revised accounting standards. As an emerging growth company, we can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the benefits of this extended transition period. USE OF ESTIMATES The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities 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. CASH AND CASH EQUIVALENTS The Company considers all highly liquid investments with an original term of three months or less to be cash equivalents. INVENTORY Inventory is valued at the lower of cost or market 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. Inventory of $49,336 and $48,761 as of September 30, 2015 and December 31, 2014, respectively, was comprised of raw materials. PROPERTY AND EQUIPMENT Property and equipment are stated at cost, and depreciation is provided by use of straight-line methods over the estimated useful lives of the assets. The estimated useful lives of property and equipment are as follows: Manufacturing equipment 10 years Office equipment and furniture 7 years Computer hardware and software 3 years The Company's property and equipment consisted of the following at September 30, 2015 and December 31, 2014: September 30, December 31, 2014 Furniture and Equipment $ 29,614 $ 26,937 Manufacturing equipment 7,396 7,396 Software 15,830 15,830 Leasehold improvements 34,849 33,503 Accumulated depreciation (34,744 ) (13,026 ) Balance $ 52,945 $ 70,640 Depreciation expense of $21,718 and $4,072 was recorded for the nine months ended September 30, 2015 and 2014, respectively. REVENUE RECOGNITION The Company recognizes revenue in accordance with the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 605, Revenue Recognition. ASC 605 requires that the following four basic criteria are met: (1) persuasive evidence of an arrangement exists, (2) delivery of products and services has occurred, (3) the fee is fixed or determinable and (4) collectability is reasonably assured. The Company recognizes revenue during the period in which the product is shipped. SHIPPING AND HANDLING Shipping and handling costs billed to customers are recorded in sales. Shipping costs incurred by the Company are recorded in cost of sales. For the three and nine months ended September 30, 2015 and 2014, the shipping costs were as follows: Three months ended September 30, Nine months ended September 30, 2015 2014 2015 2014 Freight costs billed to customers $ 18,842 $ 12,389 $ 53,636 $ 49,555 Companys shipping costs $ 17,148 $ 19,065 $ 45,954 $ 54,570 RESEARCH AND DEVELOPMENT Expenditures for research and development are charged to expense as incurred. For the three and nine months ended September 30, 2015 and 2014, the costs were as follows: Three months ended September 30, Nine months ended September 30, 2015 2014 2015 2014 Research and development costs $ 5,529 $ 9,267 $ 22,667 $ 25,339 ADVERTISING The Company records advertising costs as incurred. For the three and nine months ended September 30, 2015 and 2014, advertising expense was as follows: Three months ended September 30, Nine months ended September 30, 2015 2014 2015 2014 Advertising costs $ 92,010 $ 59,253 $ 256,247 $ 119,885 FAIR VALUE OF FINANCIAL INSTRUMENTS The Company's financial instruments consist primarily of cash, accounts receivable, accounts payable and accrued expenses, note payable and convertible debt. The carrying amounts of such financial instruments approximate their respective estimated fair value due to the short-term maturities and approximate market interest rates of these instruments. The estimated fair value is not necessarily indicative of the amounts the Company would realize in a current market exchange or from future earnings or cash flows. INCOME TAXES Prior to May 2014, the Company was organized as a sole proprietorship and was not subject to income taxes. Rather, the Companys sole stockholder was subject to income taxes on the Companys taxable activity. In May 2014, the Company became subject to income taxes and will be subject to Federal and State income taxes as a corporation. 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. EARNINGS (LOSS) PER SHARE The Company reports earnings (loss) per share in accordance with ASC 260, "Earnings per Share." Basic earnings per share is computed by dividing net income by the weighted-average number of shares of common stock outstanding during each period. Diluted earnings per share is computed by dividing net income by the weighted-average number of shares of common stock, common stock equivalents and other potentially dilutive securities outstanding during the period. For the nine months ended September 30, 2014 and 2015, 14,287,500 shares of common stock underlying convertible debt and warrants have been excluded from the computation of diluted earnings per share. RECENT ACCOUNTING PRONOUNCEMENTS Recent accounting pronouncements issued by the FASB and the SEC did not have, or are not believed by management to have, a material impact on the Company's present or future consolidated financial statements. |
SALES CONCENTRATION AND CONCENT
SALES CONCENTRATION AND CONCENTRATION OF CREDIT RISK | 9 Months Ended |
Sep. 30, 2015 | |
Fair Value Disclosures [Abstract] | |
SALES CONCENTRATION AND CONCENTRATION OF CREDIT RISK | NOTE 3 SALES CONCENTRATION AND CONCENTRATION OF CREDIT RISK CASH Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash. The Company maintains cash balances at one financial institution, which is insured by the Federal Deposit Insurance Corporation. The Company has not experienced any losses in such accounts. PURCHASES During the nine months ended September 30, 2015 and 2014, the Company made significant purchases from three suppliers as follows: Supplier Purchase % Nine months ended September 30, 2014 Purchase % Nine months ended September 30, 2015 Accounts Payable Balance as of September 30, 2015 A 21.7 % 30.7 % $ 3,925 B 18.1 % 19.4 % $ 15,491 C 16.2 % 18.3 % $ |
CONVERTIBLE NOTES PAYABLE
CONVERTIBLE NOTES PAYABLE | 9 Months Ended |
Sep. 30, 2015 | |
Debt Disclosure [Abstract] | |
CONVERTIBLE NOTES PAYABLE | NOTE 4 CONVERTIBLE NOTES PAYABLE In May and June 2014 (the May and June 2014 Notes), the Company issued 3 convertible promissory notes, each in the amount of $22,000. The Company received proceeds of $60,000 in the aggregate. Each of the May and June 2014 Notes matured on the six month anniversary of its issuance date, carried interest at 10% and contained a 9.1% original issue discount (OID). The OID was amortized over the earlier of the conversion of the note or the maturity date. The holders of the note can convert the notes into shares of common stock at any time from the date of issuance to maturity at $0.20 per share. In December 2014, the Company received conversion notices from the holders of the May and June 2014 Notes and accordingly, recorded the conversion of $66,000 of principal and $4,177 of accrued and unpaid interest of the three convertible promissory notes and 352,242 shares of common stock to be issued at a conversion price of $0.20 per share. The shares were issued in January 2015. On June 3, 2014, the Board authorized the Company to enter into a Securities Purchase Agreement (SPA) with Chicago Venture Partners, L.P. (CVP). Pursuant to the SPA, the Company agreed to issue to CVP a Secured Convertible Promissory Note in the principal amount of $1,657,500 (the Note). On June 6, 2014, the Company executed the SPA with CVP, for the sale of the Company Note in the principal amount of up to $1,657,500 (which includes CVPs legal expenses in the amount of $7,500 and a $150,000 OID) for $1,500,000, consisting of $500,000 paid in cash on June 11, 2014 (the Closing Date), two $250,000 secured promissory notes and two $250,000 promissory notes (the Investor Notes), aggregating $1,000,000, bearing interest at the rate of 10% per annum. The Investor Notes are due 30 months from the Closing Date and may be prepaid, without penalty. Advances received, OID charged and deferred financing costs incurred to CVP are as follows: Date Funded Amount OID Other Convertible Note Issued 6/11/14 $ 500,000 $ 50,000 $ 7,500 $ 557,500 10/15/14 62,500 6,250 68,750 11/17/14 62,500 6,250 68,750 12/19/14 35,000 3,500 38,500 Balances 12/31/14 660,000 60,000 7,500 733,500 3/18/15 65,000 6,500 71,500 4/14/15 22,500 2,250 24,750 4/23/15 25,500 2,550 28,050 5/20/15 30,000 3,000 33,000 6/22/15 20,000 2,000 22,000 7/17/15 45,000 4,500 49,500 9/21/15 25,000 2,500 7,500 35,000 Balances 9/30/15 $ 893,000 $ 89,300 $ 15,000 $ 997,300 The Company has also not recorded the $607,000 remaining unfunded balance of the Investor Notes issued by CVP to the Company. The Note bears interest at the rate of 10% per annum. All interest and principal must be repaid on the date that is 30 months after the Closing Date. The Note may be converted at the option of the holder, on the date that is six months from the Trading Date (defined in the Purchase Agreement as the date on which the Common Stock is first trading on an Eligible Market, but in any event the Company shall cause its Common Stock to be trading on an Eligible Market within nine months of the Closing Date of June 11, 2014) or at any time thereafter at a conversion price of $0.1976. The conversion price is equal to $6,500,000 divided by 33,000,000 (the amount of fully diluted shares of Common Stock of the Company on the date the Company filed its Registration Statement). If the holder funds $1,500,000 and elects to convert the Note into Common Stock, the number of shares issuable upon conversion will be 8,287,500. In the event the Company elects to prepay all or any portion of the Company Note, the Company is required to pay to CVP an amount in cash equal to 125% multiplied by the sum of all principal, interest and any other amounts owing. On July 16, 2015, CVP converted $50,000 of accrued and unpaid interest under the Company Note into 253,846 shares of common stock. The Company also reduced derivative liabilities for the fair value of the conversion of $70,658 and reclassified the amount to additional paid in capital. Initially the Company determined that the conversion feature of the convertible note did not meet the criteria of an embedded derivative and therefore the conversion feature was not bi-furcated and accounted for as a derivative because the Company was a private company, there was no quoted price and no active market for the Companys common stock. Since the convertible note included an embedded conversion feature that did not qualify to be bi-furcated as a derivative, management evaluated this feature to determine whether it meets the definition of a beneficial conversion feature (BCF) within the scope of ASC 470-20, Debt with Conversion and Other Options, and determined that a BCF existed. During the nine months ended September 30, 2015, and prior to the Company becoming a public company received $163,000 in new fundings and recorded a note discount of $179,300 (including $16,300 of OID), to be amortized to interest expense over the life of