Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2015 | Nov. 23, 2015 | |
Document And Entity Information | ||
Entity Registrant Name | NaturalNano, Inc. | |
Entity Central Index Key | 863,895 | |
Document Type | 10-Q | |
Trading Symbol | NNAN | |
Document Period End Date | Sep. 30, 2015 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity a Well-known Seasoned Issuer | No | |
Entity a Voluntary Filer | No | |
Entity's Reporting Status Current | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 2,093,502 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2,015 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 |
Current assets: | ||
Cash | $ 8,043 | $ 0 |
Accounts Receivable | 5,036 | |
Inventory, net of reserve of $54,000 and $0, respectively | $ 133,254 | 231,764 |
Prepaid expenses and other current assets | 7,040 | 73,140 |
Total current assets | 148,337 | 309,940 |
Total Assets | 148,337 | 309,940 |
Current Liabilities | ||
Notes payable (Note 2) | 1,595,941 | 1,534,946 |
Accounts payable | 490,543 | 572,128 |
Accrued expenses | 90,244 | $ 97,095 |
Deferred income | 40,965 | |
Accrued interest | 441,166 | $ 239,937 |
Accrued payroll | 1,138,948 | 1,068,448 |
Registration rights liability | 12,324 | 12,324 |
Derivative liabilities | 520,335 | 387,721 |
Total current liabilities | 4,330,466 | 3,912,599 |
Total Liabilities | 4,330,466 | 3,912,599 |
Rights to reserved common shares (Note 2) | $ 174,086 | $ 559,289 |
Commitments and contingencies | ||
Stockholders' Deficiency | ||
Common Stock - $.001 par value 800,000,000 authorized with 2,093,502 shares issued and outstanding | $ 2,094 | $ 2,094 |
Additional paid in capital | 21,943,031 | 21,454,431 |
Accumulated deficit | (26,302,855) | (25,620,604) |
Total stockholders' deficiency | (4,357,730) | (4,164,079) |
Total liabilities and stockholders' deficiency | $ 148,337 | $ 309,940 |
Series D Preferred Stock [Member] | ||
Stockholders' Deficiency | ||
Preferred stock | ||
Total stockholders' deficiency | ||
Series B Preferred Stock [Member] | ||
Current Liabilities | ||
Temporary stock | $ 1,515 | $ 2,131 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 |
Inventory valuation reserves (in dollars) | $ 54,000 | $ 0 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 800,000,000 | 800,000,000 |
Common stock, shares issued | 2,093,502 | 2,093,502 |
Common stock, shares outstanding | 2,093,502 | 2,093,502 |
Series D Preferred Stock [Member] | ||
Preferred stock, shares issued | 100 | 100 |
Preferred stock, shares outstanding | 100 | 100 |
Series B Preferred Stock [Member] | ||
Temporary stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Temporary stock, shares authorized | 100,000,000 | 100,000,000 |
Temporary stock, aggregate liquidation preference (in dollars) | $ 10 | $ 10 |
Temporary stock, shares issued | 5,000 | 5,000 |
Temporary stock, shares outstanding | 5,000 | 5,000 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Income: | ||||
Revenue | $ 34,131 | $ 89,600 | $ 223,621 | $ 135,774 |
Cost of goods sold | 41,331 | 8,279 | 119,358 | 16,913 |
Gross Profit | (7,200) | 81,321 | 104,263 | 118,861 |
Operating expenses: | ||||
Research and development | 397 | 17,082 | 4,753 | 40,076 |
Selling, general and administrative | $ 98,178 | $ 97,013 | 403,036 | 283,753 |
Stock based compensation attributed to warrant grants | 102,782 | 105,501 | ||
Total operating expenses | $ 98,575 | $ 114,095 | 510,571 | 429,330 |
Loss from operations | (105,775) | (32,774) | (406,308) | (310,469) |
Other income (expense): | ||||
Interest expense | (69,601) | (50,362) | (201,229) | (242,626) |
Net (loss) gain on derivative liability | $ (48,751) | 52,977 | (132,614) | (337,132) |
Net gain on extinguishment and modification of debt | $ 325,335 | 7,900 | $ 4,032,608 | |
Gain on sale of equipment | $ 50,000 | $ 50,000 | ||
Provision for reserve on receivable due from MJ Enterprises | $ (100,000) | $ (100,000) | ||
Other income (expense) | $ (68,352) | 227,950 | $ (275,943) | 3,352,850 |
(Loss) income before income taxes | $ (174,127) | $ 195,176 | $ (682,251) | $ 3,042,381 |
Income taxes | ||||
Consolidated net (loss) income | $ (174,127) | $ 195,176 | $ (682,251) | $ 3,042,381 |
(Loss) income per common share - basic (in dollars per share) | $ (0.08) | $ 0.19 | $ (0.33) | $ 1.54 |
(Loss) income per common share - diluted (in dollars per share) | $ 0.02 | $ 0.38 | ||
Weighted average shares outstanding | ||||
Basic (in shares) | 2,093,502 | 1,038,883 | 2,093,502 | 1,973,673 |
Fully diluted (in shares) | 2,093,502 | 11,272,858 | 2,093,502 | 8,093,175 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY (Unaudited) | 9 Months Ended |
Sep. 30, 2015USD ($)shares | |
Common Stock [Member] | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |
Balance at Beginning | $ 2,094 |
Balance at Beginning (in shares) | shares | 2,093,502 |
Change in value of Series B preferred shares | |
Warrants issued for services | |
Change in value of rights to common shares | |
Net loss | |
Balance at Ending | $ 2,094 |
Balance in Ending (in shares) | shares | 2,093,502 |
Series D Preferred Stock [Member] | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |
Balance at Beginning | |
Balance at Beginning (in shares) | shares | 100 |
Change in value of Series B preferred shares | |
Warrants issued for services | |
Change in value of rights to common shares | |
Net loss | |
Balance at Ending | |
Balance in Ending (in shares) | shares | 100 |
Additional Paid-in Capital [Member] | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |
Balance at Beginning | $ 21,454,431 |
Change in value of Series B preferred shares | 616 |
Warrants issued for services | 102,782 |
Change in value of rights to common shares | $ 385,203 |
Net loss | |
Balance at Ending | $ 21,943,031 |
Accumulated Deficit [Member] | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |
Balance at Beginning | $ (25,620,604) |
Change in value of Series B preferred shares | |
Warrants issued for services | |
Change in value of rights to common shares | |
Net loss | $ (682,251) |
Balance at Ending | (26,302,855) |
Balance at Beginning | (4,164,079) |
Change in value of Series B preferred shares | 616 |
Warrants issued for services | 102,782 |
Change in value of rights to common shares | 385,203 |
Net loss | (682,251) |
Balance at Ending | $ (4,357,730) |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Cash flows from operating activities: | ||
Consolidated net (loss) income | $ (682,251) | $ 3,042,381 |
Adjustments to reconcile net (loss) income to net cash used in operating activities: | ||
