Document_And_Entity_Informatio
Document And Entity Information | 9 Months Ended | |
Sep. 30, 2013 | Nov. 15, 2013 | |
Document Information [Line Items] | ' | ' |
Entity Registrant Name | 'NaturalNano, Inc. | ' |
Entity Central Index Key | '0000863895 | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Entity Filer Category | 'Smaller Reporting Company | ' |
Trading Symbol | 'NNAN | ' |
Entity Common Stock, Shares Outstanding | ' | 420,329,246 |
Document Type | '10-Q | ' |
Amendment Flag | 'false | ' |
Document Period End Date | 30-Sep-13 | ' |
Document Fiscal Period Focus | 'Q3 | ' |
Document Fiscal Year Focus | '2013 | ' |
CONSOLIDATED_BALANCE_SHEETS
CONSOLIDATED BALANCE SHEETS (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
Assets | ' | ' |
Cash | $10 | $6,160 |
Accounts receivable | 25,706 | 5,400 |
Inventory | 13,251 | 19,480 |
Prepaid expenses and other current assets | 12,040 | 10,196 |
Total current assets | 51,007 | 41,236 |
Total assets | 51,007 | 41,236 |
Liabilities and Stockholders' Deficiency | ' | ' |
Notes payable (See Note 2) | 4,042,965 | 3,893,972 |
Accounts payable | 429,941 | 502,814 |
Accrued expenses | 100,289 | 96,343 |
Accrued interest | 656,769 | 444,131 |
Accrued payroll | 950,473 | 871,610 |
Deferred revenue | 100,000 | 100,000 |
Registration rights liability (See Note 2) | 82,489 | 82,489 |
Derivative liability (see Note 4) | 12,884 | 25,732 |
Total current liabilities | 6,375,810 | 6,017,091 |
Total liabilities | 6,375,810 | 6,017,091 |
Commitments and contingencies (See Note 7) | ' | ' |
Stockholder’s Deficiency | ' | ' |
Common Stock - $.001 par value 800,000,000 authorized and 332,909,406 and 93,200,171 issued and outstanding, respectively | 332,909 | 93,200 |
Additional paid in capital | 21,115,545 | 21,159,134 |
Non-controlling interest in subsidiary | 0 | 14,264 |
Accumulated deficit | -27,835,617 | -27,410,212 |
Total stockholders' deficiency | -6,387,163 | -6,143,614 |
Total liabilities and stockholders' deficiency | 51,007 | 41,236 |
Series B Preferred Stock [Member] | ' | ' |
Liabilities and Stockholders' Deficiency | ' | ' |
Preferred Stock - $.001 par value, 10 million shares authorized | 872 | 14,111 |
Series C Preferred Stock [Member] | ' | ' |
Liabilities and Stockholders' Deficiency | ' | ' |
Preferred Stock - $.001 par value, 10 million shares authorized | 61,488 | 153,648 |
Series D Preferred Stock [Member] | ' | ' |
Liabilities and Stockholders' Deficiency | ' | ' |
Preferred Stock - $.001 par value, 10 million shares authorized | $0 | $0 |
CONSOLIDATED_BALANCE_SHEETS_Pa
CONSOLIDATED BALANCE SHEETS [Parenthetical] (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
Preferred Stock, par value (in dollars per share) | $0.00 | $0.00 |
Preferred Stock, shares authorized | 10,000,000 | 10,000,000 |
Common Stock, par value (in dollars per share) | $0.00 | $0.00 |
Common Stock, shares authorized | 800,000,000 | 800,000,000 |
Common Stock, shares issued | 332,909,406 | 93,200,171 |
Common Stock, shares outstanding | 332,909,406 | 93,200,171 |
Series B Preferred Stock [Member] | ' | ' |
Preferred Stock, aggregate liquidation preference | $10 | $310 |
Preferred Stock, shares issued | 5,000 | 142,500 |
Preferred Stock, shares outstanding | 5,000 | 142,500 |
Series C Preferred Stock [Member] | ' | ' |
Preferred Stock, aggregate liquidation preference | $6,607 | $8,099 |
Preferred Stock, shares issued | 3,303,640 | 4,049,495 |
Preferred Stock, shares outstanding | 3,303,640 | 4,049,495 |
Series D Preferred Stock [Member] | ' | ' |
Preferred Stock, shares issued | 100 | 0 |
Preferred Stock, shares outstanding | 100 | 0 |
CONSOLIDATED_STATEMENTS_OF_OPE
CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | |
Income: | ' | ' | ' | ' |
Revenue | $18,674 | $6,783 | $141,992 | $55,331 |
Cost of goods sold | 3,657 | 749 | 27,687 | 3,880 |
Gross profit | 15,017 | 6,034 | 114,305 | 51,451 |
Operating expenses: | ' | ' | ' | ' |
Research and development | 14,031 | 21,377 | 41,623 | 90,084 |
General and administrative | 81,884 | 93,549 | 265,150 | 268,437 |
Operating Expenses, Total | 95,915 | 114,926 | 306,773 | 358,521 |
(Loss) from operations | -80,898 | -108,892 | -192,468 | -307,070 |
Other income (expense): | ' | ' | ' | ' |
Interest expense, net | -93,208 | -87,149 | -274,758 | -295,650 |
Net gain on derivative liability | 89,536 | 534 | 12,848 | 534 |
Net (loss) on forgiveness/modification of debt | 0 | -163,566 | -10,336 | -473,566 |
Gain on dissolution of Combotexs | 39,373 | 0 | 39,373 | 0 |
Nonoperating Income (Expense), Total | 35,701 | -250,181 | -232,873 | -768,682 |
Net loss from continuing operations | -45,197 | -359,073 | -425,341 | -1,075,752 |
Net income from discontinued operations | 0 | 6,457 | 11,115 | 17,477 |
Loss on write-off of discontinued operation | 0 | 0 | -11,179 | 0 |
Consolidated net loss attributable controlling interest | -45,197 | -352,616 | -425,405 | -1,058,275 |
Less: Preferred Stock conversion inducement | 0 | 0 | 0 | -12,235 |
Consolidated net loss attributable to common shareholders | ($45,197) | ($352,616) | ($425,405) | ($1,070,510) |
Continuing operations loss per common share - basic and diluted (in dollars per share) | $0 | ($0.01) | $0 | ($0.03) |
Discontinued operations income (loss) per common share - basic and diluted (in dollars per share) | $0 | $0 | $0 | $0 |
Weighted average shares outstanding (in shares) | 311,664,926 | 55,644,823 | 240,252,062 | 42,169,055 |
CONSOLIDATED_STATEMENT_OF_STOC
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIENCY) (USD $) | Total | Common Stock [Member] | Preferred Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | Noncontrolling Interest [Member] |
Balance at Dec. 31, 2012 | ($6,143,614) | $93,200 | $0 | $21,159,134 | ($27,410,212) | $14,264 |
Balance (in shares) at Dec. 31, 2012 | ' | 93,200,171 | 0 | ' | ' | ' |
Series B preferred converted to Common Stock and change in value | 284 | 22,000 | ' | -21,716 | ' | ' |
Series B preferred converted to Common Stock and change in value (in shares) | ' | 22,000,000 | ' | ' | ' | ' |
Series C preferred converted to Common Stock and change in value | 105,112 | 119,337 | ' | -14,225 | ' | ' |
Series C preferred converted to Common Stock and change in value (in shares) | ' | 119,336,800 | ' | ' | ' | ' |
Warrant issued for services | 8,721 | ' | ' | 8,721 | ' | ' |
Shares issued on debt conversion | 19,913 | 21,500 | ' | -1,587 | ' | ' |
Shares issued on debt conversion (in shares) | ' | 21,500,000 | ' | ' | ' | ' |
Shares issued for interest payment | 62,090 | 76,872 | ' | -14,782 | ' | ' |
Shares issued for interest payment (in shares) | ' | 76,872,435 | ' | ' | ' | ' |
Dissolution of Non-controlling interest | -14,264 | ' | ' | ' | ' | -14,264 |
Issuance Of Series D preferred shares | 0 | ' | 0 | ' | ' | ' |
Issuance Of Series D preferred shares (in shares) | ' | ' | 100 | ' | ' | ' |
Net loss | -425,405 | ' | ' | ' | -425,405 | ' |
Balance at Sep. 30, 2013 | ($6,387,163) | $332,909 | $0 | $21,115,545 | ($27,835,617) | $0 |
Balance (in shares) at Sep. 30, 2013 | ' | 332,909,406 | 100 | ' | ' | ' |
CONSOLIDATED_STATEMENTS_OF_CAS
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 9 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | |
Cash flows from operating activities: | ' | ' |
Net loss attributable to controlling interest | ($425,405) | ($1,058,275) |
Adjustments to reconcile net loss to net cash used in operating activities: | ' | ' |
Depreciation and amortization | ' | 39,454 |
Fair value adjustment of derivative liabilities | -12,848 | -534 |
Issuance of stock for services | ' | 10,800 |
Gain on dissolution of Combotexs | -39,373 | 0 |
Inducement to convert interest | 0 | 24,221 |
Issuance of warrants for services | 8,721 | 8,720 |
Loss on forgiveness/modification of debt | 10,336 | 473,566 |
Changes in operating assets and liabilities: | ' | ' |
Decrease (increase) in accounts receivable | -20,306 | 2,651 |
Decrease (increase) in inventory | 6,229 | -4,282 |
(Increase) in other current assets | -1,844 | -1,337 |
Increase in accounts payable, accrued payroll and accrued expenses | 329,434 | 404,284 |
(Decrease) in other liability | 0 | -4,000 |
Net cash used in operating activities | -145,056 | -104,732 |
Cash flows from financing activities: | ' | ' |
Proceeds from senior secured Promissory Notes | 138,906 | 103,000 |
Net cash provided by financing activities | 138,906 | 103,000 |
(Decrease) in cash and cash equivalents | -6,150 | -1,732 |
Cash at beginning of period | 6,160 | 1,732 |
Cash at end of period | 10 | 0 |
Schedule of non-cash investing and financing activities: | ' | ' |
Common stock issued for convertible notes | 19,913 | 983,585 |
Common stock issued for accrued interest | 62,090 | 216,943 |
Conversion of preferred shares into common shares | 141,337 | 15,669 |
Transfer of preferred shares to temporary equity | $0 | $4,376 |
PRINCIPAL_BUSINESS_ACTIVITY_AN
PRINCIPAL BUSINESS ACTIVITY AND SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended | ||
Sep. 30, 2013 | |||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' | ||
Organization, Consolidation and Presentation of Financial Statements Disclosure and Significant Accounting Policies [Text Block] | ' | ||
1. PRINCIPAL BUSINESS ACTIVITY AND SIGNIFICANT ACCOUNTING POLICIES | |||
Interim Financial Statements | |||
The consolidated financial statements as of September 30, 2013 and for the three and nine months ended September 30, 2013 and 2012 are unaudited. However, in the opinion of management of the Company, these financial statements reflect all material adjustments, consisting solely of normal recurring adjustments, necessary to present fairly the financial position and results of operations for such interim periods. The results of operations for the interim periods presented are not necessarily indicative of the results to be obtained for a full year. The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X for smaller reporting companies. Accordingly, these financial statements do not include all of the information required by U.S. generally accepted accounting principles for complete financial statements. These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2012. | |||
Estimates | |||
The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires us to make estimates and assumptions that affect the amounts reported and disclosed in the financial statements and the accompanying notes. Actual results could differ materially from these estimates. On an ongoing basis, we evaluate such estimates. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. | |||
