Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2018 | Aug. 14, 2018 | |
Document And Entity Information | ||
Entity Registrant Name | OZOP SURGICAL CORP. | |
Entity Central Index Key | 1,679,817 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Is Entity a Well-known Seasoned Issuer? | No | |
Is Entity a Voluntary Filer? | No | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 26,297,500 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2,018 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheet (Unaudited) - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 |
Current Assets | ||
Cash | $ 275,412 | $ 110,792 |
Prepaid expenses | 55,082 | 18,171 |
Accounts receivable | 52,206 | |
Inventory | 245,535 | |
Total Current Assets | 628,235 | 128,963 |
Office equipment, net | 5,829 | 1,323 |
Patents and trademarks, net | 137,283 | 141,695 |
License Rights | 489,151 | |
TOTAL ASSETS | 1,260,498 | 271,981 |
Current Liabilities | ||
Accounts payable and accrued expenses | 451,477 | 141,931 |
Accounts payable and accrued expenses, related parties | 404,379 | 220,012 |
Convertible notes payable, net of discounts | 213,018 | 735,500 |
Notes Payable | 662,805 | 430,000 |
License fee payable | 250,000 | |
Derivative liabilities | 659,895 | |
Total Current Liabilities | 2,641,574 | 1,527,443 |
Stockholders' Deficit | ||
Preferred stock (10,000,000 shares authorized, par value $0.001, no shares issued and outstanding) | ||
Common stock (290,000,000 shares authorized par value $0.001 26,297,500 and 13,000,000 shares issued and outstanding June 30, 2018 and December 31, 2017, respectively) | 26,298 | 13,000 |
Common stock to be issued (1,180,768 shares issuable June 30, 2018) | 1,181 | |
Additional paid in capital | 1,024,633 | 291,155 |
Accumulated Deficit | (2,429,023) | (1,562,476) |
Stock subscription receivable | (7,600) | |
Accumulated comprehensive income | 3,435 | 2,859 |
Total Stockholders' Deficit | (1,381,076) | (1,255,462) |
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | $ 1,260,498 | $ 271,981 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheet (Parenthetical) - $ / shares | Jun. 30, 2018 | Dec. 31, 2017 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | ||
Preferred stock, shares outstanding | ||
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 290,000,000 | 290,000,000 |
Common stock, shares issued | 26,297,500 | 13,000,000 |
Common stock, shares outstanding | 26,297,500 | 13,000,000 |
Common stock to be issued, shares | 1,180,768 |
Condensed Consolidated Statemen
Condensed Consolidated Statement of Comprehensive Loss (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Income Statement [Abstract] | ||||
Revenue | $ 105,764 | $ 43,893 | $ 117,690 | $ 56,771 |
Cost of Goods | 63,628 | 29,145 | 68,828 | 38,870 |
Gross Profit | 42,136 | 14,748 | 48,862 | 17,901 |
Operating expenses: | ||||
Research and development | 41,856 | 10,565 | 84,237 | |
General and administrative | 271,312 | 186,894 | 498,229 | 467,995 |
Total operating expenses | 271,312 | 228,750 | 508,794 | 552,232 |
Operating loss | (229,176) | (214,002) | (459,932) | (534,331) |
Other (income) expenses: | ||||
Interest expense | 933,817 | 8,869 | 962,364 | 13,719 |
Gain on change in fair value of derivatives | (255,469) | (255,469) | ||
Gain on extinguishment of debt | (300,280) | (300,280) | ||
Total Other Expenses (Income) | 378,068 | 8,869 | 406,615 | 13,719 |
Net Loss | (607,244) | (222,871) | (866,547) | (548,050) |
Other comprehensive income (loss): | ||||
Foreign currency translation adjustment | (328) | 20,045 | 576 | 97 |
Comprehensive loss | $ (607,572) | $ (202,826) | $ (865,971) | $ (547,953) |
Loss per share | $ (0.02) | $ (0.02) | $ (0.04) | $ (0.05) |
Weighted average shares outstanding - Basic and dilut | 25,918,389 | 13,000,000 | 22,692,528 | 10,400,000 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) - USD ($) | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Cash flows from operating activities: | ||
Net loss | $ (866,547) | $ (548,050) |
Adjustments to reconcile net loss to net cash used in operations | ||
Non-cash interest expense | 895,962 | |
Amortization and depreciation | 4,847 | 297 |
Gain on fair value change of derivatives | 255,469 | |
Gain on extinguishment of debt | 300,280 | |
Issuance of convertible notes for fees | 9,500 | 1,875 |
Changes in operating assets and liabilities: | ||
Inventory | 16,334 | |
Accounts receivable | (41,511) | |
Prepaid expenses | (6,911) | (56) |
Accounts payable and accrued expenses | 49,612 | (4,414) |
Accounts payable and accrued expenses, related parties | 183,717 | 248,288 |
Net cash used in operating activities | (310,746) | (302,060) |
Cash flows from investing activities: | ||
Cash acquired in acquisitions | 21,580 | |
Purchase of office and computer equipment | (4,941) | (1,944) |
Net cash provided by (used in) investing activities | 16,639 | (1,944) |
Cash flows from financing activities: | ||
Redemption of common shares | (350,000) | |
Proceeds from issuances of convertible notes payable | 400,000 | 50,000 |
Proceeds from issuances of notes payable | 200,000 | 200,000 |
Proceeds from sale of common stock | 250,000 | |
Payments of principal of convertible note payable and notes payable | (41,846) | |
Net cash provided by financing activities | 458,154 | 250,000 |
Effects of exchange rate on cash and cash equivalents | 573 | 96 |
Net increase (decrease) in cash and cash equivalents | 164,620 | (53,908) |
Cash and cash equivalents, Beginning of period | 110,792 | 117,348 |
Cash and cash equivalents, End of period | 275,412 | 63,440 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | 56,323 | 7,619 |
Cash paid for income taxes | ||
Schedule of non-cash Investing or Financing Activity: | ||
Original issue discount included in notes payable | 122,175 | |
Issuance of common stock upon convertible note and accrued interest conversion | 589,176 | |
Issuance of common stock for contribution of intellectual property | $ 150,000 | |
Acquisition of Spinus, LLC | ||
Acquisitions | ||
Issuance of Common stock as consideration | 250,000 | |
Assumed liabilities | 532,289 | |
Accounts receivable | (19,054) | |
Inventory | (253,510) | |
Other Assets | (250,000) | |
Intangible assets | (239,151) | |
Cash acquired | 20,574 | |
Acquisition of Newmarkt | ||
Acquisitions | ||
Issuance of Common stock as consideration | 2,798 | |
Assumed liabilities | 62,464 | |
Paid in capital | (53,990) | |
Inventory | (8,359) | |
Prepaid expenses | (1,907) | |
Intangible assets | ||
Cash acquired | $ 1,006 |
ORGANIZATION
ORGANIZATION | 6 Months Ended |
Jun. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
ORGANIZATION | NOTE 1 - ORGANIZATION Business Ozop Surgical Corp. (“the Company”, “we”, “us” or “our”) was originally incorporated as Newmarkt Corp. on July 17, 2015, under the laws of the State of Nevada, for the purpose of the renting different kind of Segway and bicycles, dual wheels self-balancing electric scooter and related safety equipment. Following the acquisition of OZOP Surgical, Inc. as discussed below, we have been engaged in the business of inventing, designing, developing, manufacturing and globally distributing innovative endoscopic instruments, surgical implants, instrumentation, devices and related technologies, focused on spine, neurological and pain management procedures and specialties. Reverse Merger On April 13, 2018, we entered into and completed a share exchange agreement (the "Share Exchange Agreement") with OZOP Surgical, Inc. (“OZOP”), the shareholders of OZOP (the “OZOP Shareholders”) and Denis Razvodovskij, the holder of 2,000,000 shares of our common stock. Pursuant to the terms of the Share Exchange Agreement, the OZOP Shareholders transferred and exchanged 100% of the capital stock of OZOP in exchange for an aggregate of 25,000,000 newly issued shares of our common stock (the “Share Exchange”). After