Net gain on extinguishment and modification of debt | (7,900) | $ (4,032,608) |
Gain on sale of equipment | (50,000) | |
Change in fair value of derivative liabilities | 132,614 | $ 337,132 |
Issuance of warrants for services | 102,782 | 105,501 |
Provision for excess inventory | $ 54,000 | |
Provision for reserve on receivable from MJ Enterprises | 100,000 | |
Changes in operating assets and liabilities: | ||
Decrease in accounts receivable | $ 5,036 | 15,906 |
Decrease in inventory | 44,510 | 1,170 |
Decrease (increase) in prepaid expenses and other current assets | 66,100 | (100) |
Increase in accounts payable accrued expense and deferred income | 232,152 | 235,205 |
Net cash used in operating activities | (102,957) | $ (195,413) |
Cash flows from investing activities: | ||
Proceeds from sale of equipment | $ 50,000 | |
Receivable from MJ Enterprises | $ (200,000) | |
Net cash provided by (used in) in investing activities | $ 50,000 | (200,000) |
Cash flows from financing activities: | ||
Proceeds from senior secured promissory notes | $ 61,000 | 714,010 |
Payment on extinguishment of debt | (300,000) | |
Net cash provided by financing activities | $ 61,000 | 414,010 |
Increase in cash | 8,043 | 18,597 |
Cash at beginning of period | 0 | 0 |
Cash at end of period | $ 8,043 | $ 18,597 |
PRINCIPAL BUSINESS ACTIVITY AND
PRINCIPAL BUSINESS ACTIVITY AND SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
PRINCIPAL BUSINESS ACTIVITY AND SIGNIFICANT ACCOUNTING POLICIES | 1. PRINCIPAL BUSINESS ACTIVITY AND SIGNIFICANT ACCOUNTING POLICIES Interim Financial Statements The condensed consolidated financial statements as of September 30, 2015 and for the nine months ended September 30, 2015 and 2014 are unaudited. However, in the opinion of management of the Company, these condensed consolidated financial statements reflect all material adjustments, consisting solely of normal recurring adjustments, necessary to present fairly the consolidated 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 condensed 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 condensed consolidated financial statements do not include all of the information required by U.S. generally accepted accounting principles for complete financial statements. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Companys Annual Report on Form 10-K for the fiscal year ended December 31, 2014. Liquidity and Going Concern Going Concern The accompanying condensed 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. The Company generated a net loss for the nine months ended September 30, 2015 of approximately $682,000, had negative working capital of approximately $4,182,000 and a stockholders deficiency of approximately $4,358,000 at September 30, 2015. Since inception the Companys growth has been funded through a combination of convertible and non-convertible debt from private investors and from cash advances from its former parent 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 Companys 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, 2015, the Company continued to require waivers for debt covenant violations and extensions of maturity dates. Refer to Note 2 for lender waivers and maturity extensions received from the lenders. Basis of Consolidation The condensed consolidated financial statements include the accounts of NaturalNano, Inc. (NaturalNano or the Company), a Nevada corporation, and its wholly owned subsidiaries NaturalNano Research, Inc. (NN Research) a Delaware corporation. All significant inter-company accounts and transactions have been eliminated in consolidation. Description of the Business Nanotechnology 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 Companys 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 and polymers, plastics and composites. ViralProtec In the fourth quarter of 2014, the Company announced the new business line, ViralProtec, (www.viralprotec.com) a division of NaturalNano. ViralProtec, is a reseller for healthcare personal protective equipment (PPE) and ancillary supplies. Our mission is to provide personal protective equipment for caregivers for infectious patient care that meet or exceed CDC and WHO guidelines. ViralProtec was created in response of the public concern and publicity surrounding the risk to caregivers and other responders created by the Ebola virus. The Company will maintain inventory on hand for customers to order complete protection kits from a single source instead multiple sources. 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 Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Fair Value Measurement Topic of the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) establishes a three-tier fair value hierarchy which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include: · 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 Companys own assumptions used to measure assets and liabilities at fair value. A financial asset or liabilitys classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement. The carrying amounts reported in the balance sheet of cash, accounts receivable, inventory, prepaid assets, accounts payable and accrued expenses approximate fair value because of the immediate or short-term maturity of these financial instruments. The fair value of notes payable approximates their carrying value as the terms of this debt reflects market conditions. The Companys derivative liability was determined utilizing Level 3 inputs. Derivative Financial Instruments The Company does not use derivative instruments to hedge exposures to cash flow, market or foreign currency risks. The Company evaluates all of its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and then is revalued at each reporting date, with changes in fair value reported in the consolidated statement of operations. For stock based derivative financial instruments, the Company estimated the total enterprise value based upon trending the firm value from December 2006 to September 2015 considering company specific factors including the changes in forward estimated revenues and market factors, market multiples for comparable companies, and the Companys market share price, all equally weighted. Once the enterprise value was determined an option pricing model was used to allocate the enterprise value to the individual derivative securities in the Companys capital structure. 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. 