Fair Value of Financial Instruments | |||
Financial instruments include cash and cash equivalents, accounts payable and accrued expenses, notes payable, capital leases and derivative liabilities. Fair values for all instruments except for derivative liabilities were assumed to approximate carrying values for these financial instruments since they are short-term in nature and their carrying amounts approximate fair values or they are receivable or payable on demand. The fair value of the Company’s convertible notes payable is estimated based upon the quoted market prices for the same or similar issues or on the current rates offered to the Company for debt of the same remaining maturities. The carrying value approximates the fair value of these debt instruments as of September 30, 2013 and December 31, 2012 based on rates charged being consistent with current market rates available to the Company. See Note 4 for discussion on the fair value of derivative liabilities. | |||
Basis of Consolidation | |||
The consolidated financial statements include the accounts of NaturalNano, Inc. (“NaturalNano” or the “Company”), a Nevada corporation, and its wholly owned subsidiary NaturalNano Research, Inc. (“NN Research”) a Delaware corporation. All significant inter-company accounts and transactions have been eliminated in consolidation. | |||
In the second quarter of 2013, the Company filed a Certificate of Dissolution for Combotexs, LLC with the state of New York under section 1003 of the Business Corporation Law in connection with the unanimous written consent of the shareowners of Combotexs (a dormant New York limited liability company.) Prior to this action, the Company had a 51% controlling interest in Combotexs. The dissolution was accepted by NYS in the third quarter of 2013. As a result of these actions, the non-controlling interest in subsidiary in the stockholders deficiency section of the balance sheet was eliminated in the third quarter of 2013 in the amount of $14,264 and a gain of $39,373 was taken in the third quarter of 2013, which was attributed to the release of outstanding liabilities. | |||
Description of the Business | |||
NaturalNano (the “Company”), located in Rochester, New York, is engaged in the development and commercialization of material science technologies with an emphasis on additives to polymers and other industrial and consumer products by taking advantage of technology advances developed in-house. The Company’s current activities are directed toward research, development, production and marketing of its proprietary technologies relating to the treatment and separation of nanotubes from halloysite clay and the development of related commercial applications for: | |||
· | cosmetics, health and beauty products | ||
· | polymers, plastics and composites | ||
During the nine months ended September 30, 2013 and 2012, the Company derived 82% and 79%, respectively, of its nanotechnology revenue from one customer. | |||
During the fourth quarter of 2011, the Company entered into a supply agreement with another company, which is 50% owned by NaturalNano’s CEO, to manufacture and sell Error Prevention/Safety Checklist Boards which the related party will then market to the end user. In the second quarter of 2013, the Company made a decision to cease the medical board segment’s operations and ceased production of Error Prevention/Safety checklist Boards (the Medical Board business segment.) This business segment was not generating sufficient income to offset the efforts of production and administrative expenses. The Consolidated Statement of Operations as of September 30, 2013 reflects the results of the Medical Board business as a discontinued operation effective as of the second quarter of 2013. As of September 30, 2013, $13,000 of amounts due from the entity which is 50% owned by NaturalNano’s CEO is included in Accounts Receivable on the balance sheet. (See Note 3 “Discontinued Operations”). | |||
NaturalNano is domiciled in the state of Nevada as a result of the merger with Cementitious Materials, Inc., (“CMI”), which was completed on November 29, 2005. | |||
Liquidity and Going Concern | |||
Going Concern – The accompanying consolidated 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. As shown in the accompanying consolidated financial statements, the Company incurred a net loss for the nine months ended September 30, 2013 of $425,405 and had negative working capital of $6,324,803 and a stockholders’ deficiency of $6,387,163 at September 30, 2013. Since inception the Company’s growth has been funded through a combination of convertible debt from private investors and from cash advances from its former parent and former majority shareholder Technology Innovations, LLC. These factors, among others, may indicate that the Company will be unable to continue as a going concern for a reasonable period of time. The Company's continuation as a going concern is dependent upon its ability to generate sufficient cash flow to meet its obligations, to obtain additional financing, renegotiate the terms of existing financing obligations and ultimately to attain successful operations. The ability to successfully achieve those items is uncertain. The financial statements do not include any adjustments that might result from the uncertainty. | |||
As of September 30, 2013, the Company continued to require waivers for debt covenant violations and extensions of maturity dates. Refer to Note 2 for lenders waivers and maturity extensions received from the lenders. | |||
Reclassifications | |||
Certain prior year amounts have been reclassified to conform to the current year presentation. | |||
Income Taxes | |||
The Company accounts for income taxes in accordance with ASC 740 which requires recognition of estimated income taxes payable or refundable on income tax returns for the current year and for the estimated future tax effect attributable to temporary differences and carry-forwards. Measurement of deferred income items is based on enacted tax laws including tax rates, with the measurement of deferred income tax assets being reduced by available tax benefits not expected to be realized. The Company recognizes penalties and accrued interest related to unrecognized tax benefits in income tax expense. Income tax expense was $0 for the nine month periods ending September 30, 2013 and 2012. | |||
Increase in Authorized Common Stock | |||
On July 1, 2013 the Company received a unanimous written consent in lieu of a meeting from the members of the Board of Directors and a written consent from the Series D stockholder (Note 5) to amend its articles of incorporation to increase the Company’s authorized common shares from 294,117,647 shares to 800,000,000 shares of common stock. As of September 30, 2013 there were 6,412,911,665 underlying preferred stock, convertible debt, outstanding options and warrants that could potentially dilute future earnings. The Company does not have sufficient authorized shares to satisfy conversion of all the potentially dilutive instruments. | |||
Loss Per Share | |||
Basic loss per common share is computed by dividing net loss by the weighted-average number of shares of common stock outstanding during the period. Diluted loss per common share gives effect to dilutive convertible preferred stock, convertible debt, options and warrants outstanding during the period. Shares to be issued upon the exercise of these instruments have not been included in the computation of diluted loss per share as their effect is anti-dilutive based on the net loss incurred. | |||
As of September 30, 2013 and 2012 there were 6,412,911,665 and 2,656,482,041, respectively, underlying preferred stock, convertible debt, outstanding options and warrants that could potentially dilute future earnings. These potentially dilutive shares have been limited by certain debt and equity agreements with Platinum, Platinum Advisors, Merit Consulting, Alpha Capital and Technology Innovations LLC (“TI”). These agreements provide limitations on the conversion of the dilutive instruments such that the number of shares of Common Stock that may be acquired by the holder upon conversion of such instruments shall be limited to ensure that following such conversion the total number of shares of Common Stock then beneficially owned by the holder does not exceed 4.99% of the total number of issued and outstanding shares of Common Stock. The Company does not have sufficient authorized shares to satisfy conversion of all the potentially dilutive instruments. See Note 9 Subsequent Events for shares of common stock issued subsequent to September 30, 2013. | |||
Recent Accounting Pronouncements | |||
Management does not believe that any recently issued, but not yet effective, accounting standards if currently adopted, would have a material effect on the accompanying financial statements. | |||
NOTES_PAYABLE
NOTES PAYABLE | 9 Months Ended | |||||||
Sep. 30, 2013 | ||||||||
Debt Disclosure [Abstract] | ' | |||||||
Debt Disclosure [Text Block] | ' | |||||||
2. NOTES PAYABLE | ||||||||
Notes payable consisted of the following: | ||||||||
Notes Payable | September 30, | December 31, | ||||||
2013 | 2012 | |||||||
Senior Secured Convertible Notes | $ | 3,124,403 | $ | 3,134,415 | ||||
Senior Secured Promissory Notes | 647,462 | 508,557 | ||||||
Subordinated Secured Convertible Note | 271,100 | 251,000 | ||||||
Total | $ | 4,042,965 | $ | 3,893,972 | ||||
Senior Secured Convertible Notes and Senior Secured Promissory Notes | ||||||||
As of September 30, 2013, notes payable include $3,771,865 ($3,642,972 at December 31, 2012) for senior secured convertible and non-convertible promissory notes. As further described below, the Company has defaulted on certain provisions of the notes. Platinum Long Term Growth and Merit Consulting, LLC (to whom Platinum Advisors has assigned their ownership interest in notes receivable from the Company) have granted waivers of default on their outstanding principal balance of $3,148,349 through December 31, 2013 and November 30, 2013, respectively. Alpha Capital Anstalt (to whom Longview Special Finance has assigned its ownership interest in notes receivable to the Company) has granted a waiver of default on their outstanding principal of $623,516 through November 30, 2013. | ||||||||