giving effect to the redemption of 2,000,000 shares of our common stock pursuant to the Redemption Agreement discussed below and the issuance of 25,000,000 shares of our common stock pursuant to the Share Exchange Agreement, we had 25,797,500 shares of common stock issued and outstanding, with the OZOP Shareholders, as a group, owning 96.9% of such shares. Our executive officers and directors, as a group, own 19,900,000 of our shares representing 77.1% of our issued and outstanding shares of common stock. The merger was accounted for as a reverse merger, whereby OZOP was considered the accounting acquirer and became a wholly-owned subsidiary of the Company. In accordance with the accounting treatment for a “reverse merger” or a “reverse acquisition,” the Company’s historical financial statements prior to the reverse merger will be replaced with the historical financial statements of OZOP prior to the reverse merger, in all future filings with the U.S. Securities and Exchange Commission (the “SEC”). In connection with the acquisition of OZOP, we purchased and redeemed 2,000,000 shares of our common stock from Mr. Razvodovskij for a total purchase price of $350,000 pursuant to a Share Redemption Agreement (the “Redemption Agreement”). Pursuant to the terms of the Share Exchange Agreement, effective April 13, 2018, Mr. Razvodovskij resigned as the Company's Chief Executive Officer, Chief Financial Officer, Secretary, and sole director, and Michael Chermak, Salman J. Chaudhry and Eric Siu were named as directors of the Company. On May 8, 2018, we amended our Articles of Incorporation (the “Amendment”) to change our name from Newmarkt Corp. to Ozop Surgical Corp. in reflect name service offering Amendment also increased which value have value The shall issuable in may determine time time. OZOP OZOP was originally incorporated in Switzerland on November 28, 1998 under the name Perma Consultants Holding AG (“Perma”). On July 19, 2016, Mr. Eric Siu (“Siu”), one of our directors purchased 100% of the outstanding capital stock of Perma and changed the name from Perma to Ozop Surgical AG (“Ozop AG”). On February 1, 2018, Ozop AG was re-domiciled as a Delaware corporation and changed its name to Ozop Surgical, Inc. On July 28, 2016, Ozop formed as the sole member, Ozop Surgical, LLC (“Ozop LLC”), a Wyoming limited liability company. On October 28, 2016, Ozop acquired 100% of Ozop Surgical Limited (“Ozop HK”), from Siu, the sole shareholder of Ozop HK. Ozop HK, a private limited Company incorporated in Hong Kong. On February 16, 2018, the Company acquired the 100% membership interest (the “Membership Interest”) in Spinus, LLC, a Texas limited liability company (“Spinus ” The following table summarizes the preliminary value of the consideration issued and the preliminary purchase price allocation of the fair value of assets acquired and liabilities assumed in the acquisition: Purchase Price Allocation Fair value of consideration issued $ 250,000 Liabilities assumed 532,289 Total purchase consideration $ 782,289 Assets acquired $ 543,138 Intellectual Property/Technology 239,151 $ 782,289 The total purchase price of $782,289 has been allocated on a preliminary basis to the tangible and intangible assets acquired and liabilities assumed based on preliminary estimated fair values as of the completion of the Acquisition. These allocations reflect various preliminary estimates that are currently available and are subject to change upon the valuation being finalized within the measurement period. The final fair value of Spinus’s identifiable intangible assets will be determined primarily using the income approach which requires an estimate or forecast of all the expected future cash flows, either through the use of the relief-from-royalty method or the multi-period excess earnings method. The Company will record amortization expense assuming a straight-line basis over the expected life of the finite lived intangible assets, which approximates expected future cash flows. Goodwill, if any, represents the amount by which the estimated consideration transferred exceeds the historical costs of the assets the Company acquired and the liabilities the Company assumed. The Company will not amortize the goodwill, but will instead test the goodwill for impairment at least annually and whenever events or circumstances have occurred that may indicate a possible impairment. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING PRONOUNCEMENTS | 6 Months Ended |
Jun. 30, 2018 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING PRONOUNCEMENTS | NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING PRONOUNCEMENTS Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial statements and with the instructions to Form 10-Q and Article 8 of Regulation S-X of the SEC. Accordingly, they do not contain all information and footnotes required by accounting principles generally accepted in the United States of America for annual financial statements. In the opinion of the Company’s management, the accompanying unaudited condensed consolidated financial statements contain all the adjustments necessary (consisting only of normal recurring accruals) to present the financial position of the Company as of June 30, 2018, and the results of operations and cash flows for the periods presented. The results of operations for the three and six months ended June 30, 2018, are not necessarily indicative of the operating results for the full fiscal year or any future period. These unaudited condensed consolidated financial statements should be read in conjunction with the financial statements and related notes thereto included in the Company’s Current Report on Form 8-K/A filed on June 29, 2018. The unaudited condensed consolidated financial statements include the accounts of the Company and Ozop and its’ wholly owned subsidiaries Ozop LLC, Ozop HK and Spinus. Also included in the consolidation is Ozop Medical AG, a company registered in Munich, Germany (“Ozop Medical”). Officers owning approximately 86% of our common stock, own 100% of Ozop Medical. All intercompany accounts and transactions have been eliminated in consolidation. Emerging Growth Companies The Company qualifies as an “emerging growth company” under the 2012 JOBS Act. Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. As an emerging growth company, the Company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. The Company has elected to take advantage of the benefits of this extended transition period. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reported period. Actual results could differ from those estimates. Cash and Cash Equivalents The Company considers all highly liquid investments with an original term of three months or less to be cash equivalents. These investments are carried at cost, which approximates fair value. Cash and cash equivalent balances may, at certain times, exceed federally insured limits Accounts Receivable The Company records accounts receivable at the time products and services are delivered. An allowance for losses is established through a provision for losses charged to expenses. Receivables are charged against the allowance for losses when management believes collectability is unlikely. The allowance (if any) is an amount that management believes will be adequate to absorb estimated losses on existing receivables, based on evaluation of the collectability of the accounts and prior loss experience. Inventory Inventory is valued at the lower of cost or net realizable value. Cost is determined using the first in first out (FIFO) method. Provision for potentially obsolete or slow-moving inventory is made based on management analysis or inventory levels and future sales forecasts. Property, plant and equipment Property and equipment are stated at cost, and depreciation is provided by use of a straight-line method over the