the loan. The Company became trading as a public company on July 13, 2015, and on that date the Company determined the conversion feature of the Note represented an embedded derivative since the Note was convertible into a variable number of shares upon conversion. Accordingly, on July 13, 2015, the Note was not considered to be conventional debt under ASC 815 and the embedded conversion feature was bifurcated from the debt host and accounted for as a derivative liability. Accordingly, the fair value of the derivative instruments for the fundings of the Note that occurred prior to July 13, 2015, were recorded as a liability on July 13, 2015, on the consolidated balance sheet with the corresponding amount recorded as a discount to the Note. Such discount is being amortized from the date of issuance to the maturity date of the Note. The change in the fair value of the liability for derivative contracts are recorded in other income or expenses in the consolidated statements of operations at the end of each quarter, with the offset to the derivative liability on the balance sheet. The embedded feature included in the Note resulted in an initial debt discount of $233,500, an initial derivative liability expense of $1,241,340 and initial derivative liability of $1,474,800. Additionally, from July 13, 2015, through September 30, 2015, the Company received $70,000 in new fundings and increased the Company Note by $84,500 including $7,000 of OID and $7,500 of legal costs. The Company recorded an initial discount against the new fundings in the amount of $84,500 to be amortized into interest expense over the term of the Note. The Company also issued a five year warrant to CVP to purchase the number of shares equal to $420,000 divided by 70% of the average of the three lowest closing bid prices in the 20 trading days immediately after becoming public (the Market Price). Since the Company was not public and could not determine the Market Price, based on the current discounted cash flow valuation, the Company initially estimated that CVP can purchase 6,000,000 shares of common stock, with an exercise price of $0.20 per share. As of September 30, 2015, based on the Market Price, the Company estimated the number of shares that CVP can purchase to be 1,636,362. Accounting Standard Codification ASC 815 Derivatives and Hedging The warrants were valued using the Black-Scholes option pricing model. In order to calculate the fair value of the warrants, certain assumptions were made regarding components of the model, including the closing price of the underlying common stock, risk-free interest rate, volatility, expected dividend yield, and expected life. Changes to the assumptions could cause significant adjustments to valuation. Since the Company was not public, an estimated a volatility factor utilizing an average of comparable published volatilities of peer companies was utilized. The risk-free interest rate is based on the U.S. Treasury yield in effect at the time of the grant for treasury securities of similar maturity. The warrants associated with the Note were initially valued and recorded a derivative liability of $577,100 using the Black-Scholes valuation methodology and the Company also recorded an initial derivative liability expense of $77,100 and a discount to the Note of $500,000. On December 31, 2014, the Company revalued the warrant at $581,373 using the Black- Scholes option pricing model and recorded an additional derivative liability expense of $4,273 for the year ended December 31, 2014. On September 30, 2015, the Company revalued the warrant at $605,238 using the Black- Scholes option pricing model and recorded derivative liability expense of $23,865 for the nine months ended September 30, 2015 and increased the derivative liability on the balance sheet as of September 30, 2015. A summary of the derivative liability balance as of September 30, 2015 is as follows: Beginning Balance $ 581,373 Initial Derivative Liability 1,768,997 Fair Value Change (60,604 ) Reduction for conversions (246,448 ) Ending Balance $ 2,043,318 Derivative liabilities were valued using the Black-Scholes option using the following assumptions: December 31, 2014 September 30, 2015 Expected dividends -0- -0- Expected volatility 189 % 133% - 166 % Expected term 4.5 years 1.1 - 3.7 years Risk free interest 1.29 % 0.33% - 1.15 % Derivative liability $ 581,373 $ 2,043,318 The Company amortized $182,368 and $463,637 of the Note discount to interest expense for the three and nine months ending September 30, 2015, respectively, and the carrying amount of the Company Note as of September 30, 2015, was $587,615, net of unamortized discounts of $409,685, and as of December 31, 2014, was $357,478, net of the unamortized discount of $376,022. A summary of the convertible note payable balance as of September 30, 2015 and December 31, 2014 is as follows: 2015 2014 Beginning balance $ 733,500 $ -0- Convertible notes-newly issued 263,800 799,500 Conversion of convertible notes (66,000 ) Unamortized discount (409,685 ) (376,022 ) Total $ 587,615 $ 357,478 As security for the Note, the Companys CEO and COO each pledged to CVP their 50 shares of Class A Preferred Stock (see Note 8). The pledge immediately expires upon the shares of common stock of the Company being publicly traded and listed or designated for quotation on any of The New York Stock Exchange, NYSE Amex, the Nasdaq Global Select Market, the Nasdaq Global Market, the Nasdaq Capital Market, the OTC Bulletin Board, the OTCQX, or the OTCQB. On September 10, 2015, the Company entered into a forbearance and standstill agreement (the Forbearance and Standstill Agreement) with CVP and Matt Lee and Sam May, pursuant to which CVP agreed to refrain and forbear temporarily from exercising and enforcing remedies under the Note. Pursuant to the terms of the Note, the Company was required to deliver the Installment Amount (as defined in the Note) on or before each Installment Date (as defined in the Note) until the Note was repaid. The Company failed to deliver the Installment Amount in June 2015, July 2015 and August 2015 (each, a Breach and collectively, the Breaches). Each such Breach would constitute a separate event of default pursuant to the terms of the Note if so declared by the Lender. Pursuant to the terms of the Forbearance and Standstill Agreement, CVP agreed to refrain and forbear from exercising and enforcing its remedies with respect to the Breaches until the earliest occurrence of (a) any breach of the Forbearance and Standstill Agreement, or (b) any event of default after the effective date of the Forbearance and Standstill Agreement other than the Breaches. Assuming that no additional events of default occur under the Note and no breaches of the Forbearance and Standstill Agreement occur, CVP agreed, for a period of 90 days from September 10, 2015 (the Standstill Period), that it will not seek to convert any portion of the outstanding balance of the Note without the Companys prior written consent, nor will the Company be required to deliver any Installment Amount to CVP during the Standstill Period. In addition, CVP agreed that for a period of 180 days following September 10, 2015 (the Modified Conversion Period), CVPs conversion price shall be equal to $0.40 per share, and that during the Modified Conversion Period, CVP will not made any conversions without the Companys prior written consent. Also, any conversion amount applicable to any CVP conversion made during the Modified Conversion Period will automatically be applied toward and reduce the next Installment Amount due and payable to CVP. Upon conclusion of the Modified Conversion Period, CVPs conversion rights set forth in the Note shall revert to the terms and conditions set forth in Note. Pursuant to the terms of the Forbearance and Standstill Agreement, the next Installment Date will be the date that is 90 days from the date of the Forbearance and Standstill Agreement and each subsequent Installment Date will be on the same day of each month thereafter until the Notes maturity date. In addition, the Installment Amount due on the next three Installment Dates shall be equal to $50,000. The Company agreed that so long as the Note remains outstanding and the warrant issued to CVP in connection with the Note is not fully exercised or expired pursuant to its terms, the Company will not (i) issue any new shares of Class A preferred stock, (ii) issue any debt, (iii) issue other securities that have redemption rights, rights of first refusal, preemptive rights or similar rights not associated with the Companys common stock, or (iv) consummate any transaction pursuant to Section 3(a)(9) or 3(a)(10) of the Securities Act of 1933, as amended, equity line of credit or financing arrangement or other transaction that involves issuing securities convertible into Company common stock with a conversion price that varies with the market price of the common stock, without CVPs prior written consent. CVP granted to the Company the right to repurchase the Note, the Warrant and the other transaction documents for $978,500 within 90 days of September 10, 2015. CVP also agreed to pay to the Company $5,000, which payment will constitute a partial payment of the Investor Notes. The Company agreed to pay CVP $7,500, which shall be added to and included as part of the outstanding balance of the Note. The Company issued three convertible promissory notes in August 2015 (the August 2015 Notes) in the amounts of $86,250, $11,500 and $46,000, respectively. The Company received proceeds of $75,000, $10,000 and $40,000. The August 2015 Notes mature on the six month anniversary of its issuance date, carries interest at 10% and contained a 10% original issue discount (OID). The Company recorded the OID of $18,750 as a discount to the Note, to be amortized to interest expense over the life of the Note. Each of the holders of the August 2015 Notes can convert the note into shares of common stock at any time from the date of issuance to maturity at $0.20 per share. Accordingly, the Company received a conversion notice from each holder of the August 2015 Notes and issued in the aggregate 718,750 shares of restricted common stock. The company valued and recorded an initial derivative liability of $168,930 using the Black Scholes valuation methodology of which $125,000 was recorded as a discount to the August Notes and the remaining $43,930 was recorded as expense. Upon conversion of the August Notes the Company reclassified $168,930 of the derivative liability to additional paid in capital. On September 30, 2015, (the September 2015 Note) the Company issued a convertible promissory note in the amount of $5,750. The Company received proceeds of $5,750. The September 2015 Note matures on the six month anniversary of its issuance date, carries interest at 10% and contained a 10% original issue discount (OID). The holder of the September 2015 Note can convert the note into shares of common stock at any time from the date of issuance to maturity at $0.20 per share. On September 30, 2015, the Company received a conversion notice from the holder of the September 2015 Note to convert the note amount into 28,750 shares of restricted common stock. As of September 30, 2015, the Company recorded the 28,750 shares of common stock as common stock to be issued. The shares were certificated on October 27, 2015. The company valued and recorded an initial derivative liability of $6,877 using the Black Scholes valuation methodology of which $5,750 was recorded as a discount to the September Note and the remaining $1,127 was recoded as expense. Upon conversion of the September Note the Company reclassified $6,877 of the derivative liability to additional paid in capital. |