The Loan and Security Agreement and the related underlying convertible notes issued in accordance with the Initial Note agreement had the original conversion price of $3.74 (as cited in the March 7, 2007 agreement) which was adjusted to a conversion price of $0.085 in accordance with the anti-dilution provisions of this loan and security agreement. This conversion price adjustment was triggered as a result of the issuance of the 2008 Promissory Notes on September 29, 2008 thereby resulting in a reset of (a) the conversion price of the Initial Notes, (b) the exercise price of the warrants related to the Initial Notes and (c) the number of shares that may be purchased by such warrants. As compensation for forbearance from the lenders in 2012, the conversion rate was further adjusted to 75% of the lowest daily volume weighted average price (VWAP) of the Company’s common stock for the 1, 5 or 10 days immediately prior to the conversion. | ||||||||
During the nine month period ended September 30, 2013, the Company issued 9,500,000 shares of common stock to Alpha Capital Anstalt (to whom Longview Special Finance has assigned its ownership interest in notes receivable to the Company) upon the conversion of $10,013 of outstanding principal due on the 8% Senior Secured Convertible Notes held by Longview Special Finance. Also during this period the Company issued 42,000,000 shares of common stock to Alpha Capital Anstalt upon the conversion of $31,838 of interest due on the 8% Senior Secured Convertible Notes held by Longview Special Finance. | ||||||||
During the nine month period ended September 30, 2013, the Company issued 25,872,435 shares of common stock to Merit Consulting upon the conversion of $21,478 of interest due on the 8% Senior Secured Convertible Notes held by Platinum Advisors. | ||||||||
2013 Senior Secured Promissory Notes | ||||||||
During the nine month period ended September 30, 2013, the Company entered into various Senior Secured Promissory Notes aggregating to $138,906 with Platinum and Alpha (“the 2013 Senior Secured Promissory Notes”). The 2013 Senior Secured Promissory Notes are secured by, among other things, (i) the continuing security interest in certain assets of the Company pursuant to the terms of the Initial Notes dated March 7, 2007, (ii) the Pledge Agreement, as defined in the Initial Notes, and (iii) the Patent Security Agreement, dated as of March 6, 2007. The proceeds from the 2013 Senior Secured Promissory Notes are available for general working capital purposes and cannot be used to redeem or make any payment on account of any securities due to the Lenders. The 2013 Senior Secured Promissory Notes bear interest, in arrears, at a rate of 8% per annum and are payable in cash as follows: $21,000 due on June 30, 2013, $30,006 due on July 30, 2013, $49,400 due on September 30, 2013, $2,500 due October 30, 2013 and $36,000 due November 30, 2013. Past due amounts have been extended through forbearance agreements with the principal and interest due on dates ranging from November 30, 2013 to December 31, 2013. | ||||||||
2012 Forbearance | ||||||||
During the nine month period ended September 30, 2012, the Company entered into various forbearance agreements between the Company and Platinum, Platinum Advisors, Merit Consulting, Longview Special Finance and Alpha Capital Anstalt (the lenders) which extended the due dates of all outstanding notes and accrued interest. As consideration for these forbearances, the lenders added $50,000 to the principal balance of the Initial Notes and resulted in a loss on modification of debt of $50,000 for the nine month period ended September 30, 2012 and is reported in the statement of operations. | ||||||||
Subordinated Secured Convertible Note | ||||||||
Convertible Notes | ||||||||
On December 4, 2009, the Company received net proceeds of $197,500 pursuant to the terms of a subscription agreement dated as of November 30, 2009 with Cape One an accredited investor. Pursuant to the terms of the Subscription Agreement the Company issued (i) a 10% Subordinated Secured Convertible Promissory Note (“the 10% Convertible Note”) in the principal amount of $225,000 and (ii) a five-year common stock purchase warrant to purchase 2,647,059 shares, subject to certain anti-dilution provisions in the agreement of the Company’s common stock, par value $0.001 per share at an exercise price of $0.425 per share. The balance of this note as of September 30, 2013 is $271,100, a result of increases as consideration for forbearance and conversions of principal. | ||||||||
The 10% Convertible Note had a 15-month term, bears interest at 10% per annum and is secured by certain assets of the Company pursuant to a security agreement, dated November 30, 2009. The 10% Convertible Note is convertible into Common Stock at any time prior to maturity (provided that such conversion does not result in the holder and its affiliates beneficially owning in excess of 4.99% (9.99% upon 61 days prior written notice) of the issued and outstanding Common Stock at $0.085 per share (the “Conversion Price”), subject to adjustment upon the occurrence of certain anti-dilution events. Interest under the Note is due quarterly in cash or if registered, in the Company’s common stock at a 20% discount in accordance with a formula set forth in the 10% Note. The 10% Note and security interest is subordinate to certain outstanding senior indebtedness of the Company held by Platinum Long Term Growth IV, LLC, Merit Consulting and Alpha Capital Anstalt. (“Senior Lenders”). Upon the occurrence of Events of Default as set forth in the Note, the principal and interest due under the Note may be accelerated and the interest rate payable may be increased to 18%. The company has entered into various forbearance agreements between Cape One and the Company which extended the due date of the outstanding principal and interest, which is accruing at the default rate of 18%. | ||||||||
During nine month periods ended September 30, 2013 and 2012, the Company entered into various forbearance agreements which extended the due date of all the outstanding principal and interest balances. As consideration for these forbearances, Cape One will be paid $55,000 which was added to the principal balance of the note and resulted in a loss on modification of debt of $30,000 and $25,000 for the nine month periods ended September 30, 2013 and 2012, respectively, as reported in the statement of operations. In consideration for forbearance in 2012, the conversion rate of the note was adjusted from $0.085 to 75% of the lowest VWAP for the 1, 5 or 10-day period immediately prior to the conversion. This note has been extended through forbearance agreements and is now due and payable on November 30, 2013. | ||||||||
During nine month period ended September 30, 2013, the Company issued 12,000,000 shares of common stock to Cape One upon the conversion of $9,900 of outstanding principal due on the Subordinated Senior Convertible note. During the nine month period ended September 30, 2013, the Company issued 9,000,000 shares of common stock to Cape One in payment of $8,775 of interest expense obligations on the Subordinated Secured Convertible Note. | ||||||||
Registration Rights Agreement | ||||||||
On March 7, 2007, the Company entered into a Registration Rights Agreement with the Agent and the other investors, pursuant to which the Company agreed to prepare and file within 60 days of the March 7, 2007 agreement, a registration statement for resale under the Securities Act of 1933, the common stock issuable upon the exercise of the Warrants, in payment of interest on, or upon conversion of, the Notes. The Company further agreed to use its best efforts to cause the Registration Statement to be declared effective 120 days following the March 7, 2007 agreement date, or within 150 days if the Company receives a comment letter from the SEC, and to maintain such Registration Statement for the two year period following this date. This agreement allows for liquidated damages based on a daily amount of 0.0333% of the principal amount of the notes relating to the common stock issuable upon conversion of the Notes included in the Registration Statement. | ||||||||
The registration statement had not been updated with the requisite SEC filings outlined above and as such, the Company was in default of this provision of the Registration Rights Agreement. The Company recorded a total of $146,028 in such liquidated damages as of December 17, 2007, the date the registration statement was declared effective. As of December 31, 2007, $63,539 of this obligation was paid in cash and $82,489 was recorded as an accrued liability. The lender has the option to settle the liquidated damages in common stock valued at the average price for the five days prior to the end of a payment period. At September 30, 2013 and December 31, 2012 the outstanding balance for this obligation was $82,489. | ||||||||
DISCONTINUED_OPERATIONS
DISCONTINUED OPERATIONS | 9 Months Ended | |||||||||||||
Sep. 30, 2013 | ||||||||||||||
Discontinued Operations and Disposal Groups [Abstract] | ' | |||||||||||||
Disposal Groups, Including Discontinued Operations, Disclosure [Text Block] | ' | |||||||||||||
3. DISCONTINUED OPERATIONS | ||||||||||||||
On May 10, 2013 the Company ceased all activities associated with the Medical Board business segment. The Company assessed this segment and determined that inadequate income had been generated relative to the efforts of production and administrative support. The Statement of Operations for the three and nine months ended September 30, 2013 reflects the Medical Board business as a discontinued operation and prior reported periods have been reclassified to reflect this presentation. The results of discontinued operations are as follows: | ||||||||||||||
For the three months ended | For the nine months ended | |||||||||||||
September 30, | September 30, | September 30, | September 30, | |||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||
Revenues from Medical Board business | $ | - | $ | 9,375 | $ | 14,750 | $ | 31,250 | ||||||
Profit from Medical Board business | $ | - | $ | 6,457 | $ | 11,115 | $ | 17,477 | ||||||