estimated useful lives of the assets. The estimated useful lives of office equipment is 3 years. Office equipment The Company reviews property and equipment for potential impairment whenever events or changes in circumstances indicate that the carrying amounts of assets may not be recoverable. The Company’s property consisted of the following at June 30, 2018 and December 31, 2017. June 30, 2018 December 31, 2017 Office equipment $ 6,885 $ 1,944 Less: Accumulated Depreciation (1,056 ) (621 ) Property and Equipment, Net $ 5,829 $ 1,323 Depreciation expense was $273 and $435 for the three and six months ended June 30, 2018, and $162 and $297 for the three and six months ended June 30, 2017. Patents Intangible assets primarily represent legal costs and filings associated with obtaining patents on the Company’s new discoveries. The Company amortizes these costs over the shorter of the legal life of the patent or its estimated economic life using the straight-line method. The Company tests intangible assets with finite lives upon significant changes in the Company’s business environment and any resulting impairment charges are recorded at that time. When the Company acquires patents from related parties, the patents are recorded at the historical cost when available or the estimated legal and filing costs. Revenue Recognition Effective January 1, 2018, the Company adopted ASC 606 — Revenue from Contracts with Customers. Under ASC 606, the Company recognizes revenue from the commercial sales of products, licensing agreements and contracts to perform pilot studies by applying the following steps: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to each performance obligation in the contract; and (5) recognize revenue when each performance obligation is satisfied. For the comparative periods, revenue has not been adjusted and continues to be reported under ASC 605 — Revenue Recognition. Under ASC 605, revenue is recognized when the following criteria are met: (1) persuasive evidence of an arrangement exists; (2) the performance of service has been rendered to a customer or delivery has occurred; (3) the amount of fee to be paid by a customer is fixed and determinable; and (4) the collectability of the fee is reasonably assured. There was no impact on the Company’s financial statements as a result of adopting Topic 606 for the three and six months ended June 30, 2018 and 2017. Advertising and Marketing Expenses The Company expenses advertising and marketing costs as incurred. For the six months ended June 30, 2018, the Company recorded $35,355 of advertising and marketing expenses, and $954 for the six months ended June 30, 2017. Research and Development Costs and expenses that can be clearly identified as research and development are charged to expense as incurred. For the six months ended June 30, 2018, the Company recorded $10,565 of research and development expenses and $41,856 and $84,237 for the three and six months ended June 30, 2017, respectively. Fair Value of Financial Instruments The Company measures assets and liabilities at fair value based on an expected exit price as defined by the authoritative guidance on fair value measurements, which represents the amount that would be received on the sale of an asset or paid to transfer a liability, as the case may be, in an orderly transaction between market participants. As such, fair value may be based on assumptions that market participants would use in pricing an asset or liability. The authoritative guidance on fair value measurements establishes a consistent framework for measuring fair value on either a recurring or nonrecurring basis whereby inputs, used in valuation techniques, are assigned a hierarchical level. The following are the hierarchical levels of inputs to measure fair value: • Level 1 - Observable inputs that reflect quoted market prices in active markets for identical assets or liabilities. • Level 2 - Inputs reflect quoted prices for identical assets or liabilities in markets that are not active; quoted prices for similar assets or liabilities in active markets; inputs other than quoted prices that are observable for the assets or liabilities; or inputs that are derived principally from or corroborated by observable market data by correlation or other means. • Level 3 - Unobservable inputs reflecting the Company's assumptions incorporated in valuation techniques used to determine fair value. These assumptions are required to be consistent with market participant assumptions that are reasonably available. The carrying amounts of the Company's financial assets and liabilities, such as cash, prepaid expenses, other current assets, accounts payable and accrued expenses, certain notes payable and notes payable - related party, approximate their fair values because of the short maturity of these instruments. The following table represents the Company’s financial instruments that are measured at fair value on a recurring basis as of June 30, 2018, for each fair value hierarchy level: June 30, 2018 Derivative Total Level I $ — $ — Level II $ — $ — Level III $ 659,895 $ 659,895 Income Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance on deferred tax assets is established when management considers it is more likely than not that some portion or all of the deferred tax assets will not be realized. Tax benefits from an uncertain tax position are only recognized if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate resolution. Interest and penalties related to unrecognized tax benefits are recorded as incurred as a component of income tax expense. The Company has not recognized any tax benefits from uncertain tax positions for any of the reporting periods presented. Foreign Currency Translation The accounts of the Company's Hong Kong subsidiary are maintained in Hong Kong dollars and the accounts of the U.S. companies are maintained in USD. The accounts of the Hong Kong subsidiary were translated into USD in accordance with Accounting Standards Codification ("ASC") Topic 830, Foreign Currency Matters. According to Topic 830, all assets and liabilities were translated at the exchange rate on the balance sheet date; stockholders' equity is translated at historical rates and statement of comprehensive income items are translated at the weighted average exchange rate for the period. The resulting translation adjustments are reported under other comprehensive income in accordance with ASC Topic 220, Comprehensive Income. Gains and losses resulting from the foreign currency transactions are reflected in the statements of comprehensive income. Relevant exchange rates used in the preparation of the unaudited condensed financial statements are as follows for the periods ended June 30, 2018 and December 31, 2017 (Hong Kong dollar per one U.S. dollar): June 30, 2018 December 31, 2017 Balance sheet date 0.1275 0.128 Average rate for unaudited condensed statements of operations and comprehensive loss 0.1276 0.1283 Earnings (Loss) Per Share The Company computes net loss per share in accordance with FASB ASC 260, “Earnings per Share.” ASC 260 requires presentation of both basic and diluted earnings per share (EPS) on the face of the statement of operations. Basic EPS is computed by dividing net income (loss) available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period including stock options, using the treasury stock method, and convertible notes and stock warrants, using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options, warrants and conversion of convertible notes. Diluted EPS excludes all dilutive potential common shares if their effect is anti-dilutive. Recent Accounting Pronouncements In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, “Leases (Topic 842)”. Under this guidance, an entity is required to recognize right-of-use assets and lease liabilities on its balance sheet and disclose key information about leasing arrangements. This guidance offers specific accounting guidance for a lessee, a lessor and sale and leaseback transactions. Lessees and lessors are required to disclose qualitative and quantitative information about leasing arrangements to enable a user of the financial statements to assess the amount, timing and uncertainty of cash flows arising from leases. This guidance is effective for annual reporting periods beginning In January 2017, the FASB issued ASU 2017-01, “ Business Combinations (Topic 805) Clarifying the Definition of a Business With the exception of the new standard discussed above, there have been no other recent accounting pronouncements or changes in accounting pronouncements during the six months ended June 30, 2018, that are of significance or potential significance to the Company. |