NOTE PAYABLE, STOCKHOLDER
NOTE PAYABLE, STOCKHOLDER | 9 Months Ended |
Sep. 30, 2015 | |
Long-term Debt, Unclassified [Abstract] | |
NOTE PAYABLE, STOCKHOLDER | NOTE 5 NOTE PAYABLE, STOCKHOLDER For the nine months ended September 30, 2015 and the year ended December 31, 2014, a stockholder and officer loaned the Company various amounts for Company expenses. Included in the advances and repayments that follow is the activity from several credit cards that are in the name of the stockholder, but were used for Company purposes. The terms of the note include an interest rate of 15% per annum. Interest expense of $245 and $703 was recorded for the three and nine months ended September 30, 2015, respectively, and $229 and $669 for the three and nine months ended September 30, 2014, respectively. The activity for the nine months ended September 30, 201, is as follows: Nine months ended September 30, 2015 Beginning balance $ 6,168 Advances 6,314 Ending balance $ 12,482 |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 9 Months Ended |
Sep. 30, 2015 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 6 RELATED PARTY TRANSACTIONS On May 14, 2014, effective as of May 1, 2014, the Board authorized the Company to engage the services of Venture Equity, LLC (Venture Equity). Mr. Barry Hollander, the sole member of Venture Equity, was also named the Companys Chief Financial Officer. Mr. Hollander was responsible for the preparation of the financial statements, a registration statement, overseeing the going public process, the continuing reporting responsibilities upon becoming a public company and other corporate matters. The Company has agreed to compensate Venture Equity $5,000 per month and issued 1,500,000 shares of the Companys common stock, 750,000 shares of common stock immediately vested and 750,000 shares of common stock vested on November 15, 2014. The Company recorded an expense of $75,000, included in salaries and management fees for the nine months ended September 30, 2014, for the vested shares ($0.10 per share), based upon the Companys internal valuation on a discounted cash flow basis. The 750,000 shares that vested on November 15, 2014 have been recorded as deferred equity compensation on the balance sheet, at an initial value of $75,000 ($0.10 per share) and were amortized monthly from the date of issuance to their vesting date. Accordingly, the Company has expensed $37,500 and $56,250 included in salaries and management fees for the three and nine months ended September 30, 2014. The balance was amortized monthly through November 15, 2014. On May 11, 2015, the Board approved increases to the salaries of each of the Companys Chief Executive Officer (CEO), Chief Financial Officer (CFO) and Chief Operating Officer (COO) from $5,000 per month to $8,000 per month. The increases will only be paid when and if the cash flow of the Company is sufficient. For the three and nine months ended September 30, 2015 and 2014, the Company recorded expenses to its officers the following amounts: Three months ended September 30, Nine months ended September 30, 2015 2014 2015 2014 CEO $ 24,000 $ 14,500 $ 60,000 $ 38,500 COO 24,000 14,500 60,000 38,500 CFO 24,000 14,500 60,000 24,500 Total $ 72,000 $ 43,500 $ 180,000 $ 101,500 As of September 30, 2015, the Company owed $12,557 to the CEO, $20,750 to the COO and $16,250 to the CFO, for accrued and unpaid fees. As of December 31, 2014, the Company owed $4,500 to each the CEO and COO and $2,500 to the CFO. Accordingly $49,557 and $11,500 is included in accounts payable and accrued liabilities, stockholders, on the September 30, 2015 and December 31, 2014 balance sheets presented herein, respectively. The Companys COO loaned the Company various amounts for Company expenses. Included in the advances and repayments is the activity from several credit cards that are in the name of the stockholder but were used for Company purposes (see Note 5 ). The Company recorded interest expense of $245 and $228 for the three months ended September 30, 2015 and 2014, respectively and $703 and $669 for the nine months ended September 30, 2015 and 2014, respectively. As of September 30, 2015 and December 31, 2014, the COO was owed accrued interest of $3,355 and $2,652, respectively, which is included in accounts payable and accrued liabilities, stockholders, on the balance sheets presented herein. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 7 COMMITMENTS AND CONTINGENCIES LEASE AGREEMENTS Beginning January 1, 2011, the Company (through its COO) leased approximately 1,850 square feet of office and manufacturing space in an industrial complex in Irvine California. The initial lease term expired July 31, 2012. Since that date through July 2014, the Company leased the property on a month to month basis at a cost of $2,138 per month. Effective August 1, 2014, the Company moved into a 4,427 square foot facility under a new lease agreement, in the same industrial complex. The Company entered into a 26 month lease, pursuant to which (i) there is no base rent for the first two months, (ii) beginning October 1, 2014, the monthly lease is $4,870 plus common area maintenance charges of $354, and (iii) beginning October 1, 2015, the monthly rent increases to $5,091. The Company is straight lining the 24 month costs over the 26 month term of the lease. Three months ended September 30, Nine months ended September 30, Rent Expense: 2015 2014 2015 2014 Rent allocated to cost of goods sold $ 5,616 $ 4,653 $ 16,902 $ 9,904 Rent allocated to SG&A 8,502 6,980 25,431 14,855 Total rent expense $ 14,118 $ 11,633 $ 42,333 $ 24,759 Effective April 15, 2015, the Company entered into a two month Investor Relations Consulting Agreement (the Agreement) with Hayden IR (Hayden). Pursuant to the Agreement, on April 15, 2015, the Company issued 12,500 shares of common stock and 12,500 additional shares of common stock were issued on May 15, 2015. The Company valued the shares at $0.40 per share and has included $10,000 in stock compensation expense for the nine months ended September 30, 2015. On August 3, 2015, the Board of Directors of the Company authorized the engagement of Hayden effective August 1, 2015 (the Effective Date), for a twelve month period. Pursuant to the Agreement, the Company has agreed to, include among other matters, the issuance of 100,000 restricted shares of common stock to vest over the term of the Agreement as follows, 25,000 upon execution of the Agreement 50,000 shares on the 90 th th On July 21, 2015, the Company entered into a Consulting Agreement (the Consulting Agreement) with BMA Securities, LLC (the Consultant). Pursuant to the Consulting Agreement, the Consultant, on a non-exclusive basis, will provide consulting services to the Company as a financial advisor for a six month period. The Consulting Agreement automatically renews for successive six month periods unless terminated by either party 60 days prior to the end of the initial successive term. Pursuant to the Consulting Agreement, the Company issued 350,000 shares of restricted common stock on July 16, 2015 for the initial six month term. The Company valued the shares at $0.40 per share (based on the most recent sale price of the Companys common stock) and recorded $140,000 of stock compensation expense for the nine months ended September 30, 2015. |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 9 Months Ended |
Sep. 30, 2015 | |
Equity [Abstract] | |
STOCKHOLDERS' EQUITY | NOTE 8 STOCKHOLDERS EQUITY COMMON STOCK The Companys Registration Statement on Form S-1 with the SEC became effective on December 22, 2014. During the nine months ended September 30, 2015, the Company sold 502,000 shares of common stock and received $200,800. On April 1, 2015, the Company agreed to issue 75,000 shares of common stock to a consultant. The Company valued the shares at $0.40 per share (based on the most recent sale price of the Companys common stock). Accordingly, $30,000 is included in stock compensation expense for the nine months ended September 30, 2015. On April 15, 2015 and May 15, 2015, the Company issued 12,500 shares of stock to Hayden (See Note 7). On July 16, 2015, CVP converted $50,000 of accrued and unpaid interest under the Company Note into 253,846 shares of common stock. On July 21, 2015, the Company issued 350,000 shares of restricted common stock to BMA (see Note 7). The Company valued the shares at $0.40 per share (See Note 7). On July 21, 2015, 17,500 shares of common stock were issued equal in value to an aggregate of $7,000 per month to two employees as part of their compensation. Accordingly, $7,000 is included in stock compensation expense for the three and nine months ended September 30, 2015, respectively. On July 24, 2015, the board of directors of the Company approved the granting of 1,323,500 shares of restricted common stock to employees, including 750,000 shares awarded to the Companys CFO. The Company valued the shares at $0.40 per share (based on the most recent sale price of the Companys common stock) On August 4, 26, and 28, 2015, the Company issued 431,250, 57,500 and 230,000, respectively, of restricted shares of common stock upon the conversion from the holders of the August 2015 Notes. The shares were issued at $0.20 per share. On August 4, 2015, the Company issued 100,000 restricted shares of common stock to Hayden. The Company valued the shares at $0.40 per share (based on the most recent sale price of the Companys common stock) and has included $40,000 in stock compensation expense for the three and nine months ended September 30, 2015. COMMON STOCK TO BE ISSUED As of September 30, 2015, the Company had recorded 95,000 shares of common to be issued as follows: 28,750 shares issued on October 27, 2015, upon the conversion of the September 2015 Note; 20,000 shares issued on October 27, 2015 to Hayden; 18,750 shares issued on October 27, 2015 to an employee; 27,500 shares issued on October 27, 2015 to an employee CLASS A PREFERRED STOCK On June 3, 2014, the Companys Board of Directors adopted and approved the Class A Preferred Stock Certificate of Designation, establishing the terms, conditions and relative rights of the Class A Preferred