In connection with this decision to exit the Medical Board business, the Company filed a Certificate of Dissolution on May 10, 2013 with the state of New York under section 1003 of the Business Corporation Law in connection with the unanimous written consent of the shareowners of Combotexs. As a result of this decision, certain unrecovered sample inventory amounts were written off during the second quarter of 2013. The loss on write-off of discontinued operations was $11,179 and is reflected in the Statement of Operations for the three months ended September 30, 2013. | ||||||||||||||
The Nanotechnology business remains as the Company’s only reportable operating segment. | ||||||||||||||
DERIVATIVE_LIABILITY
DERIVATIVE LIABILITY | 9 Months Ended | |||||||
Sep. 30, 2013 | ||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ' | |||||||
Derivative Instruments and Hedging Activities Disclosure [Text Block] | ' | |||||||
4. DERIVATIVE LIABILITY | ||||||||
For stock based derivative financial instruments, the Company estimated the total enterprise value based upon trending of the firm value from December 2006 to September 2013 considering company specific factors including the changes in forward estimated revenues and market factors. Once the enterprise value was determined an option pricing model was used to allocate the enterprise value to the individual derivative and other securities in the Company’s capital structure. Significant unobservable inputs used in determining the value of the Company’s derivative liability include the trended firm value and volatility. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within twelve months of the balance sheet date. | ||||||||
The Company’s derivative liabilities as of September 30, 2013 are as follows: | ||||||||
· | The debt conversion feature embedded in the 8% Senior Secured Convertible Notes entered into in March 2007, August 2008, September 2008 and October 2008 which contains anti-dilution provisions that would be triggered if the Company issued instruments with rights to the Company’s common stock at prices below this exercise price. | |||||||
· | The debt conversion feature and the 2,647,059 warrants exercisable at $0.425 per share granted in connection with the 10% Subordinated Secured Convertible Note (for which the rate has been increased to 18%) entered into in November 2009. These agreements contain anti-dilution provisions that would be triggered if the Company issued instruments with rights to the Company’s common stock at prices below the exercise price. | |||||||
· | The 882,353 warrant shares granted to the CEO of the Company at an exercise price of $0.17 per share on January 2011 which vest over three years, for which the value is not material. | |||||||
· | The 28,500,000 warrants granted to the CEO of the Company and to three independent contractors at an exercise price of $0.0014 per share on February 26, 2013 which vested upon grant, for which the value is not material. | |||||||
The fair value of the derivatives is as follows: | ||||||||
Derivative Liability | September 30, | December 31, | ||||||
2013 | 2012 | |||||||
8% Notes conversion feature | $ | 10,516 | $ | 24,285 | ||||
10% Notes conversion feature | 2,368 | 1,447 | ||||||
Total | $ | 12,884 | $ | 25,732 | ||||
The decrease in the fair value of the derivative liability of $12,848 was recognized as a gain on change in derivative liability in the statement of operations for the nine months ended September 30, 2013. | ||||||||
Significant fluctuations in the variables used in calculating the value of the Company’s derivative liabilities could have significant impact on the fair market valuation. | ||||||||
Fair Value Valuation Hierarchy Measurement | ||||||||
ASC 820 establishes a valuation hierarchy for disclosure of the inputs to valuation used to measure fair value. This hierarchy prioritizes the inputs into three broad levels as follows. | ||||||||
· | Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. | |||||||
· | Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument. | |||||||
· | Level 3 inputs are unobservable inputs based on the Company’s own assumptions used to measure assets and liabilities at fair value. | |||||||
A financial asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement. The derivative liability was determined utilizing Level 3 inputs. | ||||||||
STOCKHOLDERS_EQUITY
STOCKHOLDERS EQUITY | 9 Months Ended | ||||||||||
Sep. 30, 2013 | |||||||||||
Stockholders' Equity Note [Abstract] | ' | ||||||||||
Stockholders' Equity Note Disclosure [Text Block] | ' | ||||||||||
5. STOCKHOLDERS EQUITY | |||||||||||
As of September 30, 2013 the Company was authorized to issue up to 800,000,000 shares of common stock and 10,000,000 shares of preferred stock. | |||||||||||
Preferred Stock Issuances | |||||||||||
On June 10, 2013 the Company obtained the consent of the holders of the majority of the outstanding preferred shares for the creation of a Series D Preferred Stock. The holder of the Series D Preferred Stock is entitled to a 51% vote on all matters submitted to a vote of the shareholders of the Company. There are no other rights or preferences attached to the Series D Preferred Stock. On July 1, 2013, the Company issued 100 shares of the Company’s Series D Preferred Stock to Jim Wemett, the sole officer and a director of the Company, in consideration for services provided to the Company. Such securities were issued under Section 4(2) of the Securities Act of 1933, as amended and Regulation D promulgated by the Securities and Exchange Commission. | |||||||||||
On September 29, 2008 Platinum and Longview agreed to exchange detachable warrants to purchase 71,691,180 shares of common stock of the Company for $0.085 per share held by such Investors related to the March 6, 2007 convertible notes payable for 5,000,000 shares of Series B and C preferred stock. | |||||||||||
On October 7, 2008, the Company filed a Certificate of Designation of Rights, Preferences, Designations, Qualifications and Limitations of the Series C Preferred Stock (the “Series C Designation”) with the Secretary of State of the State of Nevada, and prepared a preferred stock certificate for delivery to Platinum Long Term Growth IV, LLC, evidencing 4,250,000 shares of Series C Convertible Preferred Stock of the Company (“Series C”). On October 7, 2008, the Company also filed a Certificate of Designation of Rights, Preferences, Designations, Qualifications and Limitations of the Series B Preferred Stock (the “Series B Designation”) with the Secretary of State of the State of Nevada, and prepared a preferred stock certificate for delivery to Longview Special Funding, Inc., evidencing 750,000 shares of Series B Convertible Preferred Stock of the Company (“Series B”). The Series B and Series C have an aggregate liquidation preference of $10,000 and participate in any dividends or distributions to the common shareholders on an as converted basis. | |||||||||||
Each share of the Series B and Series C Convertible Preferred Stock is convertible into 160 shares of the Company’s common stock and votes on an as-converted basis (with each share having 160 votes). The conversion rate was reduced to 9.41 as a result of the 2012 reverse split (Note 8), but was subsequently changed back to 160 as part of the consideration related to 2012 forbearance agreements (Note 2). Both the Series B and Series C designations limits the holders’ rights to convert its Convertible Preferred Stock, and the aggregate voting powers, to no more than 4.99% of the votes attributable to the total outstanding common shares. Accordingly, the votes attributable to the Series B and Series C Convertible Preferred constitutes 4.99% of the aggregate votes attributable to the Company’s outstanding shares on an as converted basis and the votes Series B and Series C Convertible Preferred and the Series C Convertible Preferred, voting together represent approximately 9.98% of the aggregate votes attributable to the Company’s outstanding shares (on an as converted basis). As of September 30, 2013 the Series B Convertible Preferred Stock has an aggregate liquidation value of $10 and the Series C Convertible Preferred Stock has an aggregate liquidation value of $6,607. | |||||||||||
As a result of the Company not having sufficient authorized shares to satisfy the conversion of all outstanding convertible debt, convertible preferred stock, warrants and options, the Series B and C preferred shares have been moved into temporary equity classification on the balance sheet as of December 31, 2012. The preferred shares are presented at their fair value based on an allocation of the estimated total enterprise value to the preferred shares and other securities in the Company’s capital structure. The valuation methodology used is similar to that used in valuing the Company’s derivative liabilities (Level III inputs, see note 4). Any change in fair value of the preferred shares, which are deemed to be temporary equity, is reflected in additional paid in capital. | |||||||||||
During the nine months ended September 30, 2013, Alpha elected to convert 137,500 shares of Series B preferred shares owned by Longview into 22,000,000 common shares at the conversion rate of 160 common shares per each Series B share. Longview has assigned its Series B preferred stock ownership to Alpha Capital Anstalt. | |||||||||||
During the nine months ended September 30, 2013, Platinum elected to convert 745,855 shares of their Series C preferred shares into 119,336,800 common shares at the conversion rate of 160 common shares per each Series C share. | |||||||||||
Common Stock Issuances | |||||||||||
During the nine months ended September 30, 2013, the Company issued an aggregate of 76,872,435 shares in satisfaction of $62,090 of interest obligations to lenders on convertible debt. Also during this period, the Company issued an aggregate of 21,500,000 shares of its common stock in satisfaction of $19,913 of principal obligations to lenders on convertible debt. | |||||||||||
During the nine months ended September 30, 2012, the Company issued an aggregate of 6,221,156 shares of its common stock in satisfaction of interest obligations of $241,164 and 13,594,382 shares in satisfaction of principal obligations of $983,585 to its senior debt holders. During the nine months ended September 30, 2012, the Company issued an aggregate of 1,764,706 shares of common stock to various individuals or entities in connection with professional consulting provided to the Company in an aggregate amount of $10,800. | |||||||||||
Warrants Grants | |||||||||||