INTANGIBLE ASSETS
INTANGIBLE ASSETS | 6 Months Ended |
Jun. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
INTANGIBLE ASSETS | NOTE 3 – INTANGIBLE ASSETS Patents as of June 30, 2018 consist of the following: Patents and trademarks $ 138,934 License rights 500,000 Accumulated amortization (12,500 ) Net carrying amount $ 626,434 |
CONVERTIBLE NOTES PAYABLE
CONVERTIBLE NOTES PAYABLE | 6 Months Ended |
Jun. 30, 2018 | |
Debt Disclosure [Abstract] | |
CONVERTIBLE NOTES PAYABLE | NOTE 4 - CONVERTIBLE NOTES PAYABLE During the year ended December 31, 2017, OZOP issued 19 convertible promissory notes (the “2017 Notes”), in amounts of $10,000 to $50,000. OZOP received proceeds of $710,000 in the aggregate. The 2017 Notes mature(d) on their one- year anniversary and bear interest at ten percent (10%). The holders can convert the notes and any unpaid interest due, into shares of the Company’s common stock on the 15 th The Company became a public company on April 13, 2018, and on that date the Company determined the conversion feature of the Notes represented an embedded derivative since the Notes were convertible into a variable number of shares upon conversion. Accordingly, on April 13, 2018, the Notes were 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 of the Notes that occurred prior to April 13, 2018, were recorded as a liability on April 13, 2018, on the unaudited condensed 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 dates of the Notes. The change in the fair value of the liability for derivative contracts are recorded in other income or expenses in the unaudited condensed 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 Notes resulted in an initial debt discount of $620,075, interest expense of $14,000 and initial derivative liability of $634,075. For the six months ended June 30, 2018, amortization of the debt discounts of $398,886 was charged to interest expense. During the six months ended June 30, 2018, investors converted $570,500 of principal and $19,857 of accrued interest into 1,180,768 shares of common stock. Due to the conversions prior to the maturity of the converted notes, the Company recorded additional interest expense and a loss on extinguishment of debt of $234,386. As of June 30, 2018, the outstanding principal balance of the 2017 Notes was $215,000 with a carrying value as of June 30, 2018, of $196,750, net of unamortized discounts of $18,250. The March 2018 Note was part of the above conversions, and the balance of the March 2018 Note as of June 30, 2018 is $-0-. On April 13, 2018, we issued a convertible promissory note in the principal amount of $442,175 (the “Note”), pursuant to a Securities Purchase Agreement we entered into with an investor dated April 1, 2018. The Note bears interest at the rate of 12% per annum and is due and payable on April 13, 2019. The note is convertible at any time following the funding of the note into a variable number of the Company's common stock, based on a conversion ratio of 55% of the average of the lowest trading price for the 25 days prior to conversion. The note was funded on April 13, 2018, when the Company received proceeds of $350,000, after OID of $57,675, and disbursements for the lender’s transaction costs, fees and expenses of $34,500, of which $25,000 were recorded as discounts against the debt to be amortized into interest expense through maturity. Periodic payments are due by us on the Note at the rate of $850 per day (the “Repayment Amount”) via direct withdrawal from our bank account, beginning on April 27, 2018 and to last for a 30-day period. Following this period, the Repayment Amount increased to $1,100 per day until the Note is satisfied in full. On June 28, 2018, the Note was amended to increase the Repayment Amount to $1,750 per day. During the six months ended June 30, 2018, principal payments of $41,800 were made. The embedded conversion feature included in the note resulted in an initial debt discount of $407,675 interest expense of $408,280 and an initial derivative liability of $815,955. For the six months ended June 30, 2018, amortization of the debt discounts of $106,243 was charged to interest expense. As of June 30, 2018, the outstanding principal balance of the note was $400,375 with a carrying value as of June 30, 2018, of $16,268, net of unamortized discounts of $384,107. We may prepay in full the unpaid principal and interest on the Note, with at least 20 trading days’ notice, (a) any time prior to the 180th day after the issuance date, by paying 130% of the principal amount of the Note together with accrued interest thereon; and (b) any time beginning on the 181st day after the issuance date and ending on the 364th day after the issuance date, by paying 150% of the principal amount of the Note together with accrued interest thereon. After the expiration of the 364th day after the issuance date, we have no right of prepayment. In connection with our obligations under the Note, our executive officers and the Company entered into a Pledge Agreement (the “Pledge Agreement”) whereby they pledged as collateral for the Loan an aggregate of 19,900,000 shares of our common stock and we pledged the shares of our subsidiary OZOP Surgical, Inc. (collectively, the “Collateral”). Upon a default under the terms of the Note, Carebourn may, among other things, collect or take possession of the Collateral, proceed with the foreclosure of the security interest in the Collateral or sell, lease or dispose of the Collateral. A summary of the convertible note balance as of June 30, 2018 and December 31, 2017 is as follows June 30, 2018 December 31, 2017 Principal balance $ 615,375 $ 735,500 Unamortized discount (402,357 ) -0- Ending balance, net 213,018 $ 735,500 |
DERIVATIVE LIABILITIES
DERIVATIVE LIABILITIES | 6 Months Ended |
Jun. 30, 2018 | |
Notes to Financial Statements | |
DERIVATIVE LIABILITIES | NOTE 5 – DERIVATIVE LIABILITIES The Company became a public company on April 13, 2018, and on that date the Company determined the conversion feature of the Notes represented an embedded derivative since the Notes were convertible into a variable number of shares upon conversion. Accordingly, on April 13, 2018, the Notes were 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. The Company valued the derivative liabilities at June 30, 2018, and April 13, 2018, at $659,895 and $1,450,030, respectively. The Company used the Monte Carlo simulation valuation model with the following assumptions as of June 30, 2018; risk-free interest rates from 2.06% to 2.24% and volatility of 121% to 164%, and the following assumptions at April 13, 2018, risk-free interest rates from 1.06% to 1.28% and volatility of 140% to 260%. The initial derivative liabilities for convertible notes issued during the six months ended June 30, 2018, used the following assumptions; risk-free interest rates from 1.89% to 2.29% and volatility of 120% to 331%. A summary of the activity related to derivative liabilities for the six months ended June 30, 2018, is as follows: Beginning balance $ -0- Issued during period 1,450,030 Converted (534,666 ) Change in fair value recognized in operations (255,469 ) Ending balance $ 659,895 |