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 FASB 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 tax 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 three and nine month periods ending September 30, 2015 and 2014. Loss Per Share Loss per common share is computed by dividing net income or loss by the weighted-average number of shares of common stock outstanding during the period. Diluted income or 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, 2015 and 2014 there were 29,959,112 and 5,608,263 shares, respectively, underlying preferred stock, convertible debt, outstanding options and warrants that could potentially dilute future earnings. In addition to these potentially dilutive shares as of September 30, 2015 and 2014 were an additional 6,666,667 reserved shares underlying the July 23, 2014 Exchange and Right to Shares Agreement with Cape One Master Fund II LLP further described in Note 2 below. These potentially dilutive shares have been limited by certain debt and equity agreements with lenders. 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. Recent Accounting Pronouncements In July 2015, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2015-011 to Topic 330, Inventory. This ASU requires entities using inventory costing methods other than last-in-first-out and retail inventory method to value their inventory at the lower of cost and net realizable value. This ASU is effective for fiscal years beginning after December 15, 2016 and is to be applied prospectively. Early adoption of this ASU is permitted. The Company does not expect adoption of this ASU to have a material impact on its Consolidated Financial Statements. |
NOTES PAYABLE
NOTES PAYABLE | 9 Months Ended |
Sep. 30, 2015 | |
Debt Disclosure [Abstract] | |
NOTES PAYABLE | 2. NOTES PAYABLE Notes payable consisted of the following: Notes Payable September 30, December 31, Senior Secured Convertible Notes $ 441,988 $ 441,988 Senior Secured Promissory Notes 398,938 398,938 2014-2015 Convertible Promissory Notes 755,015 694,020 $ 1,595,941 $ 1,534,946 Senior Secured Convertible Notes and Senior Secured Promissory Notes As of September 30, 2015 and December 31, 2014 Notes payable on the balance sheets includes $840,926 for senior secured convertible and non-convertible senior secured promissory notes. The conversion rate for principal and accrued interest on Senior Secured Convertible Notes is 75% of the lowest volume weighted average price (VWAP) of the Companys common stock for the 1, 5 or 10 days immediately prior to the conversion. As further described below, the Company has defaulted on certain provisions of the notes. The Company has obtained a waiver of default on the outstanding principal through November 30, 2015. As a condition of this forbearance the interest rate on certain of these notes has been increased to 18%. 2014-2015 Convertible Promissory Notes During nine months ended September 30, 2015, the Company entered into two Senior Secured Convertible Promissory Notes aggregating $61,000. The 2014-2015 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 2014-2015 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 Company has obtained a waiver of default on the outstanding principal through November 30, 2015. As a condition of this forbearance the interest rate on certain of these notes has been increased to 18%. On February 15, 2015, the Company granted 300,000 warrants to the Companys board members with an exercise price of $0.10 per share and on May 30, 2015, the Company granted 375,000 warrants to the Companys board members and one consultant with an exercise price of $0.05 per share. The 2014-2015 Convertible Promissory Notes were convertible into shares at $0.30 per share subject to adjustment in the event of lower price issuances, subject to customary exceptions. Based on the Companys issuance of warrants described above, the conversion price on these debt obligations were modified to $0.05 per share. Subordinated Secured Convertible Note and Exchange and Right to Shares Agreement Cape One Master Fund II LP On July 23, 2014, the Company and Cape One Master Fund II LLP agreed to exchange the Subordinated Secured Convertible Note and related accrued and unpaid interest totaling a combined $379,624 in exchange for 6,666,667 reserved shares of the Companys common stock. The Company and Cape One agreed that a beneficial ownership limitation of 4.99% shall be maintained at all times as to the number of the shares of the common stock outstanding immediately after giving effect to the issuance of the common stock issuable under this agreement. Cape One also agreed to a Lockup provision in the agreement that specifies that Cape One will not sell, transfer or hypothecate any of the reserved shares until Alpha Capital Anstalt has received $3,500,000 from the proceeds of sales of shares obtained upon conversion of notes issued by the Company and held by Alpha as of the date of this agreement. Upon expiration of the Lockup period, Cape One shall be allowed to sell the lesser of (i) 5% of the daily trading volume of the Companys common stock or, (ii) 10% of the reserved shares in any calendar month. The Company estimated the total enterprise value based upon a combination of the trending of the firm value from December 2006 to September 2015, market comparables and the market value of the Companys stock 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 these 6,666,667 share rights and other securities in the Companys capital structure. As of September 30, 2014 the fair value of these 6,666,667 share rights was estimated at $54,289 and the Company recognized a gain on extinguishment of debt of $325,335 during the three months ended September 30, 2014 based on the excess of value of the instruments settled over the estimated fair value of the 6,666,667 share rights. As of September 30, 2015 the fair value of these 6,666,667 share rights was estimated at $174,086 based on the excess of the value of the instruments settled over the estimated fair market value of the share rights granted. The change in fair market value of this rights liability (of $385,203 since December 31, 2014) has been reflected in Additional Paid In Capital. As a result of the Company not having sufficient authorized shares to satisfy the issuance of these 6,666,667 share rights, conversion of all outstanding convertible debt, convertible preferred stock, warrants and options, the value of these share rights has been presented in temporary equity classification on the balance sheets. During the nine month period ended September 30, 2014, the Company entered into forbearance agreements with Cape One which extended the due dates of