The Company has issued warrants to purchase shares of its common stock to certain consultants and debt holders. As of September 30, 2013 and December 31, 2012 there were common stock warrants outstanding to purchase an aggregate 32,735,294 and 4,247,059 shares, respectively, of common stock pursuant to the warrant grant agreements summarized below. | |||||||||||
On February 26, 2013 the Company issued warrants to purchase common stock to certain consultants, the Company’s CEO and the Company’s sole board member. These warrants (summarized below) grant the right to purchase one share of common stock at an exercise price of $0.0014 per share. The warrants were fully vested as of the grant date, expire February 26, 2023 and contain a cashless exercise provision. The fair value of the warrants was determined by estimating the total enterprise value of the Company based upon trending the firm value and considering company specific factors thereafter including the changes in forward estimated revenues and market factors. | |||||||||||
Warrant grants made during the first quarter of 2013 are as follows: | |||||||||||
⋅ | 15,000,000 James Wemett CEO | ||||||||||
⋅ | 7,500,000 Paul LeFrois Consultant | ||||||||||
⋅ | 3,000,000 David Lubin Consultant | ||||||||||
⋅ | 3,000,000 Alexander Ruckdaeschel Board Member | ||||||||||
A summary of the outstanding warrants is presented below: | |||||||||||
2013 | |||||||||||
Shares | Weighted | Weighted | |||||||||
Average | Average | ||||||||||
Exercise | Remaining | ||||||||||
Price | Life-years | ||||||||||
Outstanding at January 1, 2013 | 4,247,059 | $ | 0.37 | 2.24 | |||||||
Granted during the year | 28,500,000 | 0.0014 | 9.92 | ||||||||
Cancelled or forfeited | -11,765 | 5.61 | |||||||||
Warrants outstanding at September 30, 2013 | 32,735,294 | $ | 0.05 | 8.51 | |||||||
INCENTIVE_STOCK_PLANS
INCENTIVE STOCK PLANS | 9 Months Ended | ||||||||||
Sep. 30, 2013 | |||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ' | ||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Text Block] | ' | ||||||||||
6. INCENTIVE STOCK PLANS | |||||||||||
A summary of the status of the outstanding incentive stock plans is presented below at September 30, 2013: | |||||||||||
Shares | Weighted | Weighted Average | |||||||||
Average | Remaining | ||||||||||
Exercise Price | Life-years | ||||||||||
Outstanding at January 1, 2013 | 723,137 | $ | 3.07 | 3.53 | |||||||
Granted/Exercises/Cancelled/Forfeited | -14,117 | ||||||||||
Options outstanding at September 30, 2013 | 709,020 | $ | 3.57 | 2.37 | |||||||
Options exercisable at September 30, 2013 | 709,020 | $ | 3.57 | 2.37 | |||||||
All compensation costs for the above options have been previously recognized in operations. | |||||||||||
COMMITMENTS_and_CONTINGENCIES
COMMITMENTS and CONTINGENCIES | 9 Months Ended |
Sep. 30, 2013 | |
Commitments and Contingencies Disclosure [Abstract] | ' |
Commitments Disclosure [Text Block] | ' |
7. COMMITMENTS and CONTINGENCIES | |
Legal Proceedings | |
On March 24, 2009 the Company received a demand notice from an attorney representing a group of certain former employees of the Company, including but not limited to the Company’s former President and Chief Financial Officer, demanding immediate payment of $331,265 for certain deferred compensation, severance and vacation benefits. Each of the former employees cited in the demand notice, as well as other former employees, had executed written agreements during 2008 that allowed the Company to defer certain of these compensation payments. The Company has accrued for earned and unused vacation benefits and deferred payroll costs for amounts electively deferred by these and other former employees as of December 31, 2009. The Company has retained counsel in connection with this demand and continues to evaluate this demand notice and has responded to this demand. No actions or probable settlement discussions between the parties have developed since the filing of this demand. Due to the Company’s current cash and liquidity position discussed above and the current evaluation of the items in the demand notice the timing of future payment of these outstanding amounts is uncertain. No further communication has been had regarding this notice. | |
REVERSE_STOCK_SPLIT
REVERSE STOCK SPLIT | 9 Months Ended |
Sep. 30, 2013 | |
Reverse Stock Split [Abstract] | ' |
Reverse Stock Split [Text Block] | ' |
8. REVERSE STOCK SPLIT | |
On June 14, 2012, the Company filed a Certificate of Amendment to its Restated Certificate of Incorporation, as amended, with the Secretary of State of the State of Nevada, to effect a 1-for-17 reverse stock split of its common stock, or the Reverse Stock Split. This action had previously been approved by the Company’s Board of Directors on March 23, 2012. As a result of the Reverse Stock Split, every seventeen shares of the Company’s pre-reverse split common stock were combined and reclassified into one share of its common stock. No fractional shares were issued in connections with the Reverse Stock Split. Stockholders who would have been entitled to receive a fractional share in connection with the Reverse Stock Split received one whole share. The par value and other terms of the common stock were not affected by the Reverse Stock Split. | |
The Company’s authorized shares immediately prior to the Reverse Stock Split totaled 5,000,000,000. These were adjusted to 294,117,647. The Company’s shares outstanding immediately prior to the Reverse Stock Split totaled 732,073,557. These were adjusted to 43,063,150 shares outstanding as a result of the Reverse Stock Split. The Company’s common stock began trading at its post-Reverse Stock Split price at the beginning of trading on June 14, 2012. Share, per share, and stock option amounts for all periods presented within this quarterly report on Form 10-Q for common stock and additional paid-in-capital were retroactively adjusted to reflect the Reverse Stock Split. | |
SUBSEQUENT_EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2013 | |
Subsequent Events [Abstract] | ' |
Subsequent Events [Text Block] | ' |
9. SUBSEQUENT EVENTS | |
Subsequent to September 30, 2013 and prior to the filing of this report, the following items occurred: | |
Promissory Notes: On October 15, 2013, the Company borrowed $14,025 from Platinum Long Term Growth IV, LLC pursuant to the terms of a Senior secured Promissory Note. The note bears interest at the rate of 8% per annum and is due and payable January 30, 2014. | |
Series C Preferred Stock Conversion to Common Stock:On October 15, 2013, Platinum Long Term Growth IV, LLC elected to convert 207,863 shares of their Series C preferred shares into 33,258,080 common shares at the conversion rate of 160 shares per each Series C share. On November 11, 2013, Platinum Long Term Growth IV, LLC elected to convert 238,511 shares of their Series C preferred shares into 38,161,760 common shares at the conversion rate of 160 shares per each Series C share. | |
Payment of Accrued Interest with Common Stock: On November 7, 2013, the Company issued an aggregate of 16,000,000 shares of its common stock in satisfaction of $6,000 in interest obligations to Alpha Capital Anstalt. | |
PRINCIPAL_BUSINESS_ACTIVITY_AN1
PRINCIPAL BUSINESS ACTIVITY AND SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended | ||
Sep. 30, 2013 | |||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' | ||
Interim Financial Statements [Policy Text Block] | ' | ||
Interim Financial Statements | |||
The consolidated financial statements as of September 30, 2013 and for the three and nine months ended September 30, 2013 and 2012 are unaudited. However, in the opinion of management of the Company, these financial statements reflect all material adjustments, consisting solely of normal recurring adjustments, necessary to present fairly the financial position and results of operations for such interim periods. The results of operations for the interim periods presented are not necessarily indicative of the results to be obtained for a full year. The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X for smaller reporting companies. Accordingly, these financial statements do not include all of the information required by U.S. generally accepted accounting principles for complete financial statements. These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2012. | |||
Use of Estimates, Policy [Policy Text Block] | ' | ||
Estimates | |||
The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires us to make estimates and assumptions that affect the amounts reported and disclosed in the financial statements and the accompanying notes. Actual results could differ materially from these estimates. On an ongoing basis, we evaluate such estimates. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. | |||
Fair Value of Financial Instruments, Policy [Policy Text Block] | ' | ||
Fair Value of Financial Instruments | |||
Financial instruments include cash and cash equivalents, accounts payable and accrued expenses, notes payable, capital leases and derivative liabilities. Fair values for all instruments except for derivative liabilities were assumed to approximate carrying values for these financial instruments since they are short-term in nature and their carrying amounts approximate fair values or they are receivable or payable on demand. The fair value of the Company’s convertible notes payable is estimated based upon the quoted market prices for the same or similar issues or on the current rates offered to the Company for debt of the same remaining maturities. The carrying value approximates the fair value of these debt instruments as of September 30, 2013 and December 31, 2012 based on rates charged being consistent with current market rates available to the Company. See Note 4 for discussion on the fair value of derivative liabilities. | |||
Consolidation, Policy [Policy Text Block] | ' | ||
Basis of Consolidation | |||
The consolidated financial statements include the accounts of NaturalNano, Inc. (“NaturalNano” or the “Company”), a Nevada corporation, and its wholly owned subsidiary NaturalNano Research, Inc. (“NN Research”) a Delaware corporation. All significant inter-company accounts and transactions have been eliminated in consolidation. | |||