NOTES PAYABLE
NOTES PAYABLE | 6 Months Ended |
Jun. 30, 2018 | |
Debt Disclosure [Abstract] | |
NOTES PAYABLE | NOTE 6 – NOTES PAYABLE The Company has the following note payables outstanding: June 30, 2018 Note payable, interest at 8%, matures September 6, 2018 $ 370,000 Note payable, includes $10,000 original issue discount, matures October 30, 2018 60,000 Note payable, interest 230,000 Other, due on demand 2,805 Total notes payable $ 662,805 On June 28, 2018, the Company issued a $230,000 principal amount Promissory note for a purchase price of $200,000 due on August 27, 2018 (the “June 2018 Note”). The June 2018 Note provides for standard and customary events of default such as failing to timely make payments under the June 2018 Note when due. In addition, a default under the June 2018 Note will result in a default under the April 2018 Note (see Note 5). We may prepay in full the unpaid principal on the June 2018 Note. The June 2018 Note also contains customary positive and negative covenants. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 6 Months Ended |
Jun. 30, 2018 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 7 – RELATED PARTY TRANSACTIONS Management Fees and related party payables For the three and six months ended June 30, 2018, the Company (including the Company’s subsidiaries) recorded expenses to its officers in the following amounts: Three months ended Six months ended June 30, 2018 June 30, 2018 CEO, parent $ 30,000 $ 60,000 CEO, subsidiary 30,000 60,000 COO 30,000 60,000 CFO 30,000 60,000 Total $ 120,000 $ 240,000 As of June 30, 2018, and December 31, 2017, included in accounts payable and accrued expenses, related party is $404,379 and $220,012, respectively, for the following amounts owed the Company’s officers: June 30, 2018 December 31, 2017 CEO, parent $ 80,989 $ 46,631 CEO, subsidiary 63,899 -0- COO 208,905 158,381 CFO 50,586 15,000 Total $ 404,379 $ 220,012 |
LICENSE FEE PAYABLE
LICENSE FEE PAYABLE | 6 Months Ended |
Jun. 30, 2018 | |
Notes to Financial Statements | |
LICENSE FEE PAYABLE | NOTE 8 – LICENSE FEE PAYABLE On February 1, 2018, Spinus entered into an Intellectual Property Licensing Agreement (the “Licensing Agreement”). The Company assumed the obligations under the Licensing Agreement and pledged the assets of Spinus as security. Pursuant to the terms of the Licensing Agreement, in consideration of $250,000 Spinus has the exclusive rights to certain patents and the non-exclusive rights to other patents. The patents surround mechanical or inflatable expandable interbody implant products. The $250,000 is due the earlier of (i) February 16, 2019 or (ii) 15 days subsequent to the Company completing a minimum of a $3,000,000 equity raise. The Company also will pay a royalty of 7% of net sales on any product sold utilizing any of the patents. |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 6 Months Ended |
Jun. 30, 2018 | |
Equity [Abstract] | |
STOCKHOLDERS' EQUITY | NOTE 9 – STOCKHOLDERS’ EQUITY Common stock On April 13, 2018, the Company completed the reverse merger with Newmarkt (see Note 1) and issued 2,797,500 shares of common stock. Also on April 13, 2018, the Company purchased and redeemed 2,000,000 shares of common stock for a purchase price of $350,000 pursuant to the Redemption Agreement. During the six months ended June 30, 2018, we sold 500,000 shares of our common stock at a price of $0.50 per share to seven investors and received proceeds of $250,000. During the six months ended June 30, 2018, holders of an aggregate of $590,357 in principal and accrued interest of convertible debt issued by OZOP converted their debt and accrued interest into 1,180,768 shares of our common stock at a conversion price of $0.50 per share. These shares have not been certificated and are included in common stock to be issued on the June 30, 2018, balance sheet presented herein. As of June 30, 2018, the Company has 290,000,000 shares of $0.001 par value common stock authorized and there are 26,297,500 shares of common stock issued and outstanding and 1,180,768 shares of common stock to be issued. Preferred stock As of June 30, 2018, 10,000,000 shares have been authorized as preferred stock, par value $0.001 (the “Preferred Stock”), which such Preferred Stock shall be issuable in such series, and with such designations, rights and preferences as the Board of Directors may determine from time to time. As of June 30, 2018, there are no shares of preferred stock issued and outstanding. Stock subscription receivable The Company recorded a stock subscription receivable from its’ officers and directors of $7,600 related to the issuance of 7,600,000 shares of common stock. |
GOING CONCERN AND MANAGEMENT'S
GOING CONCERN AND MANAGEMENT'S PLANS | 6 Months Ended |
Jun. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
GOING CONCERN AND MANAGEMENT'S PLANS | NOTE 10 – GOING CONCERN AND MANAGEMENT’S PLANS The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. At June 30, 2018, the Company had a stockholders’ deficit of $1,381,076 and a working capital deficit of $2,013,339. In addition, the Company has generated losses since inception. These factors, among others, raise substantial doubt about the ability of the Company to continue as a going concern. Management’s Plans In April 2018, OZOP entered into and completed a share exchange agreement with Newmarkt Corp., a Nevada corporation (see Note 1), a publicly traded company. As a public company, management believes it will be able to access the public equities market for fund raising for product development and regulatory approvals, sales and marketing and as we expand our distribution in the US market, we will need to meet increasing inventory requirements. On June 11, 2018, the Company entered into an engagement letter with an Underwriter, with respect to the sale of shares of our preferred stock and warrants to purchase our common stock. Under the terms and subject to the conditions contained in the engagement letter, we have agreed to issue and sell to certain investors through the Underwriter, and the Underwriter has agreed to offer and sell, a minimum of 750,000 and up to 5,000,000 Units, at $2.00 per unit on a best efforts basis. Each Unit consists of one (1) share of Series A 6% Convertible Preferred Stock, par value $0.001 per share (the “Series A Preferred Stock”) and one (1) Common Stock Purchase Warrant (the “Warrants”). Each share of Series A Preferred Stock is entitled to dividends at the rate of 6% per annum, accrued quarterly, is redeemable by the holders three (3) years after issuance and converts into shares of our Common Stock at a rate of $1.00 per share at the option of the holder. Each Warrant entitles the holder to purchase our Common Stock at an exercise price of $1.50 per share for a period of five (5) years after their issuance. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 6 Months Ended |
Jun. 30, 2018 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 11 – SUBSEQUENT EVENTS On July 23, 2018, the Company, through its wholly owned subsidiary, OZOP (Guangdong) Medical Technology Co., Ltd., a wholly owned foreign enterprise in China, acquired a 100% ownership interest in Yijingtong (Beijing) Technology Development Ltd (“Yijingtong”) from its shareholders who are unrelated parties pursuant to the terms of an Equity Transfer Agreement dated July 23, 2018 (the “Equity Transfer Agreement”). Yijington is a China based distributor of minimally invasive surgical (MIS) products to the orthopedic and neurosurgical markets in China. Pursuant to the terms of the Equity Transfer Agreement, we agreed to pay the sellers of the Yijingtong equity interest RMB 1,000,000 (approximately US$147,815) payable in cash within 120 days of closing, in addition to inventory valued at RMB 4,072,719 (approximately US$ 602,009), which the parties will separately agree to payment and delivery terms. The sellers of Yijingtong will begin the registration change process upon execution of the Equity Transfer Agreement. In the event either party breaches the agreement, the non-breaching party shall have the right to request termination of the agreement and claim compensation from the breaching party for all economic losses. |