Stock, including that the holders of the Class A Preferred Stock (the Class A Holders) shall have limited voting rights and powers compared to the voting rights and powers of holders of Common Stock and other series of Preferred Stock. The Class A Holders shall be entitled to notice of any shareholders meeting in accordance with the Bylaws of the Corporation, and shall be entitled to vote, but only with respect to the following matters (collectively, the Class A Voting Matters): (i) the appointment and/or removal of any member of the Companys board of directors, (ii) any matter related to or transaction (or series of transactions) pursuant to which the Company would sell or license all or substantially all of its assets or the stockholders of the Company would sell all or substantially all of their shares of the Companys stock or where the Company would merge with or into any other entity, (iii) causing the Company to register its Common Stock for trading pursuant to the Securities Exchange Act of 1934, as amended, including by filing a Registration Statement on Form S-1 with the Securities Exchange Commission and filing and obtaining FINRA approval of a Form 15c2-11, and (iv) with respect to any matter involving a transaction whereby the Company will become part of or merge into an existing public company. For so EQUITY COMPENSATION PLAN On May 11, 2015, the Companys Board of Directors adopted the 2015 Equity Compensation Plan (the Plan). Persons eligible to participate in the Plan include Employees (as defined in the Plan), officers and directors of the Company. Term The Plan became effective upon its adoption by the Board. Options and stock awards may be granted immediately thereafter; provided, that no option may be exercised and no stock award may be granted under the Plan until it is approved by the stockholders of the Company, within 12 months after the date of adoption by the Board. The Plan shall continue in effect for a term of 10 years from the date of the Plans adoption by the Board unless terminated earlier as provided in the Plan. Administration The Plan will be administered by the Board or a committee designated by the Board (the Committee). The Committee may grant options and stock awards under the Plan. Maximum Shares Available The maximum aggregate number of shares that may be issued under the Plan through awards is 5,000,000 shares. Adjustments The maximum aggregate number of shares that may be issued under the Plan, the number and kind of shares covered by each outstanding award, and the price per share (but not the total price) subject to each outstanding award shall be proportionally adjusted to prevent dilution or enlargement of rights under the Plan for any change in the outstanding common stock subject to the Plan, or subject to any award, resulting from any stock splits, combination or exchange of shares, consolidation, spin-off or recapitalization of shares or any capital adjustment or transaction similar to the foregoing or any distribution to holders of common stock other than regular cash dividends. Awards Options The Committee may grant options to purchase shares of common stock under the Plan from time to time in the discretion of the Administrator or automatically upon the occurrence of specified events, including the achievement of performance goals, and for the satisfaction of an event or condition within the control of the grantee or within the control of others. The per share exercise price of an option shall be determined by the Committee, provided, however that (i) the exercise price of an incentive stock option granted to a non-10% stockholder shall be no less than 100% of the fair market value of the Companys common stock on the grant date, (ii) the exercise price of an incentive stock option granted to a 10% stockholder shall be no less than 110% of the fair market value of the Companys common stock on the grant date, and (iii) the exercise price of a nonstatutory stock option shall be no less than 100% of the fair market value of the Companys common stock on the grant date. Only employees may be granted incentive stock options. Notwithstanding the designation incentive stock option in an option agreement, if the aggregate fair market value of the shares with respect to which incentive stock options are exercisable for the first time by the grantee during any calendar year (under all plans of the Company) exceeds $100,000, then the portion of such options that exceeds $100,000 shall be treated as nonstatutory stock options. Restricted Stock The Committee may grant stock awards pursuant to a stock award agreement that shall contain provisions regarding (i) the number of shares subject to such stock award or a formula for determining such number; (ii) the purchase price, if any, of the shares, and the means of payment for the shares; (iii) the performance criteria, if any, and level of achievement versus these criteria that shall determine the number of shares granted, issued, retained, or vested, as applicable; (iv) such terms and conditions on the grant, issuance, vesting, or forfeiture of the shares, as applicable, as may be determined from time to time by the Committee; (v) restrictions on the transferability of the stock award; and (vi) such further terms and conditions in each case not inconsistent with the Plan as may be determined from time to time by the Committee. Unless otherwise provided by the Committee, the grantee shall have the rights equivalent to those of a stockholder and shall be a stockholder only after shares are issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company) to the grantee. Unless otherwise provided by the Committee, a grantee holding stock units shall be entitled to receive dividend payments as if he or she were an actual stockholder. On July 24, 2015, the board of directors of the Company approved the granting of 1,323,500 shares of restricted common stock, including 750,000 shares awarded to the Companys CFO and approved the issuance of 75,000 shares to a consultant. The board of directors also approved the issuance of common stock equal in value to an aggregate of $7,000 (amended to $6,000) per month to two employees as part of their compensation. WARRANTS The Company issued a five year warrant (which expires on June 30, 2019) to CVP to purchase the number of shares equal to $420,000 divided by 70% of the average of the three lowest closing bid prices in the 20 trading days immediately preceding the applicable conversion (the Market Price). Since the Company was not public and could not determine the Market Price, based on the current discounted cash flow valuation, the Company initially estimated that CVP can purchase 6,000,000 shares of common stock, with an exercise price of $0.20 per share. As of September 30, 2015, based on the Market Price, the Company estimated the number of shares that CVP can purchase to be 1,636,362. |
GOING CONCERN
GOING CONCERN | 9 Months Ended |
Sep. 30, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
GOING CONCERN | NOTE 9 GOING CONCERN The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As of September 30, 2015 the Company had an accumulated deficit of $5,239,472 and working capital deficit of $2,265,686. These conditions raise substantial doubt about the Company's ability to continue as a going concern. Managements Plans The Company maintains daily operations and capital needs through the receipts of sales of product and from the proceeds received from the issuance of convertible promissory notes. Management is developing a plan of action to eliminate the Companys convertible notes payable that include conversion rights that may convert at a discount to the market price of our common stock. Management plans to become cash flow positive from operations by the end of this fiscal year, therefore eliminating any future cash burn. Part of managements plans include increases in unit sales of our cabinets. As part of that initiative, in July 2015 the Company introduced our newest version of our Medicab. The unit is more efficient and lower priced than its predecessor. Retailers in our wholesale program are able to purchase our products for resale. While the Companys entire product line is available the program and product was designed to allow for the retailer to carry a basic cabinet and work with their customer to custom design a cabinet that fits their needs. We are also working on introducing additional product extensions, new products, and subscription based service offerings. We plan to introduce a higher level of automation options as well as expand the offering of scalable packages and accessories. We have developed several innovative product enhancements that we are considering incorporating to our line of products and we may seek to apply for intellectual property protection. An increasing emphasis will be placed on supplies such as nutrients and grow medium which are consumed by system users with each grow cycle and represent a captive recurring revenue opportunity. We are introducing an automated contact and reorder system for our customer base to help grow this revenue stream. We are planning to expand our current line of LEDs for uses in cabinets and also as a standalone offering for larger scale growers. We also plan to offer and expand our premium support services and education. Support and education can be packaged as a monthly subscription service offering live support, advanced training, and even an auto resupply of nutrients and grow media. Additionally, managements plans include the establishment and development of wholly-owned separate stand-alone subsidiaries. There will be a separate subsidiary for technology companies, media companies, manufacturing companies and intellectual property companies. The Company also plans to acquire cannabis brands that are compatible with our risk guidelines, that have an operating history and that are cash-flow positive. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2015 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 10 SUBSEQUENT EVENTS On October 27, 2015, the 95,000 shares of common stock that were recorded as shares to be issued on the September 30, 2015 balance sheet were certificated. On October 20, 2015, the Company received $10,000 related to the $20,000 note receivable recorded in conjunction with the August 2015 Notes (see Note 4). The Company also received a Notice of Conversion and on October 27, 2015, issued 57,500 shares of common stock in settlement of $11,500 of principal and interest. On October 27, 2015, the Company issued 10,000 shares of common stock to Hayden for services rendered. On November 2, 2015, the Company received a term sheet for the issuance of a $50,000 convertible preferred note in exchange for $50,000. Pursuant to the terms of the Standstill and Forbearance Agreement with CVP, CVP had to consent to any additional debt financing proposals that the Company received. On November 5, 2015, CVP notified the Company that they did not consent and would not consent to any debt transaction that had conversion mechanics that vary with the market price of the Companys common stock. In addition CVP advised the Company that they would longer be financing the operations of the Company. Subsequently, the Company has laid off all non-executive employee and has ceased all marketing efforts including the closing of the Companys merchant account. |