In the second quarter of 2013, the Company filed a Certificate of Dissolution for Combotexs, LLC with the state of New York under section 1003 of the Business Corporation Law in connection with the unanimous written consent of the shareowners of Combotexs (a dormant New York limited liability company.) Prior to this action, the Company had a 51% controlling interest in Combotexs. The dissolution was accepted by NYS in the third quarter of 2013. As a result of these actions, the non-controlling interest in subsidiary in the stockholders deficiency section of the balance sheet was eliminated in the third quarter of 2013 in the amount of $14,264 and a gain of $39,373 was taken in the third quarter of 2013, which was attributed to the release of outstanding liabilities. | |||
Business Description [Policy Text Block] | ' | ||
Description of the Business | |||
NaturalNano (the “Company”), located in Rochester, New York, is engaged in the development and commercialization of material science technologies with an emphasis on additives to polymers and other industrial and consumer products by taking advantage of technology advances developed in-house. The Company’s current activities are directed toward research, development, production and marketing of its proprietary technologies relating to the treatment and separation of nanotubes from halloysite clay and the development of related commercial applications for: | |||
· | cosmetics, health and beauty products | ||
· | polymers, plastics and composites | ||
During the nine months ended September 30, 2013 and 2012, the Company derived 82% and 79%, respectively, of its nanotechnology revenue from one customer. | |||
During the fourth quarter of 2011, the Company entered into a supply agreement with another company, which is 50% owned by NaturalNano’s CEO, to manufacture and sell Error Prevention/Safety Checklist Boards which the related party will then market to the end user. In the second quarter of 2013, the Company made a decision to cease the medical board segment’s operations and ceased production of Error Prevention/Safety checklist Boards (the Medical Board business segment.) This business segment was not generating sufficient income to offset the efforts of production and administrative expenses. The Consolidated Statement of Operations as of September 30, 2013 reflects the results of the Medical Board business as a discontinued operation effective as of the second quarter of 2013. As of September 30, 2013, $13,000 of amounts due from the entity which is 50% owned by NaturalNano’s CEO is included in Accounts Receivable on the balance sheet. (See Note 3 “Discontinued Operations”). | |||
NaturalNano is domiciled in the state of Nevada as a result of the merger with Cementitious Materials, Inc., (“CMI”), which was completed on November 29, 2005. | |||
Liquidity Disclosure [Policy Text Block] | ' | ||
Liquidity and Going Concern | |||
Going Concern – The accompanying consolidated 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. As shown in the accompanying consolidated financial statements, the Company incurred a net loss for the nine months ended September 30, 2013 of $425,405 and had negative working capital of $6,324,803 and a stockholders’ deficiency of $6,387,163 at September 30, 2013. Since inception the Company’s growth has been funded through a combination of convertible debt from private investors and from cash advances from its former parent and former majority shareholder Technology Innovations, LLC. These factors, among others, may indicate that the Company will be unable to continue as a going concern for a reasonable period of time. The Company's continuation as a going concern is dependent upon its ability to generate sufficient cash flow to meet its obligations, to obtain additional financing, renegotiate the terms of existing financing obligations and ultimately to attain successful operations. The ability to successfully achieve those items is uncertain. The financial statements do not include any adjustments that might result from the uncertainty. | |||
As of September 30, 2013, the Company continued to require waivers for debt covenant violations and extensions of maturity dates. Refer to Note 2 for lenders waivers and maturity extensions received from the lenders. | |||
Reclassification, Policy [Policy Text Block] | ' | ||
Reclassifications | |||
Certain prior year amounts have been reclassified to conform to the current year presentation. | |||
Income Tax, Policy [Policy Text Block] | ' | ||
Income Taxes | |||
The Company accounts for income taxes in accordance with ASC 740 which requires recognition of estimated income taxes payable or refundable on income tax returns for the current year and for the estimated future tax effect attributable to temporary differences and carry-forwards. Measurement of deferred income items is based on enacted tax laws including tax rates, with the measurement of deferred income tax assets being reduced by available tax benefits not expected to be realized. The Company recognizes penalties and accrued interest related to unrecognized tax benefits in income tax expense. Income tax expense was $0 for the nine month periods ending September 30, 2013 and 2012. | |||
Increase in Authorized Common Stock [Policy Text Block] | ' | ||
Increase in Authorized Common Stock | |||
On July 1, 2013 the Company received a unanimous written consent in lieu of a meeting from the members of the Board of Directors and a written consent from the Series D stockholder (Note 5) to amend its articles of incorporation to increase the Company’s authorized common shares from 294,117,647 shares to 800,000,000 shares of common stock. As of September 30, 2013 there were 6,412,911,665 underlying preferred stock, convertible debt, outstanding options and warrants that could potentially dilute future earnings. The Company does not have sufficient authorized shares to satisfy conversion of all the potentially dilutive instruments. | |||
Earnings Per Share, Policy [Policy Text Block] | ' | ||
Loss Per Share | |||
Basic loss per common share is computed by dividing net loss by the weighted-average number of shares of common stock outstanding during the period. Diluted loss per common share gives effect to dilutive convertible preferred stock, convertible debt, options and warrants outstanding during the period. Shares to be issued upon the exercise of these instruments have not been included in the computation of diluted loss per share as their effect is anti-dilutive based on the net loss incurred. | |||
As of September 30, 2013 and 2012 there were 6,412,911,665 and 2,656,482,041, respectively, underlying preferred stock, convertible debt, outstanding options and warrants that could potentially dilute future earnings. These potentially dilutive shares have been limited by certain debt and equity agreements with Platinum, Platinum Advisors, Merit Consulting, Alpha Capital and Technology Innovations LLC (“TI”). These agreements provide limitations on the conversion of the dilutive instruments such that the number of shares of Common Stock that may be acquired by the holder upon conversion of such instruments shall be limited to ensure that following such conversion the total number of shares of Common Stock then beneficially owned by the holder does not exceed 4.99% of the total number of issued and outstanding shares of Common Stock. The Company does not have sufficient authorized shares to satisfy conversion of all the potentially dilutive instruments. See Note 9 Subsequent Events for shares of common stock issued subsequent to September 30, 2013. | |||
New Accounting Pronouncements, Policy [Policy Text Block] | ' | ||
Recent Accounting Pronouncements | |||
Management does not believe that any recently issued, but not yet effective, accounting standards if currently adopted, would have a material effect on the accompanying financial statements. | |||
NOTES_PAYABLE_Tables
NOTES PAYABLE (Tables) | 9 Months Ended | |||||||
Sep. 30, 2013 | ||||||||
Debt Disclosure [Abstract] | ' | |||||||
Schedule of Debt [Table Text Block] | ' | |||||||
Notes payable consisted of the following: | ||||||||
Notes Payable | September 30, | December 31, | ||||||
2013 | 2012 | |||||||
Senior Secured Convertible Notes | $ | 3,124,403 | $ | 3,134,415 | ||||
Senior Secured Promissory Notes | 647,462 | 508,557 | ||||||
Subordinated Secured Convertible Note | 271,100 | 251,000 | ||||||
Total | $ | 4,042,965 | $ | 3,893,972 | ||||
DISCONTINUED_OPERATIONS_Tables
DISCONTINUED OPERATIONS (Tables) | 9 Months Ended | |||||||||||||
Sep. 30, 2013 | ||||||||||||||
Discontinued Operations and Disposal Groups [Abstract] | ' | |||||||||||||
Schedule Of Disposal Groups Including Discontinued Operations Income Statement Disclosures [Table Text Block] | ' | |||||||||||||
The results of discontinued operations are as follows: | ||||||||||||||
For the three months ended | For the nine months ended | |||||||||||||
September 30, | September 30, | September 30, | September 30, | |||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||
Revenues from Medical Board business | $ | - | $ | 9,375 | $ | 14,750 | $ | 31,250 | ||||||
Profit from Medical Board business | $ | - | $ | 6,457 | $ | 11,115 | $ | 17,477 | ||||||
DERIVATIVE_LIABILITY_Tables
DERIVATIVE LIABILITY (Tables) | 9 Months Ended | |||||||
Sep. 30, 2013 | ||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ' | |||||||
Schedule of Derivative Liabilities at Fair Value [Table Text Block] | ' | |||||||
The fair value of the derivatives is as follows: | ||||||||
Derivative Liability | September 30, | December 31, | ||||||
2013 | 2012 | |||||||
8% Notes conversion feature | $ | 10,516 | $ | 24,285 | ||||
10% Notes conversion feature | 2,368 | 1,447 | ||||||
Total | $ | 12,884 | $ | 25,732 | ||||
STOCKHOLDERS_EQUITY_Tables
STOCKHOLDERS EQUITY (Tables) | 9 Months Ended | ||||||||||
Sep. 30, 2013 | |||||||||||
Stockholders' Equity Note [Abstract] | ' | ||||||||||
Class Of Warrant Outstanding [Table Text Block] | ' | ||||||||||
A summary of the outstanding warrants is presented below: | |||||||||||
2013 | |||||||||||
Shares | Weighted | Weighted | |||||||||
Average | Average | ||||||||||
Exercise | Remaining | ||||||||||
Price | Life-years | ||||||||||
Outstanding at January 1, 2013 | 4,247,059 | $ | 0.37 | 2.24 | |||||||
Granted during the year | 28,500,000 | 0.0014 | 9.92 | ||||||||
Cancelled or forfeited | -11,765 | 5.61 | |||||||||
Warrants outstanding at September 30, 2013 | 32,735,294 | $ | 0.05 | 8.51 | |||||||
INCENTIVE_STOCK_PLANS_Tables
INCENTIVE STOCK PLANS (Tables) | 9 Months Ended | ||||||||||
Sep. 30, 2013 | |||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ' | ||||||||||
Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block] | ' | ||||||||||