certain outstanding notes and accrued interest. As consideration for this forbearance, the lender increased its principal balance outstanding by $40,000. This amount was added to the principal balance of the Initial Notes and the Company recognized a loss on modification of debt of $40,000 in the nine month period ended September 30, 2014. Payoff Agreement with Platinum Long Term Growth IV, LLC and Merit Consulting LLC On June 26, 2014, the Company entered into a Payoff Agreement with two of its lenders (collectively referred to as the holders) where the holders agreed to surrender their outstanding promissory notes and debentures in the aggregate principal amount of $3,256,399 plus all accrued and unpaid interest amounting to $592,414 in consideration for an aggregate payment of $300,000. As further consideration, one of the lenders agreed to return its 2,587,674 shares of Series C Preferred Stock for cancellation. The Company reversed $70,165 in registration rights liabilities in connection with this Payoff Agreement. Effective upon the consummation of this Payoff Agreement, the Company had no further obligation to the holders pursuant to the terms of the preferred stock and the notes as defined in the Payoff Agreement. As a result of this Payoff Agreement, the Company recognized a gain on extinguishment of debt during the second quarter of 2014 in the amount of $3,747,273. Bitcoin Promissory Notes The Company established its subsidiary, Bitcoin Bidder, Inc. in September, 2014 for the sole purpose of bidding on bitcoins which had been seized by the FBI and were sold at auction September 27, 2014. In connection with this, the Company issued notes aggregating $2,150,000 under a Securities Purchase Agreement. Bitcoin Bidder, Inc. was not successful at the auction and $1,950,000 in borrowings was repaid to the lenders on September 30, 2014. The remaining $200,000 was repaid to the lenders in July, 2014 without any penalty or interest charges to NaturalNano. The Company dissolved Bitcoin Bidder, Inc. in 2014. |
SEGMENT INFORMATION
SEGMENT INFORMATION | 9 Months Ended |
Sep. 30, 2015 | |
Segment Reporting [Abstract] | |
SEGMENT INFORMATION | 3. SEGMENT INFORMATION The Companys reportable segments are strategic business units that offer different products and services. The Companys reportable segments are organized, managed and internally reported separately because each business requires different technology and marketing strategies. The Company currently has two operating segments, Nanotechnology and ViralProtec. The accounting policies of the segments are the same as those described in the summary of significant accounting policies of the Company. The Company accounts for intersegment sales and transfers as if the sales or transfers were to third parties, that is, at current market prices. The Company relies on intersegment cooperation and management does not represent that these segments, if operated independently, would report the results contained herein. For purposes of determining segment loss, corporate overhead is primarily included in Nanotechnology, other than direct expense of ViralProtec. A summary of the two segments is as follows: Nanotechnology 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 and polymers, plastics and composites. ViralProtec Distributor and reseller of personal protective equipment and supplies to protect medical workers from infection and contagious incidents. Information concerning the Companys operations by reportable segment for the three and nine months ended September 30, 2015 and 2014 are as follows: Nanotechnology ViralProtec Consolidated For the three months ended For the three months ended For the three months ended September 30, September 30, September 30, September 30, September 30, September 30, Revenue $ 24,371 $ 89,600 $ 9,760 $ 34,131 $ 89,600 Loss from operations $ (53,472 ) $ (32,774 ) $ (52,303 ) $ (105,775 ) $ (32,774 ) Interest expense (69,601 ) (50,362 ) (69,601 ) (50,362 ) Net loss (gain) on derivative liabilities (48,751 ) 52,977 (48,751 ) 52,977 Gain on forgiveness and modification of debt 325,335 325,335 Gain on sale of equipment 50,000 50,000 Provision for reserve on receivable due from MJ Enterprises (100,000) (100,000) Net income (loss) $ (121,824 ) $ 195,176 $ (52,303 ) $ (174,127 ) $ 195,176 Nanotechnology ViralProtec Consolidated For the nine months ended For the nine months ended For the nine months ended September 30, September 30, September 30, September 30, September 30, September 30, Revenue $ 131,652 $ 135,774 $ 91,969 $ 223,621 $ 135,774 (Loss) income from operations $ (373,168 ) $ (310,469 ) $ (33,140 ) $ (406,308 ) $ (310,469 ) Interest expense (201,229 ) (242,626 ) (201,229 ) (242,626 ) Net loss on derivative liabilities (132,614 ) (337,132 ) (132,614 ) (337,132 ) Gain on forgiveness and modification of debt 7,900 4,032,608 7,900 4,032,608 Gain on sale of equipment 50,000 50,000 Provision for reserve on receivable due from MJ Enterprises (100,000 ) (100,000 ) Net income (loss) $ (649,111 ) $ 3,042,381 $ (33,140 ) $ (682,251 ) $ 3,042,381 Assets $ 32,817 $ 145,113 $ 115,520 $ 148,337 $ 145,113 Geographic Areas Major Customers |
DERIVATIVE LIABILITY
DERIVATIVE LIABILITY | 9 Months Ended |
Sep. 30, 2015 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
DERIVATIVE LIABILITY | 4. DERIVATIVE LIABILITY For stock based derivative financial instruments, the Company estimated the total enterprise value based upon a combination of the trending of the firm value from December 2006 to September 2015, market comparables, and the market value of the Companys stock, 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 Companys capital structure. 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 Companys derivative liabilities as of September 30, 2015 and December 31, 2014 are as follows: · The debt conversion feature embedded in the various Convertible Promissory Notes which contain anti-dilution provisions that would be triggered if the Company issued instruments with rights to the Companys common stock at prices below this exercise price (described in Note 2.) · Derivative liabilities related to outstanding warrants and options due to the Company having insufficient authorized shares to satisfy the exercise or conversion of all outstanding instruments as of September 30, 2015 and December 31, 2014. The fair value of the derivative liabilities as of September 30, 2015 and December 31, 2014 are as follows: September 30, December 31, Note conversion feature liabilities $ 519,622 $ 375,949 Warrant liability 713 11,772 Total $ 520,335 $ 387,721 The change in the fair value of the derivative liability resulted in a loss of $48,751 in the third quarter of 2015 and a loss of $132,614 for the nine months ended September 30, 2015 and has been recognized in the statement of operations for the respective periods. A change in fair value of the derivative liability of resulted in a gain of $52,977 in the third quarter of 2014 and a loss of $337,132 for the nine months ended September 30, 2014 and has been recognized in the respective periods. Significant fluctuations in the variables used in calculating the value of the Companys derivative liabilities could have significant impact on the fair market valuation. |