RESTATED FINANCIAL STATEMENTS
RESTATED FINANCIAL STATEMENTS | 9 Months Ended |
Sep. 30, 2015 | |
Equity [Abstract] | |
RESTATED FINANCIAL STATEMENTS | NOTE 11 RESTATED FINANCIAL STATEMENTS The Companys previously issued financial statements have been restated to reflect the correction as a result of the Company not previously measuring and re-measuring the fair value of warrants issued in connection with a convertible promissory note (see Note 4) to CVP to purchase common stock and to correct the per share fair value from $0.20 to $0.40 to reflect the fair value based on the most recent sale price of the Companys common stock at the time the shares were granted. The following tables present the effects of the restatement adjustments on the affected line items in the previously reported statement of operations for the three and nine months ended September 30, 2015 and the balance sheet as of June 30, 2015. There was no effect to the net increase in cash and cash equivalents for the nine months ended September 30, 2015, as the increase in the net loss was offset by the decreases in the fair market value change on the warrants issued and the amortization of the discount. The Company determined that the conversion feature of the convertible note did not meet the criteria of an embedded derivative and therefore the conversion feature was not bi-furcated and accounted for as a derivative because the Company was a private company, there was no quoted price and no active market for the Companys common stock. However, the exercise price of the warrant is subject to adjustment if we issue or sell shares of our common stock for a consideration per share less than the exercise price, or issue options, warrants or other securities convertible or exchange for shares of our common stock at a conversion price less than the exercise price in the warrants. If either of these events should occur, the exercise price is reduced to the lowest price at which these securities were issued or are exercisable. Therefore, the settlement of the warrants fails the fixed for fixed criteria of ASC 815 and they are required to be recorded as a liability at their fair value on inception. The warrant liability is required to be re-measured at its fair value on each reporting date with the changes in fair value recorded in the Companys Statement of Operations. All related amounts have been restated as appropriate within these financial statements. Three months ended September 30, 2015 Adjustments As reported 9/30/2015 Restated Salaries and Management fees $ 434,608 $ 264,700 $ 699,308 Professional fees $ 86,835 $ 131,808 $ 218,643 Total operating expenses $ 726,701 $ 396,508 $ 1,123,209 Loss from operations $ (670,862 ) $ (396,508 ) $ (1,067,370 ) Other income (expense) Interest expense $ (84,475 ) $ (268,583 ) $ (353,058 ) Derivative liability expense $ $ (1,300,908 ) $ (1,300,908 ) Total other expense, net $ (84,090 ) $ (1,569,491 ) $ (1,653,581 ) Net Loss $ (754,952 ) $ (1,965,999 ) $ (2,720,951 ) Basic and diluted loss per share $ (0.02 ) $ (0.06 ) $ (0.08 ) Weighted average number of shares outstanding Basic and diluted 36,094,306 36,094,306 36,094,306 Nine months ended September 30, 2015 As reported Adjustments Restated Salaries and Management fees $ 660,262 $ 264,700 $ 924,962 Professional fees $ 186,010 $ 131,808 $ 317,818 Total operating expenses $ 1,345,766 $ 396,508 $ 1,742,274 Loss from operations $ (1,175,450 ) $ (396,508 ) $ (1,571,958 ) Other income (expense) Interest expense $ (343,088 ) $ (333,448 ) $ (676,536 ) Derivative liability expense $ $ (1,274,144 ) $ (1,274,144 ) Total other expense, net $ (342,418 ) $ (1,607,592 ) $ (1,950,010 ) Net Loss $ (1,517,868 ) $ (2,004,100 ) $ (3,521,968 ) Basic and diluted loss per share $ (0.04 ) $ (0.06 ) $ (0.10 ) Weighted average number of shares outstanding Basic and diluted 34,631,287 34,631,287 34,631,287 Balance Sheet as of September 30, 2015 As reported Adjustments Restated Liabilities and Stockholders' Deficit Derivative liabilities $ $ 2,043,318 $ 2,043,318 Total current liabilities $ 325,974 $ 2,043,318 $ 2,369,293 Convertible notes payable $ 784,274 $ (196,659 ) $ 587,615 Total liabilities $ 1,110,248 $ 1,846,660 $ 2,956,908 Stockholders' Deficit Deferred stock compensation $ (55,833 ) $ 55,833 $ Additional paid-in capital $ 2,158,754 $ 263,494 $ 2,422,248 Accumulated deficit $ (3,073,485 ) $ (2,165,987 ) $ (5,239,472 ) Total stockholders' deficit $ (933,576 ) $ (1,846,660 ) $ (2,780,236 ) $ 176,672 $ $ 176,672 |
SUMMARY OF SIGNIFICANT ACCOUN18
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2015 | |
Accounting Policies [Abstract] | |
BASIS OF PRESENTATION | BASIS OF PRESENTATION The accompanying unaudited condensed financial statements have been prepared by the Company without audit. In the opinion of management, all adjustments necessary to present the financial position, results of operations and cash flows for the stated periods have been made. Except as described below, these adjustments consist only of normal and recurring adjustments. Certain information and note disclosures normally included in the Companys annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) have been condensed or omitted. These condensed financial statements should be read in conjunction with the Companys financial statements and notes thereto included in the Companys annual report for the year ended December 31, 2014 on Form 10-K. Interim results of operations for the three and nine months ended September 30, 2015 are not necessarily indicative of future results for the full year. Certain amounts from the 2014 period have been reclassified to conform to the presentation used in the current period. |
EMERGING GROWTH COMPANY | EMERGING GROWTH COMPANY We qualify as an emerging growth company under the Jumpstart Our Business Startups Act of 2012 (the 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 of 1933, as amended (the Securities Act), for complying with new or revised accounting standards. As an emerging growth company, we can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the benefits of this extended transition period. |
USE OF ESTIMATES | USE OF ESTIMATES The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities 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. |
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. |
INVENTORY | INVENTORY Inventory is valued at the lower of cost or market 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. Inventory of $49,336 and $48,761 as of September 30, 2015 and December 31, 2014, respectively, was comprised of raw materials. |
PROPERTY AND EQUIPMENT | PROPERTY AND EQUIPMENT Property and equipment are stated at cost, and depreciation is provided by use of straight-line methods over the estimated useful lives of the assets. The estimated useful lives of property and equipment are as follows: Manufacturing equipment 10 years Office equipment and furniture 7 years Computer hardware and software 3 years The Company's property and equipment consisted of the following at September 30, 2015 and December 31, 2014: September 30, December 31, 2014 Furniture and Equipment $ 29,614 $ 26,937 Manufacturing equipment 7,396 7,396 Software 15,830 15,830 Leasehold improvements 34,849 33,503 Accumulated depreciation (34,744 ) (13,026 ) Balance $ 52,945 $ 70,640 Depreciation expense of $21,718 and $4,072 was recorded for the nine months ended September 30, 2015 and 2014, respectively. |
REVENUE RECOGNITION | REVENUE RECOGNITION The Company recognizes revenue in accordance with the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 605, Revenue Recognition. ASC 605 requires that the following four basic criteria are met: (1) persuasive evidence of an arrangement exists, (2) delivery of products and services has occurred, (3) the fee is fixed or determinable and (4) collectability is reasonably assured. The Company recognizes revenue during the period in which the product is shipped. |
SHIPPING AND HANDLING | SHIPPING AND HANDLING Shipping and handling costs billed to customers are recorded in sales. Shipping costs incurred by the Company are recorded in cost of sales. For the three and nine months ended September 30, 2015 and 2014, the shipping costs were as follows: Three months ended September 30, Nine months ended September 30, 2015 2014 2015 2014 Freight costs billed to customers $ 18,842 $ 12,389 $ 53,636 $ 49,555 Companys shipping costs $ 17,148 $ 19,065 $ 45,954 $ 54,570 |
RESEARCH AND DEVELOPMENT | RESEARCH AND DEVELOPMENT Expenditures for research and development are charged to expense as incurred. For the three and nine months ended September 30, 2015 and 2014, the costs were as follows: Three months ended September 30, Nine months ended September 30, 2015 2014 2015 2014 Research and development costs $ 5,529 $ 9,267 $ 22,667 $ 25,339 |
ADVERTISING | ADVERTISING The Company records advertising costs as incurred. For the three and nine months ended September 30, 2015 and 2014, advertising expense was as follows: Three months ended September 30, Nine months ended September 30, 2015 2014 2015 2014 Advertising costs $ 92,010 $ 59,253 $ 256,247 $ 119,885 |
FAIR VALUE OF FINANCIAL INSTRUMENTS | FAIR VALUE OF FINANCIAL INSTRUMENTS The Company's financial instruments consist primarily of cash, accounts receivable, accounts payable and accrued expenses, note payable and convertible debt. The carrying amounts of such financial instruments approximate their respective estimated fair value due to the short-term maturities and approximate market interest rates of these instruments. The estimated fair value is not necessarily indicative of the amounts the Company would realize in a current market exchange or from future earnings or cash flows. |
INCOME TAXES | INCOME TAXES Prior to May 2014, the Company was organized as a sole proprietorship and was not subject to income taxes. Rather, the Companys sole stockholder was subject to income taxes on the Companys taxable activity. In May 2014, the Company became subject to income taxes and will be subject to Federal and State income taxes as a corporation. 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. |
EARNINGS PER SHARE | EARNINGS (LOSS) PER SHARE The Company reports earnings (loss) per share in accordance with ASC 260, "Earnings per Share." Basic earnings per share is computed by dividing net income by the weighted-average number of shares of common stock outstanding during each period. Diluted earnings per share is computed by dividing net income by the weighted-average number of shares of common stock, common stock equivalents and other potentially dilutive securities outstanding during the period. For the nine months ended September 30, 2014 and 2015, 14,287,500 shares of common stock underlying convertible debt and warrants have been excluded from the computation of diluted earnings per share. |