A summary of the status of the outstanding incentive stock plans is presented below at September 30, 2013: | |||||||||||
Shares | Weighted | Weighted Average | |||||||||
Average | Remaining | ||||||||||
Exercise Price | Life-years | ||||||||||
Outstanding at January 1, 2013 | 723,137 | $ | 3.07 | 3.53 | |||||||
Granted/Exercises/Cancelled/Forfeited | -14,117 | ||||||||||
Options outstanding at September 30, 2013 | 709,020 | $ | 3.57 | 2.37 | |||||||
Options exercisable at September 30, 2013 | 709,020 | $ | 3.57 | 2.37 | |||||||
PRINCIPAL_BUSINESS_ACTIVITY_AN2
PRINCIPAL BUSINESS ACTIVITY AND SIGNIFICANT ACCOUNTING POLICIES (Details Textual) (USD $) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Dec. 31, 2012 | |
Accounting Policies [Line Items] | ' | ' | ' | ' | ' |
Business Acquisition, Percentage of Voting Interests Acquired | 51.00% | ' | 51.00% | ' | ' |
Net loss attributable to controlling interest | ($45,197) | ($352,616) | ($425,405) | ($1,058,275) | ' |
Working Capital Deficit | 6,324,803 | ' | 6,324,803 | ' | ' |
Total stockholders' deficiency | -6,387,163 | ' | -6,387,163 | ' | -6,143,614 |
Weighted Average Number of Shares Outstanding, Diluted | ' | ' | 6,412,911,665 | 2,656,482,041 | ' |
Income Tax Reconciliation, Tax Holidays | ' | ' | 0 | 0 | ' |
Stock Conversion Limit Percentage | ' | ' | 4.99% | ' | ' |
Common Stock, Shares Authorized | 800,000,000 | ' | 800,000,000 | ' | 800,000,000 |
Gain On Dissolution Of Combotexs | 39,373 | ' | ' | ' | ' |
Non Controlling Interest De Consolidation Gain Or Loss | ' | ' | -14,264 | ' | ' |
Before Amendment [Member] | ' | ' | ' | ' | ' |
Accounting Policies [Line Items] | ' | ' | ' | ' | ' |
Common Stock, Shares Authorized | 294,117,647 | ' | 294,117,647 | ' | 294,117,647 |
Nanotechnology [Member] | Sales Revenue, Segment [Member] | ' | ' | ' | ' | ' |
Accounting Policies [Line Items] | ' | ' | ' | ' | ' |
Concentration Risk, Percentage | ' | ' | 82.00% | 79.00% | ' |
Chief Executive Officer [Member] | ' | ' | ' | ' | ' |
Accounting Policies [Line Items] | ' | ' | ' | ' | ' |
Percentage Of Interest On Supply Agreement | 50.00% | ' | 50.00% | ' | ' |
Chief Executive Officer [Member] | Accounts Receivable [Member] | ' | ' | ' | ' | ' |
Accounting Policies [Line Items] | ' | ' | ' | ' | ' |
Concentration Risk, Percentage | ' | ' | 50.00% | ' | ' |
Due from entity | $13,000 | ' | $13,000 | ' | ' |
NOTES_PAYABLE_Details
NOTES PAYABLE (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
Notes Payable [Line Items] | ' | ' |
Notes payable, Total | $4,042,965 | $3,893,972 |
Senior Secured Promissory Note [Member] | ' | ' |
Notes Payable [Line Items] | ' | ' |
Notes payable, Total | 647,462 | 508,557 |
Senior Secured Convertible Notes [Member] | ' | ' |
Notes Payable [Line Items] | ' | ' |
Notes payable, Total | 3,124,403 | 3,134,415 |
Subordinated Secured Convertible Notes [Member] | ' | ' |
Notes Payable [Line Items] | ' | ' |
Notes payable, Total | $271,100 | $251,000 |
NOTES_PAYABLE_Details_Textual
NOTES PAYABLE (Details Textual) (USD $) | 1 Months Ended | 9 Months Ended | 9 Months Ended | 9 Months Ended | 9 Months Ended | 1 Months Ended | 9 Months Ended | 1 Months Ended | 0 Months Ended | 1 Months Ended | ||||||||||||||
Dec. 17, 2007 | Sep. 30, 2013 | Sep. 30, 2012 | Feb. 26, 2013 | Dec. 31, 2012 | Jan. 31, 2011 | Nov. 30, 2009 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2013 | Jul. 30, 2013 | Jun. 30, 2013 | Sep. 30, 2013 | Nov. 30, 2013 | Oct. 30, 2013 | Nov. 04, 2009 | Nov. 30, 2009 | Sep. 30, 2013 | |
Merit Consulting [Member] | Five Year Common Stock Purchase Warrant [Member] | Platinum Long Term Growth and Platinum Advisors [Member] | Longview Special Financing Inc [Member] | Cape One [Member] | Cape One [Member] | Senior Secured Nonconvertible Promissory Notes [Member] | Senior Secured Nonconvertible Promissory Notes [Member] | 8% Senior Secured Convertible Notes [Member] | 2013 Senior Secured Promissory Notes [Member] | 2013 Senior Secured Promissory Notes [Member] | 2013 Senior Secured Promissory Notes [Member] | 2013 Senior Secured Promissory Notes [Member] | 2013 Senior Secured Promissory Notes [Member] | 10% Subordinated Secured Convertible Promissory Note [Member] | 10% Subordinated Secured Convertible Promissory Note [Member] | Convertible Notes Payable [Member] | ||||||||
Subsequent Event [Member] | Subsequent Event [Member] | |||||||||||||||||||||||
Notes Payable [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Notes Payable, Total | ' | $4,042,965 | ' | ' | $3,893,972 | ' | ' | ' | ' | ' | ' | ' | ' | $3,771,865 | $3,642,972 | ' | ' | ' | $138,906 | ' | ' | ' | ' | $271,100 |
Notes Payable Written Off | ' | ' | ' | ' | ' | ' | ' | ' | ' | 3,148,349 | 623,516 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Debt Instrument Convertible Conversion Price Initial | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $3.74 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Debt Instrument, Convertible, Conversion Price | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $0.09 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Debt Instrument, Convertible, Terms of Conversion Feature | ' | 'In consideration for forbearance in 2012, the conversion rate of the note was adjusted from $0.085 to 75% of the lowest VWAP for the 1, 5 or 10-day period immediately prior to the conversion. | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 'As compensation for forbearance from the lenders in 2012, the conversion rate was further adjusted to 75% of the lowest daily volume weighted average price (VWAP) of the Companys common stock for the 1, 5 or 10 days immediately prior to the conversion. | ' | ' | ' | 'The 10% Convertible Note is convertible into Common Stock at any time prior to maturity (provided that such conversion does not result in the holder and its affiliates beneficially owning in excess of 4.99% (9.99% upon 61 days prior written notice) of the issued and outstanding Common Stock at $0.085 per share (the “Conversion Price”), subject to adjustment upon the occurrence of certain anti-dilution events. | ' |
Debt Instrument Convertible Number Of Equity Instruments For Outstanding Principal | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 9,000,000 | ' | ' | ' | 9,500,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Convertible Debt | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 10,013 | ' | ' | ' | ' | ' | ' | ' | ' |
Debt Instrument Convertible Number Of Equity Instruments For Accrued Interest | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 8,775 | ' | ' | ' | 42,000,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Convertible Debt Accrued Interest | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 31,838 | ' | ' | ' | ' | ' | ' | ' | ' |
Notes Payable Interest Payment | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 30,006 | 21,000 | 49,400 | 36,000 | 2,500 | ' | ' | ' |
Forbearance Charges Added To Principal Balance | ' | ' | 50,000 | ' | ' | ' | ' | ' | ' | ' | ' | 55,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Loss On Modification Notes Payable | ' | ' | 50,000 | ' | ' | ' | ' | ' | ' | ' | ' | 30,000 | 25,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Proceeds from Issuance of Secured Debt | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 197,500 | ' | ' |
Notes Issued | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 225,000 | ' |
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | ' | ' | ' | ' | ' | ' | ' | ' | 2,647,059 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Class Of Warrant Or Right Par Value Of Securities Called By Warrants Or Rights | ' | ' | ' | ' | ' | ' | ' | ' | $0.00 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Class of Warrant or Right, Exercise Price of Warrants or Rights | ' | ' | ' | 0.0014 | ' | 0.17 | 0.425 | ' | 0.425 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Stock Issuance For Interest Payment Percentage Discount | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 20.00% | ' |
Interest Payment Percentage Payable On Default | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 18.00% | ' |
Liquidated Damages | 146,028 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Liquidated Damages Paid Value | 63,539 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Accrued Registration Rights Obligation | ' | 82,489 | ' | ' | 82,489 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Liquidated Damage Allowed As Percentage Of Note | 0.03% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Stock Issued During Period, Shares, Conversion Of Convertible Securities | ' | ' | 13,594,382 | ' | ' | ' | ' | 25,872,435 | ' | ' | ' | 12,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Debt Instrument, Face Amount | ' | 9,900 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Debt Instrument, Interest Rate, Stated Percentage | ' | 8.00% | ' | ' | ' | ' | 10.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Stock Issued During Period, Value, Conversion Of Convertible Securities | ' | $19,913 | ' | ' | ' | ' | ' | $21,478 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
DISCONTINUED_OPERATIONS_Detail
DISCONTINUED OPERATIONS (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | |
Discontinued Operations [Line Items] | ' | ' | ' | ' |
Profit from Medical Board business | ' | ' | ($425,405) | ' |
Medical Board business [Member] | ' | ' | ' | ' |
Discontinued Operations [Line Items] | ' | ' | ' | ' |
Revenues from Medical Board business | 0 | 9,375 | 14,750 | 31,250 |
Profit from Medical Board business | $0 | $6,457 | $11,115 | $17,477 |
DISCONTINUED_OPERATIONS_Detail1
DISCONTINUED OPERATIONS (Details Textual) (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | |
Discontinued Operations [Line Items] | ' | ' | ' | ' |
Loss on write-off of discontinued operation | $0 | $0 | $11,179 | $0 |
DERIVATIVE_LIABILITY_Details
DERIVATIVE LIABILITY (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
Derivative [Line Items] | ' | ' |
Derivative Liability, Fair Value, Net | $12,884 | $25,732 |
8% Notes conversion feature [Member] | ' | ' |
Derivative [Line Items] | ' | ' |
Derivative Liability, Fair Value, Net | 10,516 | 24,285 |
10% Notes conversion feature [Member] | ' | ' |
Derivative [Line Items] | ' | ' |
Derivative Liability, Fair Value, Net | $2,368 | $1,447 |
DERIVATIVE_LIABILITY_Details_T