STOCKHOLDERS EQUITY
STOCKHOLDERS EQUITY | 9 Months Ended |
Sep. 30, 2015 | |
Stockholders' Equity Note [Abstract] | |
STOCKHOLDERS EQUITY | 5. STOCKHOLDERS EQUITY As of September 30, 2015 the Company was authorized to issue up to 800,000,000 shares of common stock and 10,000,000 shares of preferred stock. Authorized Common Stock: Preferred Stock Issuances The Series B Convertible Preferred Stock is convertible into 160 shares of the Companys common stock and votes on an as-converted basis (with each share having 160 votes). The Series B designation 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. As a result of the Company not having sufficient authorized shares to satisfy the conversion of all outstanding convertible debt, share rights, convertible preferred stock, warrants and options, the Series B preferred shares have been moved into temporary equity classification on the balance sheet. Warrants Grants The Company has issued warrants to purchase shares of its common stock to certain consultants and debt holders. As of September 30, 2015 and December 31, 2014 there were common stock warrants outstanding to purchase an aggregate of 1,217,941 and 545,294 shares of common stock, respectively, pursuant to the warrant grant agreements. On February 15, 2015, the Company granted a total of 300,000 warrants to the Companys board members. These warrants, included in the summary below, grant the right to purchase one share of common stock at an exercise price of $0.10 per share. The warrants were fully vested as of the grant date and contain a cashless exercise provision. The fair value of the warrants on the date of grant was determined using the Black-Scholes model and was measured on the date of grant at $61,106. An expected volatility assumption of 140% was used based on the volatility of the Companys stock price utilizing a look-back basis and the risk-free interest rate of 1.62% which was derived from the U.S. treasury yields on the date of grant. The market price of the Companys common stock on the grant date was $0.22 per share. The expiration date used in the valuation model aligns with the warrant life of five years as indicated in the agreements. The dividend yield was assumed to be zero. On May 30, 2015, the Company granted a total of 375,000 warrants to the Companys board members and one consultant. These warrants, included in the summary below, grant the right to purchase one share of common stock at an exercise price of $0.05 per share. The warrants were fully vested as of the grant date and contain a cashless exercise provision. The fair value of the warrants on the date of grant was determined using the Black-Scholes model and was measured on the date of grant at $41,676. An expected volatility assumption of 140% was used based on the volatility of the Companys stock price utilizing a look-back basis and the risk-free interest rate of 1.49% which was derived from the U.S. treasury yields on the date of grant. The market price of the Companys common stock on the grant date was $0.12 per share. The expiration date used in the valuation model aligns with the warrant life of five years as indicated in the agreements. The dividend yield was assumed to be zero. A summary of the outstanding warrants is presented below: Shares Weighted Weighted Outstanding at January 1, 2015 545,294 $ 4.26 2.24 Granted 675,000 0.07 Expired (2,353 ) 102.00 Warrants outstanding at September 30, 2015 1,217,941 $ 0.35 4.32 Warrants exercisable at September 30, 2015 1,217,941 $ 0.35 4.32 |
INCENTIVE STOCK PLANS
INCENTIVE STOCK PLANS | 9 Months Ended |
Sep. 30, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
INCENTIVE STOCK PLANS | 6. INCENTIVE STOCK PLANS A summary of the status of the outstanding incentive stock plans is presented below: Shares Weighted Weighted Average Options outstanding at January 1, 2015 2,363 $ 921.00 3.53 Options expired unexercised first quarter (1,264 ) Options outstanding at September 30, 2015 1,099 $ 2,008 1.32 Options exercisable at September 30, 2015 1,099 $ 2,008 1.32 All compensation costs for the above options have been previously recognized in operations. As of September 30, 2015, the aggregate intrinsic value of the stock options outstanding and exercisable was $0. There were no option grants made in the nine month periods ended September 30, 2015 and 2014. |
REVERSE STOCK SPLIT
REVERSE STOCK SPLIT | 9 Months Ended |
Sep. 30, 2015 | |
Reverse Stock Split Abstract [Abstract] | |
REVERSE STOCK SPLIT | 7. REVERSE STOCK SPLIT On December 19, 2014, 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-300 reverse stock split of its common stock, or the Reverse Stock Split. This action had previously been approved by the Companys Board of Directors on November 4, 2014. As a result of the Reverse Stock Split, every three hundred shares of the Companys 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 Companys common stock began trading at its post-Reverse Stock Split price at the beginning of trading on December 22, 2014. |
PRINCIPAL BUSINESS ACTIVITY A14
PRINCIPAL BUSINESS ACTIVITY AND SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Interim Financial Statements | Interim Financial Statements The condensed consolidated financial statements as of September 30, 2015 and for the nine months ended September 30, 2015 and 2014 are unaudited. However, in the opinion of management of the Company, these condensed consolidated financial statements reflect all material adjustments, consisting solely of normal recurring adjustments, necessary to present fairly the consolidated 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 condensed 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 condensed consolidated financial statements do not include all of the information required by U.S. generally accepted accounting principles for complete financial statements. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Companys Annual Report on Form 10-K for the fiscal year ended December 31, 2014. |