SUMMARY OF SIGNIFICANT ACCOUN17
SUMMARY OF SIGNIFICANT ACCOUNTING PRONOUNCEMENTS (Policies) | 6 Months Ended |
Jun. 30, 2018 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial statements and with the instructions to Form 10-Q and Article 8 of Regulation S-X of the SEC. Accordingly, they do not contain all information and footnotes required by accounting principles generally accepted in the United States of America for annual financial statements. In the opinion of the Company’s management, the accompanying unaudited condensed consolidated financial statements contain all the adjustments necessary (consisting only of normal recurring accruals) to present the financial position of the Company as of June 30, 2018, and the results of operations and cash flows for the periods presented. The results of operations for the three and six months ended June 30, 2018, are not necessarily indicative of the operating results for the full fiscal year or any future period. These unaudited condensed consolidated financial statements should be read in conjunction with the financial statements and related notes thereto included in the Company’s Current Report on Form 8-K/A filed on June 29, 2018. The unaudited condensed consolidated financial statements include the accounts of the Company and Ozop and its’ wholly owned subsidiaries Ozop LLC, Ozop HK and Spinus. Also included in the consolidation is Ozop Medical AG, a company registered in Munich, Germany (“Ozop Medical”). Officers owning approximately 86% of our common stock, own 100% of Ozop Medical. All intercompany accounts and transactions have been eliminated in consolidation. |
Emerging Growth Companies | Emerging Growth Companies The Company qualifies as an “emerging growth company” under the 2012 JOBS Act. Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. As an emerging growth company, the Company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. The Company has 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 accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reported period. Actual results could differ from those estimates. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid investments with an original term of three months or less to be cash equivalents. These investments are carried at cost, which approximates fair value. Cash and cash equivalent balances may, at certain times, exceed federally insured limits |
Accounts Receivable | Accounts Receivable The Company records accounts receivable at the time products and services are delivered. An allowance for losses is established through a provision for losses charged to expenses. Receivables are charged against the allowance for losses when management believes collectability is unlikely. The allowance (if any) is an amount that management believes will be adequate to absorb estimated losses on existing receivables, based on evaluation of the collectability of the accounts and prior loss experience. |
Inventory | Inventory Inventory is valued at the lower of cost or net realizable value. Cost is determined using the first in first out (FIFO) method. Provision for potentially obsolete or slow-moving inventory is made based on management analysis or inventory levels and future sales forecasts. |
Property, plant and equipment | Property, plant and equipment Property and equipment are stated at cost, and depreciation is provided by use of a straight-line method over the estimated useful lives of the assets. The estimated useful lives of office equipment is 3 years. Office equipment The Company reviews property and equipment for potential impairment whenever events or changes in circumstances indicate that the carrying amounts of assets may not be recoverable. The Company’s property consisted of the following at June 30, 2018 and December 31, 2017. June 30, 2018 December 31, 2017 Office equipment $ 6,885 $ 1,944 Less: Accumulated Depreciation (1,056 ) (621 ) Property and Equipment, Net $ 5,829 $ 1,323 Depreciation expense was $273 and $435 for the three and six months ended June 30, 2018, and $162 and $297 for the three and six months ended June 30, 2017. |
Patents | Patents Intangible assets primarily represent legal costs and filings associated with obtaining patents on the Company’s new discoveries. The Company amortizes these costs over the shorter of the legal life of the patent or its estimated economic life using the straight-line method. The Company tests intangible assets with finite lives upon significant changes in the Company’s business environment and any resulting impairment charges are recorded at that time. When the Company acquires patents from related parties, the patents are recorded at the historical cost when available or the estimated legal and filing costs. |
Revenue Recognition | Revenue Recognition Effective January 1, 2018, the Company adopted ASC 606 — Revenue from Contracts with Customers. Under ASC 606, the Company recognizes revenue from the commercial sales of products, licensing agreements and contracts to perform pilot studies by applying the following steps: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to each performance obligation in the contract; and (5) recognize revenue when each performance obligation is satisfied. For the comparative periods, revenue has not been adjusted and continues to be reported under ASC 605 — Revenue Recognition. Under ASC 605, revenue is recognized when the following criteria are met: (1) persuasive evidence of an arrangement exists; (2) the performance of service has been rendered to a customer or delivery has occurred; (3) the amount of fee to be paid by a customer is fixed and determinable; and (4) the collectability of the fee is reasonably assured. There was no impact on the Company’s financial statements as a result of adopting Topic 606 for the three and six months ended June 30, 2018 and 2017. |
Advertising and Marketing Expenses | Advertising and Marketing Expenses The Company expenses advertising and marketing costs as incurred. For the six months ended June 30, 2018, the Company recorded $35,355 of advertising and marketing expenses, and $954 for the six months ended June 30, 2017. |
Research and Development | Research and Development Costs and expenses that can be clearly identified as research and development are charged to expense as incurred. For the six months ended June 30, 2018, the Company recorded $10,565 of research and development expenses and $41,856 and $84,237 for the three and six months ended June 30, 2017, respectively. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company measures assets and liabilities at fair value based on an expected exit price as defined by the authoritative guidance on fair value measurements, which represents the amount that would be received on the sale of an asset or paid to transfer a liability, as the case may be, in an orderly transaction between market participants. As such, fair value may be based on assumptions that market participants would use in pricing an asset or liability. The authoritative guidance on fair value measurements establishes a consistent framework for measuring fair value on either a recurring or nonrecurring basis whereby inputs, used in valuation techniques, are assigned a hierarchical level. The following are the hierarchical levels of inputs to measure fair value: • Level 1 - Observable inputs that reflect quoted market prices in active markets for identical assets or liabilities. • Level 2 - Inputs reflect quoted prices for identical assets or liabilities in markets that are not active; quoted prices for similar assets or liabilities in active markets; inputs other than quoted prices that are observable for the assets or liabilities; or inputs that are derived principally from or corroborated by observable market data by correlation or other means. • Level 3 - Unobservable inputs reflecting the Company's assumptions incorporated in valuation techniques used to determine fair value. These assumptions are required to be consistent with market participant assumptions that are reasonably available. The carrying amounts of the Company's financial assets and liabilities, such as cash, prepaid expenses, other current assets, accounts payable and accrued expenses, certain notes payable and notes payable - related party, approximate their fair values because of the short maturity of these instruments. The following table represents the Company’s financial instruments that are measured at fair value on a recurring basis as of June 30, 2018, for each fair value hierarchy level: June 30, 2018 Derivative Total Level I $ — $ — Level II $ — $ — Level III $ 659,895 $ 659,895 |
Income Taxes | Income Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance on deferred tax assets is established when management considers it is more likely than not that some portion or all of the deferred tax assets will not be realized. Tax benefits from an uncertain tax position are only recognized if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate resolution. Interest and penalties related to unrecognized tax benefits are recorded as incurred as a component of income tax expense. The Company has not recognized any tax benefits from uncertain tax positions for any of the reporting periods presented. |
Foreign Currency Translation | Foreign Currency Translation The accounts of the Company's Hong Kong subsidiary are maintained in Hong Kong dollars and the accounts of the U.S. companies are maintained in USD. The accounts of the Hong Kong subsidiary were translated into USD in accordance with Accounting Standards Codification ("ASC") Topic 830, Foreign Currency Matters. According to Topic 830, all assets and liabilities were translated at the exchange rate on the balance sheet date; stockholders' equity is translated at historical rates and statement of comprehensive income items are translated at the weighted average exchange rate for the period. The resulting translation adjustments are reported under other comprehensive income in accordance with ASC Topic 220, Comprehensive Income. Gains and losses resulting from the foreign currency transactions are reflected in the statements of comprehensive income. Relevant exchange rates used in the preparation of the unaudited condensed financial statements are as follows for the periods ended June 30, 2018 and December 31, 2017 (Hong Kong dollar per one U.S. dollar): June 30, 2018 December 31, 2017 Balance sheet date 0.1275 0.128 Average rate for unaudited condensed statements of operations and comprehensive loss 0.1276 0.1283 |
Earnings (Loss) Per Share | Earnings (Loss) Per Share The Company computes net loss per share in accordance with FASB ASC 260, “Earnings per Share.” ASC 260 requires presentation of both basic and diluted earnings per share (EPS) on the face of the statement of operations. Basic EPS is computed by dividing net income (loss) available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period including stock options, using the treasury stock method, and convertible notes and stock warrants, using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options, warrants and conversion of convertible notes. Diluted EPS excludes all dilutive potential common shares if their effect is anti-dilutive. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, “Leases (Topic 842)”. Under this guidance, an entity is required to recognize right-of-use assets and lease liabilities on its balance sheet and disclose key information about leasing arrangements. This guidance offers specific accounting guidance for a lessee, a lessor and sale and leaseback transactions. Lessees and lessors are required to disclose qualitative and quantitative information about leasing arrangements to enable a user of the financial statements to assess the amount, timing and uncertainty of cash flows arising from leases. This guidance is effective for annual reporting periods beginning In January 2017, the FASB issued ASU 2017-01, “ Business Combinations (Topic 805) Clarifying the Definition of a Business With the exception of the new standard discussed above, there have been no other recent accounting pronouncements or changes in accounting pronouncements during the six months ended June 30, 2018, that are of significance or potential significance to the Company. |
ORGANIZATION (Tables)
ORGANIZATION (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Purchase price allocation of acquisition | Purchase Price Allocation Fair value of consideration issued $ 250,000 Liabilities assumed 532,289 Total purchase consideration $ 782,289 Assets acquired $ 543,138 Intellectual Property/Technology 239,151 $ 782,289 |
SUMMARY OF SIGNIFICANT ACCOUN19
SUMMARY OF SIGNIFICANT ACCOUNTING PRONOUNCEMENTS (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Accounting Policies [Abstract] | |
Property and equipment | June 30, 2018 December 31, 2017 Office equipment $ 6,885 $ 1,944 Less: Accumulated Depreciation (1,056 ) (621 ) Property and Equipment, Net $ 5,829 $ 1,323 |
Financial instruments that are measured at fair value on a recurring basis | June 30, 2018 Derivative Total Level I $ — $ — Level II $ — $ — Level III $ 659,895 $ 659,895 |
Relevant exchange rates used | June 30, 2018 December 31, 2017 Balance sheet date 0.1275 0.128 Average rate for unaudited condensed statements of operations and comprehensive loss 0.1276 0.1283 |
INTANGIBLE ASSETS (Tables)
INTANGIBLE ASSETS (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Patents | Patents and trademarks $ 138,934 License rights 500,000 Accumulated amortization (12,500 ) Net carrying amount $ 626,434 |
CONVERTIBLE NOTES PAYABLE (Tabl
CONVERTIBLE NOTES PAYABLE (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Debt Disclosure [Abstract] | |
Summary of convertible note balance | June 30, 2018 December 31, 2017 Principal balance $ 615,375 $ 735,500 Unamortized discount (402,357 ) -0- Ending balance, net 213,018 $ 735,500 |
DERIVATIVE LIABILITIES (Tables)
DERIVATIVE LIABILITIES (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Notes to Financial Statements | |
Summary of activity related to derivative liabilities | Beginning balance $ -0- Issued during period 1,450,030 Converted (534,666 ) Change in fair value recognized in operations (255,469 ) Ending balance $ 659,895 |
NOTES PAYABLE (Tables)
NOTES PAYABLE (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Debt Disclosure [Abstract] | |
Note payables outstanding | June 30, 2018 Note payable, interest at 8%, matures September 6, 2018 $ 370,000 Note payable, includes $10,000 original issue discount, matures October 30, 2018 60,000 Note payable, interest 230,000 Other, due on demand 2,805 Total notes payable $ 662,805 |
RELATED PARTY TRANSACTIONS (Tab
RELATED PARTY TRANSACTIONS (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Related Party Transactions [Abstract] | |
Expenses to officers | Three months ended Six months ended June 30, 2018 June 30, 2018 CEO, parent $ 30,000 $ 60,000 CEO, subsidiary 30,000 60,000 COO 30,000 60,000 CFO 30,000 60,000 Total $ 120,000 $ 240,000 |
Amounts owed to officers, included in accounts payable and accrued expenses, related party | June 30, 2018 December 31, 2017 CEO, parent $ 80,989 $ 46,631 CEO, subsidiary 63,899 -0- COO 208,905 158,381 CFO 50,586 15,000 Total $ 404,379 $ 220,012 |