RECENT ACCOUNTING PRONOUNCEMENTS | RECENT ACCOUNTING PRONOUNCEMENTS Recent accounting pronouncements issued by the FASB and the SEC did not have, or are not believed by management to have, a material impact on the Company's present or future consolidated financial statements. |
SUMMARY OF SIGNIFICANT ACCOUN19
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Accounting Policies [Abstract] | |
Property and equipment | September 30, December 31, 2014 Furniture and Equipment $ 29,614 $ 26,937 Manufacturing equipment 7,396 7,396 Software 15,830 15,830 Leasehold improvements 34,849 33,503 Accumulated depreciation (34,744 ) (13,026 ) Balance $ 52,945 $ 70,640 |
Shipping and handling billing costs | Three months ended September 30, Nine months ended September 30, 2015 2014 2015 2014 Freight costs billed to customers $ 18,842 $ 12,389 $ 53,636 $ 49,555 Companys shipping costs $ 17,148 $ 19,065 $ 45,954 $ 54,570 |
Research and development costs | Three months ended September 30, Nine months ended September 30, 2015 2014 2015 2014 Research and development costs $ 5,529 $ 9,267 $ 22,667 $ 25,339 |
Advertising costs | Three months ended September 30, Nine months ended September 30, 2015 2014 2015 2014 Advertising costs $ 92,010 $ 59,253 $ 256,247 $ 119,885 |
SALES CONCENTRATION AND CONCE20
SALES CONCENTRATION AND CONCENTRATION OF CREDIT RISK (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Sales Concentration And Concentration Of Credit Risk Tables | |
Significant purchases from suppliers | Supplier Purchase % Nine months ended September 30, 2014 Purchase % Nine months ended September 30, 2015 Accounts Payable Balance as of September 30, 2015 A 21.7 % 30.7 % $ 3,925 B 18.1 % 19.4 % $ 15,491 C 16.2 % 18.3 % $ |
CONVERTIBLE NOTES PAYABLE (Tabl
CONVERTIBLE NOTES PAYABLE (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Convertible Notes Payable Tables | |
Advances received, OID charged and deferred financing costs incurred to CVP | Date Funded Amount OID Other Convertible Note Issued 6/11/14 $ 500,000 $ 50,000 $ 7,500 $ 557,500 10/15/14 62,500 6,250 68,750 11/17/14 62,500 6,250 68,750 12/19/14 35,000 3,500 38,500 Balances 12/31/14 660,000 60,000 7,500 733,500 3/18/15 65,000 6,500 71,500 4/14/15 22,500 2,250 24,750 4/23/15 25,500 2,550 28,050 5/20/15 30,000 3,000 33,000 6/22/15 20,000 2,000 22,000 7/17/15 45,000 4,500 49,500 9/21/15 25,000 2,500 7,500 35,000 Balances 9/30/15 $ 893,000 $ 89,300 $ 15,000 $ 997,300 |
Summary of derivative liability balance | Beginning Balance $ 581,373 Initial Derivative Liability 1,768,997 Fair Value Change (60,604 ) Reduction for conversions (246,448 ) Ending Balance $ 2,043,318 |
Assumptions used for portion of derivatives liabilities related to outstanding warrants | December 31, 2014 September 30, 2015 Expected dividends -0- -0- Expected volatility 189 % 133% - 166 % Expected term 4.5 years 1.1 - 3.7 years Risk free interest 1.29 % 0.33% - 1.15 % Derivative liability $ 581,373 $ 2,043,318 |
Summary of convertible notes payable balance | 2015 2014 Beginning balance $ 733,500 $ -0- Convertible notes-newly issued 263,800 799,500 Conversion of convertible notes (66,000 ) Unamortized discount (409,685 ) (376,022 ) Total $ 587,615 $ 357,478 |
NOTE PAYABLE, STOCKHOLDER (Tabl
NOTE PAYABLE, STOCKHOLDER (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Long-term Debt, Unclassified [Abstract] | |
Activity on note payable, stockholder | Nine months ended September 30, 2015 Beginning balance $ 6,168 Advances 6,314 Ending balance $ 12,482 |
RELATED PARTY TRANSACTIONS (Tab
RELATED PARTY TRANSACTIONS (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Related Party Transactions Tables | |
Officers' compensation | Three months ended September 30, Nine months ended September 30, 2015 2014 2015 2014 CEO $ 24,000 $ 14,500 $ 60,000 $ 38,500 COO 24,000 14,500 60,000 38,500 CFO 24,000 14,500 60,000 24,500 Total $ 72,000 $ 43,500 $ 180,000 $ 101,500 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Commitments And Contingencies Tables | |
Rent expense | Three months ended September 30, Nine months ended September 30, Rent Expense: 2015 2014 2015 2014 Rent allocated to cost of goods sold $ 5,616 $ 4,653 $ 16,902 $ 9,904 Rent allocated to SG&A 8,502 6,980 25,431 14,855 Total rent expense $ 14,118 $ 11,633 $ 42,333 $ 24,759 |
RESTATED FINANCIAL STATEMENTS (
RESTATED FINANCIAL STATEMENTS (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Equity [Abstract] | |
Restated financial statements | Three months ended September 30, 2015 Adjustments As reported 9/30/2015 Restated Salaries and Management fees $ 434,608 $ 264,700 $ 699,308 Professional fees $ 86,835 $ 131,808 $ 218,643 Total operating expenses $ 726,701 $ 396,508 $ 1,123,209 Loss from operations $ (670,862 ) $ (396,508 ) $ (1,067,370 ) Other income (expense) Interest expense $ (84,475 ) $ (268,583 ) $ (353,058 ) Derivative liability expense $ $ (1,300,908 ) $ (1,300,908 ) Total other expense, net $ (84,090 ) $ (1,569,491 ) $ (1,653,581 ) Net Loss $ (754,952 ) $ (1,965,999 ) $ (2,720,951 ) Basic and diluted loss per share $ (0.02 ) $ (0.06 ) $ (0.08 ) Weighted average number of shares outstanding Basic and diluted 36,094,306 36,094,306 36,094,306 Nine months ended September 30, 2015 As reported Adjustments Restated Salaries and Management fees $ 660,262 $ 264,700 $ 924,962 Professional fees $ 186,010 $ 131,808 $ 317,818 Total operating expenses $ 1,345,766 $ 396,508 $ 1,742,274 Loss from operations $ (1,175,450 ) $ (396,508 ) $ (1,571,958 ) Other income (expense) Interest expense $ (343,088 ) $ (333,448 ) $ (676,536 ) Derivative liability expense $ $ (1,274,144 ) $ (1,274,144 ) Total other expense, net $ (342,418 ) $ (1,607,592 ) $ (1,950,010 ) Net Loss $ (1,517,868 ) $ (2,004,100 ) $ (3,521,968 ) Basic and diluted loss per share $ (0.04 ) $ (0.06 ) $ (0.10 ) Weighted average number of shares outstanding Basic and diluted 34,631,287 34,631,287 34,631,287 Balance Sheet as of September 30, 2015 As reported Adjustments Restated Liabilities and Stockholders' Deficit Derivative liabilities $ $ 2,043,318 $ 2,043,318 Total current liabilities $ 325,974 $ 2,043,318 $ 2,369,293 Convertible notes payable $ 784,274 $ (196,659 ) $ 587,615 Total liabilities $ 1,110,248 $ 1,846,660 $ 2,956,908 Stockholders' Deficit Deferred stock compensation $ (55,833 ) $ 55,833 $ Additional paid-in capital $ 2,158,754 $ 263,494 $ 2,422,248 Accumulated deficit $ (3,073,485 ) $ (2,165,987 ) $ (5,239,472 ) Total stockholders' deficit $ (933,576 ) $ (1,846,660 ) $ (2,780,236 ) $ 176,672 $ $ 176,672 |
SUMMARY OF SIGNIFICANT ACCOUN26
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Property and equipment (Details) - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 |
Summary Of Significant Accounting Policies - Property And Equipment Details | ||
Furniture and Equipment | $ 29,614 | $ 26,937 |
Manufacturing equipment | 7,396 | 7,396 |
Software | 15,830 | 15,830 |
Leasehold improvements | 34,849 | 33,503 |
Accumulated depreciation | (34,744) | (13,026) |
Balance | $ 52,945 | $ 70,640 |
SUMMARY OF SIGNIFICANT ACCOUN27
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Shipping and handling billing costs (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Freight costs billed to customers | ||||
Shipping and handling costs | $ 18,842 | $ 12,389 | $ 53,636 | $ 49,555 |
Company's shipping costs | ||||
Shipping and handling costs | $ 17,148 | $ 19,065 | $ 45,954 | $ 54,570 |
SUMMARY OF SIGNIFICANT ACCOUN28
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Research and development costs (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Summary Of Significant Accounting Policies - Research And Development Costs Details | ||||
Research and development costs | $ 5,529 | $ 9,267 | $ 22,667 | $ 25,339 |
SUMMARY OF SIGNIFICANT ACCOUN29
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Advertising costs (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Summary Of Significant Accounting Policies - Advertising Costs Details | ||||
Advertising costs | $ 92,010 | $ 59,253 | $ 256,247 | $ 119,885 |
SUMMARY OF SIGNIFICANT ACCOUN30
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | |
Inventory comprised of raw materials | $ 49,336 | $ 48,761 | |
Depreciation expense | $ 21,718 | $ 4,072 | |
Potentially dilutive securities not included in calculation of diluted loss per share, options to purchase shares of common stock | 14,287,500 | 14,287,500 | |
Manufacturing equipment | |||
Useful life of property and equipment | 10 years | ||
Office equipment and furniture | |||
Useful life of property and equipment | 7 years | ||
Computer hardware and software | |||
Useful life of property and equipment | 3 years |
SALES CONCENTRATION AND CONCE31
SALES CONCENTRATION AND CONCENTRATION OF CREDIT RISK - Significant purchases from suppliers (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Supplier A | ||
Percent of purchases | 30.70% | 21.70% |
Accounts payable balance | $ 3,925 | |
Supplier B | ||
Percent of purchases | 19.40% | 18.10% |
Accounts payable balance | $ 15,491 | |
Supplier C | ||
Percent of purchases | 18.30% | 16.20% |
Accounts payable balance |
CONVERTIBLE NOTES PAYABLE - Adv
CONVERTIBLE NOTES PAYABLE - Advances received, OID charged and deferred financing costs incurred to CVP (Details) - USD ($) | Oct. 20, 2015 | Sep. 30, 2015 | Sep. 21, 2015 | Jul. 17, 2015 | Jun. 22, 2015 | May 20, 2015 | Apr. 23, 2015 | Apr. 14, 2015 | Mar. 18, 2015 | Dec. 31, 2014 | Dec. 19, 2014 | Nov. 17, 2014 | Oct. 15, 2014 | Jun. 11, 2014 | Jun. 06, 2014 |
Funded Amount | $ 10,000 | ||||||||||||||
Company Note | |||||||||||||||
Funded Amount | $ 25,000 | $ 45,000 | $ 20,000 | $ 30,000 | $ 25,500 | $ 22,500 | $ 65,000 | $ 35,000 | $ 62,500 | $ 62,500 | $ 500,000 | ||||
OID | 2,500 | 4,500 | 2,000 | 3,000 | 2,550 | 2,250 | 6,500 | 3,500 | 6,250 | 6,250 | $ 150,000 | ||||
Other | 7,500 | 7,500 | |||||||||||||
Convertible Note Issued | $ 35,000 | $ 49,500 | $ 22,000 | $ 33,000 | $ 28,050 | $ 24,750 | $ 71,500 | $ 38,500 | $ 68,750 | $ 68,750 | $ 557,500 | ||||
Company Note - Balances | |||||||||||||||
Funded Amount | $ 893,000 | $ 660,000 | |||||||||||||
Other | 15,000 | 7,500 | |||||||||||||
Convertible Note Issued | $ 997,300 | $ 733,500 |
CONVERTIBLE NOTES PAYABLE - Sum
CONVERTIBLE NOTES PAYABLE - Summary of derivative liability balance (Details) - Derivative liability balance | 9 Months Ended |
Sep. 30, 2015USD ($) | |
Beginning Balance | $ 581,373 |
Initial Derivative Liability | 1,768,997 |
Fair Value Change | (60,604) |
Reduction for conversions | (246,448) |
Ending Balance | $ 2,043,318 |
CONVERTIBLE NOTES PAYABLE - Ass