Liquidity and Going Concern | Liquidity and Going Concern Going Concern The accompanying condensed 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. The Company generated a net loss for the nine months ended September 30, 2015 of approximately $582,000, had negative working capital of approximately $4,082,000 and a stockholders deficiency of approximately $4,300,000 at September 30, 2015. Since inception the Companys growth has been funded through a combination of convertible and non-convertible debt from private investors and from cash advances from its former parent 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 Companys 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, 2015, the Company continued to require waivers for debt covenant violations and extensions of maturity dates. Refer to Note 2 for lender waivers and maturity extensions received from the lenders. |
Basis of Consolidation | Basis of Consolidation The condensed consolidated financial statements include the accounts of NaturalNano, Inc. (NaturalNano or the Company), a Nevada corporation, and its wholly owned subsidiaries NaturalNano Research, Inc. (NN Research) a Delaware corporation. All significant inter-company accounts and transactions have been eliminated in consolidation. |
Description of the Business | Description of the Business Nanotechnology 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 Companys 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 and polymers, plastics and composites. ViralProtec In the fourth quarter of 2014, the Company announced the new business line, ViralProtec, (www.viralprotec.com) a division of NaturalNano. ViralProtec, is a reseller for healthcare personal protective equipment (PPE) and ancillary supplies. Our mission is to provide personal protective equipment for caregivers for infectious patient care that meet or exceed CDC and WHO guidelines. ViralProtec was created in response of the public concern and publicity surrounding the risk to caregivers and other responders created by the Ebola virus. The Company will maintain inventory on hand for customers to order complete protection kits from a single source instead multiple sources. |
Estimates | 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 | Fair Value of Financial Instruments Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Fair Value Measurement Topic of the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) establishes a three-tier fair value hierarchy which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include: 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 Companys own assumptions used to measure assets and liabilities at fair value. A financial asset or liabilitys classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement. The carrying amounts reported in the balance sheet of cash, accounts receivable, inventory, prepaid assets, accounts payable and accrued expenses approximate fair value because of the immediate or short-term maturity of these financial instruments. The fair value of notes payable approximates their carrying value as the terms of this debt reflects market conditions. The Companys derivative liability was determined utilizing Level 3 inputs. |
Derivative Financial Instruments | Derivative Financial Instruments The Company does not use derivative instruments to hedge exposures to cash flow, market or foreign currency risks. The Company evaluates all of its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and then is revalued at each reporting date, with changes in fair value reported in the consolidated statement of operations. For stock based derivative financial instruments, the Company estimated the total enterprise value based upon trending the firm value from December 2006 to September 2015 considering company specific factors including the changes in forward estimated revenues and market factors, market multiples for comparable companies, and the Companys market share price, all equally weighted. Once the enterprise value was determined an option pricing model was used to allocate the enterprise value to the individual derivative securities in the Companys capital structure. 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. |
Reclassifications | Reclassifications Certain prior year amounts have been reclassified to conform to the current year presentation. |
Income Taxes | Income Taxes The Company accounts for income taxes in accordance with FASB 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 tax 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 three and nine month periods ending September 30, 2015 and 2014. |
Loss Per Share | Loss Per Share Loss per common share is computed by dividing net income or loss by the weighted-average number of shares of common stock outstanding during the period. Diluted income or 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, 2015 and 2014 there were 29,959,112 and 5,608,263 shares, respectively, underlying preferred stock, convertible debt, outstanding options and warrants that could potentially dilute future earnings. In addition to these potentially dilutive shares as of September 30, 2015 and 2014 were an additional 6,666,667 reserved shares underlying the July 23, 2014 Exchange and Right to Shares Agreement with Cape One Master Fund II LLP further described in Note 2 below. These potentially dilutive shares have been limited by certain debt and equity agreements with lenders. 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. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In July 2015, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2015-011 to Topic 330, Inventory. This ASU requires entities using inventory costing methods other than last-in-first-out and retail inventory method to value their inventory at the lower of cost and net realizable value. This ASU is effective for fiscal years beginning after December 15, 2016 and is to be applied prospectively. Early adoption of this ASU is permitted. The Company does not expect adoption of this ASU to have a material impact on its Consolidated Financial Statements. |
NOTES PAYABLE (Tables)
NOTES PAYABLE (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Debt Disclosure [Abstract] | |
Schedule of notes payable | Notes payable consisted of the following: Notes Payable September 30, December 31, Senior Secured Convertible Notes $ 441,988 $ 441,988 Senior Secured Promissory Notes 398,938 398,938 2014-2015 Convertible Promissory Notes 755,015 694,020 $ 1,595,941 $ 1,534,946 |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Segment Reporting [Abstract] | |