ORGANIZATION - Purchase price a
ORGANIZATION - Purchase price allocation of acquisition (Details) | 6 Months Ended |
Jun. 30, 2018USD ($) | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Fair value of consideration issued | $ 250,000 |
Liabilities assumed | 532,289 |
Total purchase consideration | 782,289 |
Assets acquired | 543,138 |
Intellectual Property/Technology | 239,151 |
Total | $ 782,289 |
ORGANIZATION (Details Narrative
ORGANIZATION (Details Narrative) - USD ($) | Apr. 13, 2018 | Feb. 16, 2018 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Repurchase of common stock, shares | 2,000,000 | |
Repurchase of common stock, purchase price | $ 350,000 | |
Spinus membership interest acquired | 100.00% | |
Spinus acquisition, Company shares issued | 5,000,000 | |
Spinus acquisition, obligation to a third party assumed | $ 250,000 |
SUMMARY OF SIGNIFICANT ACCOUN27
SUMMARY OF SIGNIFICANT ACCOUNTING PRONOUNCEMENTS - Property and equipment (Details) - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 |
Accounting Policies [Abstract] | ||
Office equipment | $ 6,885 | $ 1,944 |
Less: Accumulated Depreciation | (1,056) | (621) |
Property and Equipment, Net | $ 5,829 | $ 1,323 |
SUMMARY OF SIGNIFICANT ACCOUN28
SUMMARY OF SIGNIFICANT ACCOUNTING PRONOUNCEMENTS - Financial instruments that are measured at fair value on a recurring basis (Details) - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 |
Derivative liabilities | $ 659,895 | |
Level I | ||
Derivative liabilities | ||
Level II | ||
Derivative liabilities | ||
Level III | ||
Derivative liabilities | $ 659,895 |
SUMMARY OF SIGNIFICANT ACCOUN29
SUMMARY OF SIGNIFICANT ACCOUNTING PRONOUNCEMENTS - Relevant exchange rates used (Details) | Jun. 30, 2018 | Dec. 31, 2017 |
Balance sheet date | ||
Exchange rate used, Hong Kong dollar per one U.S. dollar | .1275 | .128 |
Average rate for unaudited condensed statements of operations and comprehensive loss | ||
Exchange rate used, Hong Kong dollar per one U.S. dollar | .1276 | .1283 |
SUMMARY OF SIGNIFICANT ACCOUN30
SUMMARY OF SIGNIFICANT ACCOUNTING PRONOUNCEMENTS (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Accounting Policies [Abstract] | ||||
Depreciation expense | $ 273 | $ 162 | $ 435 | $ 297 |
Advertising and marketing expenses | 35,355 | 954 | ||
Research and development expenses | $ 41,856 | $ 10,565 | $ 84,237 |
INTANGIBLE ASSETS - Patents (De
INTANGIBLE ASSETS - Patents (Details) | Jun. 30, 2018USD ($) |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Patents and trademarks | $ 138,934 |
License rights | 500,000 |
Accumulated amortization | (12,500) |
Net carrying amount | $ 626,434 |
INTANGIBLE ASSETS (Details Narr
INTANGIBLE ASSETS (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended |
Jun. 30, 2018 | Jun. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Amortization expense | $ 2,206 | $ 4,412 |
CONVERTIBLE NOTES PAYABLE - Sum
CONVERTIBLE NOTES PAYABLE - Summary of convertible note balance (Details) - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 |
Debt Disclosure [Abstract] | ||
Principal balance | $ 615,375 | $ 735,500 |
Unamortized discount | (402,357) | |
Ending balance, net | $ 213,018 | $ 735,500 |
CONVERTIBLE NOTES PAYABLE (Deta
CONVERTIBLE NOTES PAYABLE (Details Narrative) - USD ($) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2018 | Dec. 31, 2017 | |
2017 Notes | ||
Proceeds received | $ 710,000 | |
March 2018 Note | ||
Convertible promissory notes, amount | 50,000 | |
Proceeds received | $ 50,000 | |
Notes | ||
Initial debt discount | $ 620,075 | |
Interest expense | 14,000 | |
Initial derivative liability | 634,075 | |
Amortization of debt discounts charged to interest expense | 398,886 | |
Conversion of convertible debt, principal converted | 570,500 | |
Conversion of convertible debt, accrued interest converted | $ 19,857 | |
Conversion of convertible debt, shares issued | 1,180,768 | |
Outstanding principal balance of note | $ 215,000 | |
Carrying value of note | 196,750 | |
Unamortized discounts on note | 18,250 | |
Note Issued Pursuant to Securities Purchase Agreement | ||
Convertible promissory notes, amount | 442,175 | |
Proceeds received | 350,000 | |
Original issue discount | 57,675 | |
Principal payments made on note | 41,800 | |
Initial debt discount | 407,675 | |
Interest expense | 408,280 | |
Initial derivative liability | 815,955 | |
Amortization of debt discounts charged to interest expense | 106,243 | |
Outstanding principal balance of note | 400,375 | |
Carrying value of note | 16,268 | |
Unamortized discounts on note | $ 384,107 |
DERIVATIVE LIABILITIES - Summar
DERIVATIVE LIABILITIES - Summary of activity related to derivative liabilities (Details) | 6 Months Ended |
Jun. 30, 2018USD ($) | |
Notes to Financial Statements | |
Beginning balance | |
Issued during period | 1,450,030 |
Converted | (534,666) |
Change in fair value recognized in operations | (255,469) |
Ending balance | $ 659,895 |
DERIVATIVE LIABILITIES (Details
DERIVATIVE LIABILITIES (Details Narrative) | Jun. 30, 2018 | Apr. 13, 2018 | Jun. 30, 2018 |
Notes to Financial Statements | |||
Risk-free interest rate, minimum | 2.06% | 1.06% | 1.89% |
Risk-free interest rate, maximum | 2.24% | 1.28% | 2.29% |
Volatility, minimum | 121.00% | 140.00% | 120.00% |
Volatility, maximum | 164.00% | 260.00% | 331.00% |
NOTES PAYABLE - Note payables o
NOTES PAYABLE - Note payables outstanding (Details) | Jun. 30, 2018USD ($) |
Debt Disclosure [Abstract] | |
Note payable, interest at 8%, matures September 6, 2018 | $ 370,000 |
Note payable, includes $10,000 original issue discount, matures October 30, 2018 | 60,000 |
Note payable, interest | 230,000 |
Other, due on demand | 2,805 |
Total notes payable | $ 662,805 |
RELATED PARTY TRANSACTIONS - Ex
RELATED PARTY TRANSACTIONS - Expenses to officers (Details) - USD ($) | 3 Months Ended | 6 Months Ended |
Jun. 30, 2018 | Jun. 30, 2018 | |
Expenses to officers | $ 120,000 | $ 240,000 |
CEO, parent | ||
Expenses to officers | 30,000 | 60,000 |
CEO, subsidiary | ||
Expenses to officers | 30,000 | 60,000 |
COO | ||
Expenses to officers | 30,000 | 60,000 |
CFO | ||
Expenses to officers | $ 30,000 | $ 60,000 |
RELATED PARTY TRANSACTIONS - Am
RELATED PARTY TRANSACTIONS - Amounts owed to officers, included in accounts payable and accrued expenses, related party (Details) - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 |
Due to related party | $ 404,379 | $ 220,012 |
CEO, parent | ||
Due to related party | 80,989 | 46,631 |
CEO, subsidiary | ||
Due to related party | 63,899 | |
COO | ||
Due to related party | 208,905 | 158,381 |
CFO | ||
Due to related party | $ 50,586 | $ 15,000 |
LICENSE FEE PAYABLE (Details Na
LICENSE FEE PAYABLE (Details Narrative) | Feb. 16, 2018USD ($) |
Notes to Financial Statements | |
Spinus acquisition, obligation to a third party assumed | $ 250,000 |
STOCKHOLDERS' EQUITY (Details N
STOCKHOLDERS' EQUITY (Details Narrative) | 6 Months Ended |
Jun. 30, 2018USD ($)$ / sharesshares | |
Equity [Abstract] | |
Common stock sold, shares | shares | 500,000 |
Common stock sold, price per share | $ / shares | $ .50 |
Common stock sold, proceeds received | $ | $ 250,000 |
Conversion of convertible debt, aggregate principal and accrued interest | $ | $ 590,357 |
Conversion of convertible debt, shares issued | shares | 1,180,768 |
Conversion of convertible debt, conversion price | $ / shares | $ .50 |
GOING CONCERN AND MANAGEMENT'42
GOING CONCERN AND MANAGEMENT'S PLANS (Details Narrative) - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Stockholders' deficit | $ (1,381,076) | $ (1,255,462) |
Working capital deficit | $ (2,013,339) |
SUBSEQUENT EVENTS (Details Narr
SUBSEQUENT EVENTS (Details Narrative) | Jul. 23, 2018USD ($) |
Subsequent Events [Abstract] | |
Equity Transfer Agreement, equity interest paid to sellers | $ 147,815 |
Equity Transfer Agreement, inventory value | $ 602,009 |