DERIVATIVE LIABILITY (Details Textual) (USD $) | 3 Months Ended | 9 Months Ended | |||||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Feb. 26, 2013 | Jan. 31, 2011 | Nov. 30, 2009 | |
Derivative [Line Items] | ' | ' | ' | ' | ' | ' | ' |
Debt Instrument, Interest Rate, Stated Percentage | 8.00% | ' | 8.00% | ' | ' | ' | 10.00% |
Class of Warrant or Right, Outstanding | ' | ' | ' | ' | 28,500,000 | 882,353 | 2,647,059 |
Class of Warrant or Right, Exercise Price of Warrants or Rights | ' | ' | ' | ' | 0.0014 | 0.17 | 0.425 |
Net (loss) on derivative liability | $89,536 | $534 | $12,848 | $534 | ' | ' | ' |
STOCKHOLDERS_EQUITY_Details
STOCKHOLDERS EQUITY (Details) (Warrant [Member], USD $) | 9 Months Ended |
Sep. 30, 2013 | |
Warrant [Member] | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' |
Shares Outstanding at beginning of year | 4,247,059 |
Shares Granted during the year | 28,500,000 |
Shares Cancelled or forfeited | -11,765 |
Shares outstanding at end of year | 32,735,294 |
Weighted Average Exercise Price Outstanding at beginning of year | $0.37 |
Weighted Average Exercise Price Granted during the year | $0.00 |
Weighted Average Exercise Price Cancelled or forfeited | $5.61 |
Weighted Average Exercise Price outstanding at end of year | $0.05 |
Weighted Average Remaining Life-years Outstanding at beginning of year | '2 years 2 months 26 days |
Weighted Average Remaining Life-years Granted during the year | '9 years 11 months 1 day |
Weighted Average Remaining Life years Warrants outstanding at end of year | '8 years 6 months 4 days |
STOCKHOLDERS_EQUITY_Details_Te
STOCKHOLDERS EQUITY (Details Textual) (USD $) | 9 Months Ended | 9 Months Ended | 0 Months Ended | 9 Months Ended | 0 Months Ended | 1 Months Ended | 0 Months Ended | 9 Months Ended | 0 Months Ended | 9 Months Ended | 9 Months Ended | 3 Months Ended | 1 Months Ended | 1 Months Ended | 3 Months Ended | |||||||||||||
Sep. 30, 2013 | Sep. 30, 2012 | Dec. 31, 2012 | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Oct. 07, 2008 | Sep. 30, 2013 | Oct. 07, 2008 | Jun. 30, 2013 | Jun. 10, 2013 | Oct. 07, 2008 | Sep. 30, 2013 | Oct. 07, 2008 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2013 | Mar. 31, 2013 | Mar. 31, 2013 | Mar. 31, 2013 | Sep. 30, 2008 | Sep. 29, 2008 | Sep. 30, 2008 | Sep. 29, 2008 | Mar. 31, 2013 | |
Warrant [Member] | Warrant [Member] | Convertible Preferred Stock [Member] | Common Stock [Member] | Series B Preferred Stock [Member] | Series B Preferred Stock [Member] | Series B and Series C Convertible Preferred Stock [Member] | Series D Preferred Stock [Member] | Series D Preferred Stock [Member] | Series C Preferred Stock [Member] | Series C Preferred Stock [Member] | Platinum Partners Long Term Growth IV [Member] | Platinum Partners Long Term Growth IV [Member] | Alpha Capital [Member] | Alpha Capital [Member] | Longview Special Financing Inc [Member] | Cape One [Member] | Paul Lefrois [Member] | James Wemett [Member] | David Lubin [Member] | Platinum Partners Long Term Growth Iv and Longview Special Financing Inc [Member] | Platinum Partners Long Term Growth Iv and Longview Special Financing Inc [Member] | Platinum Partners Long Term Growth Iv and Longview Special Financing Inc [Member] | Platinum Partners Long Term Growth Iv and Longview Special Financing Inc [Member] | Alexander Ruckdaeschel [Member] | ||||
Llc Series C Convertible Preferred Stock [Member] | Series C Preferred Stock [Member] | Series B Preferred Stock [Member] | Series B Preferred Stock [Member] | Series B Preferred Stock [Member] | Series C Preferred Stock [Member] | Series C Preferred Stock [Member] | ||||||||||||||||||||||
Schedule of Equity Method Investments [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Debt Instrument, Convertible, Conversion Price | ' | ' | ' | ' | ' | ' | ' | ' | ' | $9.41 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Stock Issued During Period, Shares, Conversion Of Convertible Securities | ' | 13,594,382 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 119,336,800 | ' | ' | 22,000,000 | 12,000,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Stock Issued During Period, Shares, Issued for Services | ' | 1,764,706 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Stock Issued During Period, Value, Issued for Services | ' | $10,800 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $745,855 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Conversion of Stock, Shares Converted | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 137,500 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Conversion of Stock, Shares Issued | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 5,000,000 | ' | 5,000,000 | ' | ' |
Debt Conversion, Converted Instrument, Shares Issued | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 21,500,000 | ' | ' | ' | ' | ' | ' | 71,691,180 | ' | 71,691,180 | ' | ' |
Debt Conversion, Converted Instrument, Amount | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 19,913 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Common Stock, shares authorized | 800,000,000 | ' | 800,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Preferred Stock, shares authorized | 10,000,000 | ' | 10,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Common Stock, par value (in dollars per share) | $0.00 | ' | $0.00 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $0.09 | ' | $0.09 | ' |
Stock Issued During Period, Shares, Conversion of Units | ' | ' | ' | ' | ' | ' | ' | 750,000 | 160 | 160 | ' | ' | ' | 160 | 4,250,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Preferred Stock, Liquidation Preference, Value | ' | ' | ' | ' | ' | 10,000 | ' | 10 | ' | ' | ' | ' | 6,607 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Excess Of Debt Instrument Conversion Percentage | ' | ' | ' | ' | ' | ' | ' | ' | ' | 4.99% | ' | ' | 9.98% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Stock Issued During Period, Shares, Settlement Of Interest Obligations | ' | ' | ' | ' | ' | 76,872,435 | 6,221,156 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 241,164 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Stock Issued During Period, Value, Settlement Of Interest Obligations | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 62,090 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Shares Granted during the year | ' | ' | ' | 28,500,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 7,500,000 | 15,000,000 | 3,000,000 | ' | ' | ' | ' | 3,000,000 |
Common Stock, Capital Shares Reserved for Future Issuance | ' | ' | ' | 32,735,294 | 4,247,059 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Equity Method Investment, Ownership Percentage | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 51.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Stock Issued During Period, Shares, New Issues | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 100 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Common Stock Issued For Convertible Notes | $19,913 | $983,585 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
INCENTIVE_STOCK_PLANS_Details
INCENTIVE STOCK PLANS (Details) (Incentive Stock Plans [Member], USD $) | 9 Months Ended |
Sep. 30, 2013 | |
Incentive Stock Plans [Member] | ' |
Stock Option Plan [Line Items] | ' |
Shares Outstanding at beginning of year | 723,137 |
Shares Granted/Exercises/Cancelled/Forfeited | -14,117 |
Shares outstanding at end of year | 709,020 |
Shares exercisable at end of year | 709,020 |
Weighted Average Exercise Price Outstanding at beginning of year | $3.07 |
Weighted Average Exercise Price outstanding at end of year | $3.57 |
Weighted Average Exercise Price exercisable at end of year | $3.57 |
Weighted Average Remaining Life-years Outstanding at beginning of year | '3 years 6 months 11 days |
Weighted Average Remaining Life years Warrants outstanding at end of year | '2 years 4 months 13 days |
Weighted Average Remaining Life Years Warrants exercisable at end of year | '2 years 4 months 13 days |
COMMITMENTS_and_CONTINGENCIES_
COMMITMENTS and CONTINGENCIES (Details Textual) (USD $) | Mar. 24, 2009 |
Commitments And Contingencies [Line Items] | ' |
Loss Contingency, Estimate of Possible Loss | $331,265 |
REVERSE_STOCK_SPLIT_Details_Te
REVERSE STOCK SPLIT (Details Textual) | 12 Months Ended | |
Dec. 31, 2012 | Sep. 30, 2013 | |
Class of Stock [Line Items] | ' | ' |
Common Stock, shares authorized | 800,000,000 | 800,000,000 |
Common Stock, shares outstanding | 93,200,171 | 332,909,406 |
Stockholders' Equity, Reverse Stock Split | '1-for-17 reverse stock split of its common stock | ' |
Before Amendment [Member] | ' | ' |
Class of Stock [Line Items] | ' | ' |
Common Stock, shares authorized | 294,117,647 | 294,117,647 |
Prior To Reverse Stock Split [Member] | ' | ' |
Class of Stock [Line Items] | ' | ' |
Common Stock, shares authorized | 5,000,000,000 | ' |
Common Stock, shares outstanding | 732,073,557 | ' |
After Reverse Stock Split [Member] | ' | ' |
Class of Stock [Line Items] | ' | ' |
Common Stock, shares outstanding | 43,063,150 | ' |
SUBSEQUENT_EVENTS_Details_Text
SUBSEQUENT EVENTS (Details Textual) (USD $) | Sep. 30, 2013 | Nov. 30, 2009 | Sep. 30, 2013 | Sep. 30, 2012 | Nov. 11, 2013 | Oct. 31, 2013 | Oct. 15, 2013 | Nov. 07, 2013 |
Alpha Capital [Member] | Alpha Capital [Member] | Subsequent Event [Member] | Subsequent Event [Member] | Subsequent Event [Member] | Subsequent Event [Member] | |||
Platinum Long Term Growth Iv [Member] | Platinum Long Term Growth Iv [Member] | Platinum Long Term Growth Iv [Member] | Alpha Capital Anstalt [Member] | |||||
Subsequent Event [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' |
Long-term Debt, Gross | ' | ' | ' | ' | ' | ' | $14,025 | ' |
Debt Instrument, Interest Rate, Stated Percentage | 8.00% | 10.00% | ' | ' | ' | ' | 8.00% | ' |
Conversion of Stock, Description | ' | ' | ' | ' | 'On November 11, 2013, Platinum Long Term Growth IV, LLC elected to convert 238,511 shares of their Series C preferred shares into 38,161,760 common shares at the conversion rate of 160 shares per each Series C share. | 'On October 15, 2013, Platinum Long Term Growth IV, LLC elected to convert 207,863 shares of their Series C preferred shares into 33,258,080 common shares at the conversion rate of 160 shares per each Series C share. | ' | ' |
Stock Issued During Period, Shares, Settlement Of Interest Obligations | ' | ' | ' | 241,164 | ' | ' | ' | 16,000,000 |
Stock Issued During Period, Value, Settlement Of Interest Obligations | ' | ' | $62,090 | ' | ' | ' | ' | $6,000 |