CONVERTIBLE NOTES PAYABLE - Assumptions used for portion of derivatives liabilities related to outstanding warrants (Details) - USD ($) | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2015 | Dec. 31, 2015 | Dec. 31, 2014 | |
Convertible Notes Payable - Assumptions Used For Portion Of Derivatives Liabilities Related To Outstanding Warrants Details | |||
Expected dividends | 0.00% | 0.00% | |
Expected volatility | 189.00% | ||
Expected volatility, minimum | 133.00% | ||
Expected volatility, maximum | 166.00% | ||
Expected term | 4 years 6 months | ||
Expected term, minimum | 1 year 1 month 6 days | ||
Expected term, maximum | 3 years 8 months 12 days | ||
Risk free interest | 1.29% | ||
Risk free interest, minimum | 0.33% | ||
Risk free interest, maximum | 1.15% | ||
Derivative liability | $ 2,043,318 | $ 581,373 |
CONVERTIBLE NOTES PAYABLE - S35
CONVERTIBLE NOTES PAYABLE - Summary of convertible notes payable balance (Details) - Convertible note payable balance - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2015 | Dec. 31, 2014 | |
Beginning balance | $ 733,500 | |
Convertible notes - newly issued | 263,800 | 799,500 |
Conversion of convertible notes | (66,000) | |
Unamortized discount | (409,685) | (376,022) |
Total | $ 587,615 | $ 357,478 |
CONVERTIBLE NOTES PAYABLE - May
CONVERTIBLE NOTES PAYABLE - May and June 2014 Notes (Details Narrative) - May and June 2014 Notes - USD ($) | 1 Months Ended | 2 Months Ended |
Dec. 31, 2014 | Jun. 30, 2014 | |
Convertible promissory note issued, total of three notes, each in the amount of $22,000 | $ 66,000 | |
Aggregate proceeds received | $ 60,000 | |
Interest rate on convertible notes | 10.00% | |
Original issue discount percentage | 9.10% | |
Conversion price of notes | $ .20 | |
Conversion of principal on notes | $ 66,000 | |
Conversion of accrued and unpaid interest on notes | $ 4,177 | |
Conversion of notes, shares to be issued, shares | 352,242 |
CONVERTIBLE NOTES PAYABLE - CVP
CONVERTIBLE NOTES PAYABLE - CVP Notes (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | |||||||||||||||
Sep. 30, 2015 | Sep. 30, 2015 | Sep. 30, 2014 | Sep. 21, 2015 | Jul. 17, 2015 | Jul. 16, 2015 | Jun. 22, 2015 | May 20, 2015 | Apr. 23, 2015 | Apr. 14, 2015 | Mar. 18, 2015 | Dec. 31, 2014 | Dec. 19, 2014 | Nov. 17, 2014 | Oct. 15, 2014 | Jun. 11, 2014 | Jun. 06, 2014 | |
Carrying amount of Company Note, net | $ 587,615 | $ 587,615 | $ 357,478 | ||||||||||||||
Unamortized discounts on Company Note | 409,685 | 409,685 | 376,022 | ||||||||||||||
Company Note | |||||||||||||||||
Company Note principal amount | $ 1,657,500 | ||||||||||||||||
Legal expenses included in principal amount of Company Note | 7,500 | ||||||||||||||||
OID | $ 2,500 | $ 4,500 | $ 2,000 | $ 3,000 | $ 2,550 | $ 2,250 | $ 6,500 | $ 3,500 | $ 6,250 | $ 6,250 | 150,000 | ||||||
Sale price of Company Note | $ 1,500,000 | ||||||||||||||||
Cash paid for note on Closing Date | $ 500,000 | ||||||||||||||||
Aggregate value of two secured promissory notes and two promissory notes issued in sale of Company Note, $250,000 each | $ 1,000,000 | ||||||||||||||||
Interest rate of Company Note | 10.00% | ||||||||||||||||
Amortization included in interest expense | 182,368 | 463,637 | |||||||||||||||
Accrued and unpaid interest converted by CVP, amount | $ 50,000 | ||||||||||||||||
Accrued and unpaid interest converted by CVP, shares | 253,846 | ||||||||||||||||
Reduction in derivative liabilities for fair value of conversion, reclassified to additional paid in capital | 70,658 | ||||||||||||||||
Company Note - Balances | |||||||||||||||||
Balance of Investor Notes issued by CVP not recorded | 607,000 | 607,000 | |||||||||||||||
Carrying amount of Company Note, net | 587,615 | 587,615 | 357,478 | ||||||||||||||
Unamortized discounts on Company Note | $ 409,685 | $ 409,685 | 376,022 | ||||||||||||||
Company Note - Conversion Details | |||||||||||||||||
Conversion price of Company Note | $ 0.1976 | $ 0.1976 | |||||||||||||||
Amount of CVP Note needed to be funded for conversion, amount | $ 1,500,000 | $ 1,500,000 | |||||||||||||||
Amount of CVP Note needed to be funded for conversion, shares issued | 8,287,500 | 8,287,500 | |||||||||||||||
Initial debt discount | $ 84,500 | $ 233,500 | |||||||||||||||
Initial derivative liability expense | 1,241,340 | ||||||||||||||||
Initial derivative liability | 1,474,800 | 1,474,800 | |||||||||||||||
Company Note - Additional Funding | |||||||||||||||||
New funding received | 70,000 | 163,000 | |||||||||||||||
Note discount recorded | 179,300 | ||||||||||||||||
Increase of Company Note | 84,500 | ||||||||||||||||
OID included | 7,000 | 16,300 | |||||||||||||||
Legal costs included | 7,500 | ||||||||||||||||
Warrants issued to CVP | |||||||||||||||||
Warrant issued to CVP, number of shares purchaseable value | $ 420,000 | $ 420,000 | |||||||||||||||
Warrant issued to CVP, estimated number of shares purchaseable current number | 6,000,000 | 6,000,000 | |||||||||||||||
Warrant issued to CVP, estimated number of shares purchaseable | 1,636,362 | 1,636,362 | |||||||||||||||
Warrant issued to CVP, exercise price | $ 0.20 | $ 0.20 | |||||||||||||||
Warrant issued to CVP, derivative liability | $ 577,100 | $ 577,100 | |||||||||||||||
Warrant issued to CVP, initial derivative liability expense | 77,100 | ||||||||||||||||
Warrant issued to CVP, discount on Note | 500,000 | 500,000 | |||||||||||||||
Warrant issued to CVP, revaluation | $ 605,238 | 605,238 | $ 581,373 | ||||||||||||||
Warrant issued to CVP, credit to derivative liability expense | $ 23,865 | $ 4,273 |
CONVERTIBLE NOTES PAYABLE - For
CONVERTIBLE NOTES PAYABLE - Forebearance and Standstill Agreement, August 2015 Notes and September 2015 Note(Details Narrative) - USD ($) | Sep. 30, 2015 | Aug. 31, 2015 | Dec. 09, 2015 | Mar. 08, 2016 |
CVP conversion price on Modified Conversion Period | $ 0.40 | |||
Installment Amount due on next three Installment Dates | $ 50,000 | |||
Repurchase price of Note, Warrant and other transaction documents | 978,500 | |||
Amount paid to Company by CVP, which will constitute a partial payment of Investor Notes | 5,000 | |||
Amount paid to CVP by Company, added and included as part of outstanding balance of Note | $ 7,500 | |||
August 2015 Notes (a) | ||||
Convertible promissory notes issued | $ 86,250 | |||
Proceeds received from issuance | 75,000 | |||
August 2015 Notes (b) | ||||
Convertible promissory notes issued | 11,500 | |||
Proceeds received from issuance | 10,000 | |||
August 2015 Notes (c) | ||||
Convertible promissory notes issued | 46,000 | |||
Proceeds received from issuance | $ 40,000 | |||
August 2015 Notes | ||||
Note receivable recorded | $ 20,000 | |||
Interest rate | 10.00% | |||
OID contained | 10.00% | |||
OID recorded as a discount to the Note | $ 18,750 | |||
Conversion price | $ 0.20 | |||
Restricted common stock issued | 718,750 | |||
Initial derivative liability | $ 168,930 | |||
Amount recorded as discount to Notes | $ 125,000 | |||
Amount recorded as expense to Notes | 43,930 | |||
Amount of derivative liability reclassified to additional paid in capital upon conversion of Notes | $ 168,930 | |||
September 2015 Note | ||||
Convertible promissory notes issued | 5,750 | |||
Proceeds received from issuance | $ 5,750 | |||
Interest rate | 10.00% | |||
OID contained | 10.00% | |||
Conversion price | $ 0.20 | |||
Restricted common stock issued | 28,750 | |||
Initial derivative liability | $ 6,877 | |||
Amount recorded as discount to Notes | 5,750 | |||
Amount recorded as expense to Notes | 1,127 | |||
Amount of derivative liability reclassified to additional paid in capital upon conversion of Notes | $ 6,877 |
NOTE PAYABLE, STOCKHOLDER - Act
NOTE PAYABLE, STOCKHOLDER - Activity on note payable, stockholder (Details) - Note Payable, Stockholder | 9 Months Ended |
Sep. 30, 2015USD ($) | |
Beginning balance | $ 6,168 |
Advances | 6,314 |
Ending balance | $ 12,482 |
NOTE PAYABLE, STOCKHOLDER (Deta
NOTE PAYABLE, STOCKHOLDER (Details Narrative) - Note Payable, Stockholder - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Interest rate on note payable | 15.00% | 15.00% | 15.00% | 15.00% |
Interest expense | $ 245 | $ 229 | $ 703 | $ 669 |
RELATED PARTY TRANSACTIONS - Of
RELATED PARTY TRANSACTIONS - Officers' compensation (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
CEO | ||||
Officers' compensation | $ 24,000 | $ 14,500 | $ 60,000 | $ 38,500 |
COO | ||||
Officers' compensation | 24,000 | 14,500 | 60,000 | 38,500 |
CFO | ||||
Officers' compensation | 24,000 | 14,500 | 60,000 | 24,500 |
Total | ||||
Officers' compensation | $ 72,000 | $ 43,500 | $ 180,000 | $ 101,500 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) | May 14, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Nov. 15, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | May 11, 2015 | Dec. 31, 2014 |
Monthly compensation to Venture Equity | $ 5,000 | |||||||
Shares issued to Venture Equity | 1,500,000 | |||||||
Shares vested | 750,000 | 750,000 | ||||||
Expense recorded for vested shares, included in salaries and management fees | $ 75,000 | $ 75,000 | ||||||
Vested shares, price per share | $ 0.10 | |||||||
Initial value of vested shares recorded as deferred equity compensation | $ 75,000 | |||||||
Amortization expense included in salaries and management fees | 37,500 | 56,250 | ||||||
Monthly salary of each individual officer, original amount | $ 5,000 | |||||||
Monthly salary of each individual officer, increased amount | $ 8,000 | |||||||
Amounts owed to officers included in accounts payable and accrued liabilities, stockholders | $ 49,557 | $ 49,557 | $ 11,500 | |||||
Related party interest expense | 245 | $ 228 | 703 | $ 669 | ||||
CEO | ||||||||
Amounts owed to officers for accrued and unpaid fees | 12,557 | 12,557 | 4,500 | |||||
COO | ||||||||
Amounts owed to officers for accrued and unpaid fees | 20,750 | 20,750 | 4,500 | |||||
Accrued interest owed to COO, included in accounts payable and accrued liabilities, stockholders | 3,355 | 3,355 | 2,652 | |||||
CFO | ||||||||
Amounts owed to officers for accrued and unpaid fees | $ 16,250 | $ 16,250 | $ 2,500 |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - Rent expense (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Commitments And Contingencies - Rent Expense Details | ||||
Rent allocated to cost of goods sold | $ 5,616 | $ 4,653 | $ 16,902 | $ 9,904 |
Rent allocated to SG&A | 8,502 | 6,980 | 25,431 | 14,855 |
Total rent expense | $ 14,118 | $ 11,633 | $ 42,333 | $ 24,759 |
COMMITMENTS AND CONTINGENCIES44
COMMITMENTS AND CONTINGENCIES (Details Narrative) | Aug. 03, 2015shares | May 15, 2015shares | Apr. 15, 2015shares | Jul. 30, 2015$ / sharesshares | Sep. 30, 2014USD ($) | Sep. 30, 2015USD ($)$ / sharesshares | Sep. 30, 2015USD ($)$ / sharesshares | Sep. 30, 2016USD ($) | Sep. 30, 2015USD ($) | Jul. 31, 2014USD ($) | Jul. 31, 2012ft² | Jan. 01, 2011ft² |
Office and manufacturing space leased, area | ft² | 4,427 | 1,850 | ||||||||||
Office space lease term length | 26 months | |||||||||||