Schedule of operations by reportable segment | Information concerning the Companys operations by reportable segment for the three and nine months ended September 30, 2015 and 2014 are as follows: Nanotechnology ViralProtec Consolidated For the three months ended For the three months ended For the three months ended September 30, September 30, September 30, September 30, September 30, September 30, Revenue $ 24,371 $ 89,600 $ 9,760 $ 34,131 $ 89,600 Loss from operations $ (53,472 ) $ (32,774 ) $ (52,303 ) $ (105,775 ) $ (32,774 ) Interest expense (69,601 ) (50,362 ) (69,601 ) (50,362 ) Net loss (gain) on derivative liabilities (48,751 ) 52,977 (48,751 ) 52,977 Gain on forgiveness and modification of debt 325,335 325,335 Gain on sale of equipment 50,000 50,000 Provision for reserve on receivable due from MJ Enterprises (100,000) (100,000) Net income (loss) $ (121,824 ) $ 195,176 $ (52,303 ) $ (174,127 ) $ 195,176 Nanotechnology ViralProtec Consolidated For the nine months ended For the nine months ended For the nine months ended September 30, September 30, September 30, September 30, September 30, September 30, Revenue $ 131,652 $ 135,774 $ 91,969 $ 223,621 $ 135,774 (Loss) income from operations $ (373,168 ) $ (310,469 ) $ (33,140 ) $ (406,308 ) $ (310,469 ) Interest expense (201,229 ) (242,626 ) (201,229 ) (242,626 ) Net loss on derivative liabilities (132,614 ) (337,132 ) (132,614 ) (337,132 ) Gain on forgiveness and modification of debt 7,900 4,032,608 7,900 4,032,608 Gain on sale of equipment 50,000 50,000 Provision for reserve on receivable due from MJ Enterprises (100,000 ) (100,000 ) Net income (loss) $ (649,111 ) $ 3,042,381 $ (33,140 ) $ (682,251 ) $ 3,042,381 Assets $ 32,817 $ 145,113 $ 115,520 $ 148,337 $ 145,113 |
DERIVATIVE LIABILITY (Tables)
DERIVATIVE LIABILITY (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of the fair value of the derivative liabilities | The fair value of the derivative liabilities as of September 30, 2015 and December 31, 2014 are as follows: September 30, December 31, Note conversion feature liabilities $ 519,622 $ 375,949 Warrant liability 713 11,772 Total $ 520,335 $ 387,721 |
STOCKHOLDERS EQUITY (Tables)
STOCKHOLDERS EQUITY (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Stockholders' Equity Note [Abstract] | |
Schedule of outstanding warrants | A summary of the outstanding warrants is presented below: Shares Weighted Weighted Outstanding at January 1, 2015 545,294 $ 4.26 2.24 Granted 675,000 0.07 Expired (2,353 ) 102.00 Warrants outstanding at September 30, 2015 1,217,941 $ 0.35 4.32 Warrants exercisable at September 30, 2015 1,217,941 $ 0.35 4.32 |
INCENTIVE STOCK PLANS (Tables)
INCENTIVE STOCK PLANS (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of outstanding incentive stock plans | A summary of the status of the outstanding incentive stock plans is presented below: Shares Weighted Weighted Average Options outstanding at January 1, 2015 2,363 $ 921.00 3.53 Options expired unexercised first quarter (1,264 ) Options outstanding at September 30, 2015 1,099 $ 2,008 1.32 Options exercisable at September 30, 2015 1,099 $ 2,008 1.32 |
PRINCIPAL BUSINESS ACTIVITY A20
PRINCIPAL BUSINESS ACTIVITY AND SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | Jul. 23, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 |
Net loss | $ (174,127) | $ 195,176 | $ (682,251) | $ 3,042,381 | ||
Working capital deficit | 4,182,000 | |||||
Stockholders' deficiency | $ (4,357,730) | $ (4,357,730) | $ (4,164,079) | |||
Income tax expense | ||||||
Number of shares underlying preferred stock, convertible debt (in shares) | 29,959,112 | |||||
Stock conversion limit percentage | 4.99% | |||||
Cape One Master Fund II LP [Member] | ||||||
Number of potentially dilutive shares (in shares) | 6,666,667 | 6,666,667 | 6,666,667 | |||
Options And Securities [Member] | ||||||
Number of shares underlying preferred stock, convertible debt (in shares) | 29,959,112 | 5,608,263 |
NOTES PAYABLE (Details)
NOTES PAYABLE (Details) - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 |
Short-term Debt [Line Items] | ||
Notes payable | $ 1,595,941 | $ 1,534,946 |
Senior Secured Convertible Notes [Member] | ||
Short-term Debt [Line Items] | ||
Notes payable | 441,988 | 441,988 |
Senior Secured Promissory Note [Member] | ||
Short-term Debt [Line Items] | ||
Notes payable | 398,938 | 398,938 |
2014-2015 Convertible Promissory Notes [Member] | ||
Short-term Debt [Line Items] | ||
Notes payable | $ 755,015 | $ 694,020 |
NOTES PAYABLE (Details Narrativ
NOTES PAYABLE (Details Narrative) - USD ($) | May. 30, 2015 | Feb. 15, 2015 | Jul. 23, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 |
Notes payable current | $ 1,595,941 | $ 1,595,941 | $ 1,534,946 | |||||
Proceeds from notes payable | 61,000 | $ 714,010 | ||||||
Rights to reserved common shares fair value | $ 174,086 | 174,086 | 559,289 | |||||
Gain on extinguishment of debt | $ 325,335 | 7,900 | 4,032,608 | |||||
Senior Secured Convertible Notes and Senior Secured Promissory Notes [Member] | ||||||||
Notes payable current | $ 840,926 | $ 840,926 | 840,926 | |||||
Description of conversion terms | The conversion rate for principal and accrued interest on Senior Secured Convertible Notes is 75% of the lowest volume weighted average price (VWAP) of the Companys common stock for the 1, 5 or 10 days immediately prior to the conversion. | |||||||
Forbearance interest rate | 18.00% | |||||||
2014-2015 Convertible Promissory Notes [Member] | ||||||||
Notes payable current | $ 755,015 | $ 755,015 | 694,020 | |||||
Forbearance interest rate | 18.00% | |||||||
Number of promissory notes issued | 2 | |||||||
Proceeds from notes payable | $ 61,000 | |||||||
Description of collateral | 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. | |||||||
Conversion price (in dollars per share) | $ 0.3 | $ 0.3 | ||||||
Revised conversion price (in dollars per share) | $ 0.5 | $ 0.5 | ||||||
2014-2015 Convertible Promissory Notes [Member] | Warrant [Member] | Board Members [Member] | ||||||||
Number of shares issued | 300,000 | |||||||
Exercise price (in dollars per share) | $ 0.10 | |||||||
2014-2015 Convertible Promissory Notes [Member] | Warrant [Member] | Board Members & One Consultant [Member] | ||||||||
Number of shares issued | 375,000 | |||||||
Exercise price (in dollars per share) | $ 0.05 | |||||||
Subordinated Secured Convertible Note [Member] | Cape One Master Fund II LP [Member] | ||||||||