Monthly rent | $ 0 | $ 5,091 | $ 4,870 | $ 2,138 | ||||||||
CAM charges | $ 354 | |||||||||||
Hayden IR Consulting Agreement (a) | ||||||||||||
Common stock issued for consulting services | shares | 12,500 | 12,500 | ||||||||||
Value per share | $ / shares | $ 0.40 | |||||||||||
Stock compensation expense | $ 10,000 | |||||||||||
Hayden IR Consulting Agreement (b) | ||||||||||||
Common stock issued for consulting services | shares | 100,000 | |||||||||||
Value per share | $ / shares | $ 0.20 | $ 0.20 | ||||||||||
Stock compensation expense | $ 5,000 | $ 5,000 | ||||||||||
Hayden IR Consulting Agreement (c) | ||||||||||||
Common stock issued for consulting services | shares | 20,000 | 20,000 | ||||||||||
Stock compensation expense | $ 8,000 | $ 8,000 | ||||||||||
Additional monthly compensation to Hayden, total | $ 6,000 | |||||||||||
Additional monthly compensation to Hayden, share option restricted common stock issuance | shares | 10,000 | |||||||||||
Additional monthly compensation to Hayden, share option cash amount | $ 2,000 | |||||||||||
BMA Securities, LLC Consulting Agreement | ||||||||||||
Common stock issued for consulting services | shares | 350,000 | |||||||||||
Value per share | $ / shares | $ .40 | |||||||||||
Stock compensation expense | $ 140,000 | $ 140,000 |
STOCKHOLDERS' EQUITY (Details N
STOCKHOLDERS' EQUITY (Details Narrative) - USD ($) | Aug. 28, 2015 | Aug. 26, 2015 | Aug. 04, 2015 | Jul. 24, 2015 | Jul. 21, 2015 | May 15, 2015 | Apr. 02, 2015 | Apr. 30, 2015 | Sep. 30, 2015 | Sep. 30, 2015 | Sep. 30, 2014 | Oct. 27, 2015 | Jul. 16, 2015 | Dec. 31, 2014 | Jun. 03, 2014 |
COMMON STOCK AND COMMON STOCK TO BE ISSUED | |||||||||||||||
Common stock sold, shares | 502,000 | ||||||||||||||
Common stock sold, amount | $ 200,800 | $ 500 | |||||||||||||
Accrued and unpaid interest converted, amount | $ 50,000 | ||||||||||||||
Accrued and unpaid interest converted, shares | 253,846 | ||||||||||||||
COMMON STOCK TO BE ISSUED | |||||||||||||||
Shares of common stock to be issued | 95,000 | 95,000 | 352,242 | ||||||||||||
CLASS A PREFERRED STOCK | |||||||||||||||
Value of issued Class A Preferred Stock | $ 428,000 | ||||||||||||||
EQUITY COMPENSATION PLAN | |||||||||||||||
Plan term | 10 years | ||||||||||||||
Maximum aggregate number of shares that may be issued under Plan through awards | 5,000,000 | 5,000,000 | |||||||||||||
Consultant (a) | |||||||||||||||
COMMON STOCK AND COMMON STOCK TO BE ISSUED | |||||||||||||||
Common stock issued for consulting services | 75,000 | ||||||||||||||
Shares issued, price per share | $ 0.40 | ||||||||||||||
Value of stock issued, included in stock compensation expense | $ 30,000 | ||||||||||||||
Hayden IR Consulting Agreement | |||||||||||||||
COMMON STOCK AND COMMON STOCK TO BE ISSUED | |||||||||||||||
Common stock issued for consulting services | 100,000 | 12,500 | 12,500 | ||||||||||||
Shares issued, price per share | $ .40 | ||||||||||||||
Value of stock issued, included in stock compensation expense | $ 20,000 | 40,000 | |||||||||||||
BMA consulting | |||||||||||||||
COMMON STOCK AND COMMON STOCK TO BE ISSUED | |||||||||||||||
Common stock issued for consulting services | 350,000 | ||||||||||||||
Shares issued, price per share | $ .40 | ||||||||||||||
Issued as part of Employee Compensation | |||||||||||||||
COMMON STOCK AND COMMON STOCK TO BE ISSUED | |||||||||||||||
Shares of common stock issued | 17,500 | ||||||||||||||
Value of stock issued, included in stock compensation expense | 7,000 | 7,000 | |||||||||||||
Consultant (b) | |||||||||||||||
COMMON STOCK AND COMMON STOCK TO BE ISSUED | |||||||||||||||
Common stock issued for consulting services | 75,000 | ||||||||||||||
Shares issued, price per share | $ .40 | ||||||||||||||
Value of stock issued, included in stock compensation expense | 15,000 | 15,000 | |||||||||||||
Common stock to employees | |||||||||||||||
COMMON STOCK AND COMMON STOCK TO BE ISSUED | |||||||||||||||
Shares issued, price per share | $ .40 | ||||||||||||||
Value of stock issued, included in stock compensation expense | 529,400 | 529,400 | |||||||||||||
Shares of restricted common stock approved to be granted to employees, total | 1,323,500 | ||||||||||||||
Shares of restricted common stock approved to be granted to employees, CFO portion | 750,000 | ||||||||||||||
Common stock approved to be issued to two employees as part of compensation, aggregate value | $ 7,000 | ||||||||||||||
Common stock approved to be issued to two employees as part of compensation, amended value | $ 6,000 | ||||||||||||||
Conversion of August 2015 Notes | |||||||||||||||
COMMON STOCK AND COMMON STOCK TO BE ISSUED | |||||||||||||||
Shares issued, price per share | $ 0.20 | $ 0.20 | $ 0.20 | ||||||||||||
Restrcited shares issued upon conversion from holders of August 2015 Notes | 230,000 | 57,500 | 431,250 | ||||||||||||
Common shares to be issued - conversion of September 2015 Note | |||||||||||||||
COMMON STOCK TO BE ISSUED | |||||||||||||||
Shares of common stock to be issued | 28,750 | ||||||||||||||
Common shares to be issued - Hayden | |||||||||||||||
COMMON STOCK TO BE ISSUED | |||||||||||||||
Shares of common stock to be issued | 20,000 | ||||||||||||||
Common shares to be issued - employee (a) | |||||||||||||||
COMMON STOCK TO BE ISSUED | |||||||||||||||
Shares of common stock to be issued | 18,750 | ||||||||||||||
Common shares to be issued - employee (b) | |||||||||||||||
COMMON STOCK TO BE ISSUED | |||||||||||||||
Shares of common stock to be issued | 27,500 | ||||||||||||||
CEO | |||||||||||||||
CLASS A PREFERRED STOCK | |||||||||||||||
Class A Preferred Stock issued to officers | 50 | ||||||||||||||
COO | |||||||||||||||
CLASS A PREFERRED STOCK | |||||||||||||||
Class A Preferred Stock issued to officers | 50 | ||||||||||||||
Warrants issued to CVP | |||||||||||||||
WARRANTS | |||||||||||||||
Warrant issued to CVP, number of shares purchaseable value | $ 420,000 | $ 420,000 | |||||||||||||
Warrant issued to CVP, estimated number of shares purchaseable current number | 6,000,000 | 6,000,000 | |||||||||||||
Warrant issued to CVP, estimated number of shares purchaseable | 1,636,362 | 1,636,362 | |||||||||||||
Warrant issued to CVP, exercise price | $ 0.20 | $ 0.20 |
GOING CONCERN (Details Narrativ
GOING CONCERN (Details Narrative) - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Accumulated deficit | $ (5,239,472) | $ (1,717,505) |
Working capital deficit | $ (2,265,686) |
SUBSEQUENT EVENTS (Details Narr
SUBSEQUENT EVENTS (Details Narrative) - USD ($) | Oct. 27, 2015 | Oct. 20, 2015 |
Certified shares of common stock that were recoreded as shares to be issued on balance sheet | 95,000 | |
Amounts received related to note receivable recorded in conjunction with August 2015 Notes | $ 10,000 | |
Common stock issued in settlement of principal and interest, shares | 57,500 | |
Common stock issued in settlement of principal and interest, interest | $ 11,500 | |
Hayden | ||
Common stock issued for consulting services | 10,000 |
RESTATED FINANCIAL STATEMENTS -
RESTATED FINANCIAL STATEMENTS - Restated financial statements (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | |
Salaries and Management fees | $ 699,308 | $ 176,307 | $ 924,962 | $ 767,663 | |
Professional fees | 218,643 | 14,231 | 317,818 | 182,517 | |
Total operating expenses | 1,123,209 | 333,491 | 1,742,274 | 1,215,883 | |
Loss from operations | (1,067,370) | (300,539) | (1,571,958) | (1,088,061) | |
Other income (expenses): | |||||
Interest expense | (353,058) | (676,536) | |||
Derivative liability expense | (1,300,908) | (1,274,144) | |||
Total other expense, net | (1,653,581) | (1,950,010) | |||
Net loss | $ (2,720,951) | $ (390,092) | $ (3,521,968) | $ (1,198,871) | |
Basic and diluted loss per share | $ (0.08) | $ (0.01) | $ (.10) | $ (0.04) | |
Weighted average number of common shares outstanding Basic and diluted | 36,094,306 | 33,000,000 | 34,631,287 | 31,533,088 | |
Current Liabilities: | |||||
Derivative liabilities | $ 2,043,318 | $ 2,043,318 | $ 581,373 | ||
Total current liabilities | 2,369,293 | 2,369,293 | 713,896 | ||
Convertible notes payable, net of current portion, net of discount | 587,615 | 587,615 | 357,478 | ||
Total liabilities | 2,956,908 | 2,956,908 | 1,071,373 | ||
Stockholders' Deficit: | |||||
Deferred stock compensation | |||||
Additional paid-in capital | 2,422,248 | 2,422,248 | 831,890 | ||
Accumulated deficit | (5,239,472) | (5,239,472) | (1,717,505) | ||
Total stockholders' deficit | (2,780,236) | (2,780,236) | (852,163) | ||
Total liabilities and stockholders' deficit | 176,672 | 176,672 | $ 219,211 | ||
As reported | |||||
Salaries and Management fees | 434,608 | 660,262 | |||
Professional fees | 86,835 | 186,010 | |||
Total operating expenses | 726,701 | 1,345,766 | |||
Loss from operations | (670,862) | (1,175,450) | |||
Other income (expenses): | |||||
Interest expense | (84,475) | (343,088) | |||
Derivative liability expense | |||||
Total other expense, net | (84,090) | (342,418) | |||
Net loss | $ (754,952) | $ (1,517,868) | |||
Basic and diluted loss per share | $ (0.02) | $ (0.04) | |||
Weighted average number of common shares outstanding Basic and diluted | 36,094,306 | 34,631,287 | |||
Current Liabilities: | |||||
Derivative liabilities | |||||
Total current liabilities | 325,974 | 325,974 | |||
Convertible notes payable, net of current portion, net of discount | 784,274 | 784,274 | |||
Total liabilities | 1,110,248 | 1,110,248 | |||
Stockholders' Deficit: | |||||
Deferred stock compensation | (55,833) | (55,833) | |||
Additional paid-in capital | 2,158,754 | 2,158,754 | |||
Accumulated deficit | (3,073,485) | (3,073,485) | |||
Total stockholders' deficit | (933,576) | (933,576) | |||
Total liabilities and stockholders' deficit | 176,672 | 176,672 | |||
Adjustments | |||||
Salaries and Management fees | 264,700 | 264,700 | |||
Professional fees | 131,808 | 131,808 | |||
Total operating expenses | 396,508 | 396,508 | |||
Loss from operations | (396,508) | (369,508) | |||
Other income (expenses): | |||||
Interest expense | (268,583) | (333,448) | |||
Derivative liability expense | (1,300,908) | (1,274,144) | |||
Total other expense, net | (1,569,491) | (1,607,592) | |||
Net loss | $ (1,965,999) | $ (2,004,100) | |||
Basic and diluted loss per share | $ (0.06) | $ (0.06) | |||
Weighted average number of common shares outstanding Basic and diluted | 36,094,306 | 34,631,287 | |||
Current Liabilities: | |||||
Derivative liabilities | $ 2,043,318 | $ 2,043,318 | |||
Total current liabilities | 2,043,318 | 2,043,318 | |||
Convertible notes payable, net of current portion, net of discount | (196,659) | (196,659) | |||
Total liabilities | 1,846,660 | 1,846,660 | |||
Stockholders' Deficit: | |||||
Deferred stock compensation | 55,833 | 55,833 | |||
Additional paid-in capital | 263,494 | 263,494 | |||
Accumulated deficit | (2,165,987) | (2,165,987) | |||
Total stockholders' deficit | (1,846,660) | (1,846,660) | |||
Total liabilities and stockholders' deficit |