Notes payable | $ 379,624 | |||||||
Number of reserve common stock issued | 6,666,667 | |||||||
Percentage of beneficial ownership limitation | 4.99% | |||||||
Description of lockup provision | Lockup provision in the agreement that specifies that Cape One will not sell, transfer or hypothecate any of the reserved shares until Alpha Capital Anstalt has received $3,500,000 from the proceeds of sales of shares obtained upon conversion of notes issued by the Company and held by Alpha as of the date of this agreement. Upon expiration of the Lockup period, Cape One shall be allowed to sell the lesser of (i) 5% of the daily trading volume of the Companys common stock or, (ii) 10% of the reserved shares in any calendar month. | |||||||
Rights to reserved common shares fair value | $ 174,086 | 54,289 | $ 174,086 | 54,289 | ||||
Gain on extinguishment of debt | $ 325,335 | |||||||
Increase (decrease) fair value rights liability | $ 385,203 | |||||||
Debt instrument forbearance increased amount | 40,000 | |||||||
Loss on modification of debt | $ 40,000 | |||||||
Subordinated Secured Convertible Note [Member] | Alpha Capital Anstalt [Member] | ||||||||
Proceeds receivable from sale of shares obtained | $ 3,500,000 |
NOTES PAYABLE (Details Narrat23
NOTES PAYABLE (Details Narrative 1) - USD ($) | Jun. 26, 2014 | Sep. 30, 2014 | Jul. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Jun. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 |
Gain on extinguishment of debt | $ 325,335 | $ 7,900 | $ 4,032,608 | |||||
Proceeds from notes payable | $ 61,000 | $ 714,010 | ||||||
Platinum Long Term Growth IV, LLC and Merit Consulting LLC [Member] | ||||||||
Notes payable | $ 3,256,399 | |||||||
Accrued and unpaid interest | 592,414 | |||||||
Repayment of debt origination | 300,000 | |||||||
Reversal of registration rights liabilities | $ 70,165 | |||||||
Gain on extinguishment of debt | $ 3,747,273 | |||||||
Platinum Long Term Growth IV, LLC and Merit Consulting LLC [Member] | Series C Preferred Stock [Member] | ||||||||
Number of shares cancelled | 2,587,674 | |||||||
Bitcoin Bidder Inc [Member] | ||||||||
Proceeds from notes payable | $ 2,150,000 | |||||||
Repayments of notes payable | $ 1,950,000 | $ 200,000 |
SEGMENT INFORMATION (Details)
SEGMENT INFORMATION (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | |
Revenue | $ 34,131 | $ 89,600 | $ 223,621 | $ 135,774 | |
(Loss) income from operations | (105,775) | (32,774) | (406,308) | (310,469) | |
Interest expense | (69,601) | (50,362) | (201,229) | (242,626) | |
Net loss (gain) on derivative liability | $ (48,751) | 52,977 | (132,614) | (337,132) | |
Gain on forgiveness and modification of debt | $ 325,335 | 7,900 | $ 4,032,608 | ||
Gain on sale of equipment | $ 50,000 | $ 50,000 | |||
Provision for reserve on receivable due from MJ Enterprises | $ (100,000) | $ (100,000) | |||
Net income (loss) | $ (174,127) | 195,176 | $ (682,251) | 3,042,381 | |
Assets | 148,337 | 145,113 | 148,337 | 145,113 | $ 309,940 |
Nanotechnology Segment [Member] | |||||
Revenue | 24,371 | 89,600 | 131,652 | 135,774 | |
(Loss) income from operations | (53,472) | (32,774) | (373,168) | (310,469) | |
Interest expense | (69,601) | (50,362) | (201,229) | (242,626) | |
Net loss (gain) on derivative liability | $ (48,751) | 52,977 | (132,614) | (337,132) | |
Gain on forgiveness and modification of debt | $ 325,335 | 7,900 | $ 4,032,608 | ||
Gain on sale of equipment | $ 50,000 | $ 50,000 | |||
Provision for reserve on receivable due from MJ Enterprises | $ (100,000) | $ (100,000) | |||
Net income (loss) | $ (121,824) | 195,176 | $ (649,111) | 3,042,381 | |
Assets | 32,817 | $ 145,113 | 32,817 | $ 145,113 | |
Viralprotec Segment [Member] | |||||
Revenue | 9,760 | 91,969 | |||
(Loss) income from operations | $ (52,303) | $ (33,140) | |||
Interest expense | |||||
Net loss (gain) on derivative liability | |||||
Gain on forgiveness and modification of debt | |||||
Gain on sale of equipment | |||||
Provision for reserve on receivable due from MJ Enterprises | |||||
Net income (loss) | $ (52,303) | $ (33,140) | |||
Assets | $ 115,520 | $ 115,520 |
SEGMENT INFORMATION (Detail Nar
SEGMENT INFORMATION (Detail Narrative) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015USD ($) | Sep. 30, 2014USD ($) | Sep. 30, 2015USD ($)Number | Sep. 30, 2014USD ($) | |
Number of reportable segments | Number | 2 | |||
Sales revenue | $ 34,131 | $ 89,600 | $ 223,621 | $ 135,774 |
UNITED STATES | ||||
Sales revenue | 10,200 | |||
Viralprotec Segment [Member] | ||||
Sales revenue | 9,760 | $ 91,969 | ||
Viralprotec Segment [Member] | Sales Revenue, Net [Member] | ||||
Concentration risk, percentage | 11.00% | |||
Nanotechnology Segment [Member] | ||||
Sales revenue | $ 24,371 | $ 89,600 | $ 131,652 | $ 135,774 |
Nanotechnology Segment [Member] | Sales Revenue, Net [Member] | ||||
Concentration risk, percentage | 64.00% | 93.00% |
DERIVATIVE LIABILITY (Details)
DERIVATIVE LIABILITY (Details) - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 |
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Note conversion feature liabilities | $ 519,622 | $ 375,949 |
Total | 520,335 | 387,721 |
Warrant [Member] | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Total | $ 713 | $ 11,772 |
DERIVATIVE LIABILITY (Details N
DERIVATIVE LIABILITY (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||
Net (loss) gain on derivative liability | $ (48,751) | $ 52,977 | $ (132,614) | $ (337,132) |
STOCKHOLDERS EQUITY (Details)
STOCKHOLDERS EQUITY (Details) - Warrant [Member] | 9 Months Ended |
Sep. 30, 2015$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | |
Outstanding at beginning of period | 545,294 |
Granted | 675,000 |
Expired | (2,353) |
Outstanding at end of period | 1,217,941 |
Exercisable at end of the period | 1,217,941 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract] | |
Outstanding at beginning of period | $ / shares | $ 4.26 |
Granted | $ / shares | 0.07 |
Expired | $ / shares | 102 |
Outstanding at end of period | $ / shares | 0.35 |
Exercisable at end of the period | $ / shares | $ 0.35 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Remaining Contractual Term [Roll Forward] | |
Outstanding at beginning of period | 2 years 2 months 27 days |
Outstanding at end of period | 4 years 3 months 25 days |
Exercisable at end of the period | 4 years 3 months 25 days |
STOCKHOLDERS EQUITY (Details Na
STOCKHOLDERS EQUITY (Details Narrative) - USD ($) | May. 30, 2015 | Feb. 15, 2015 | Jul. 23, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 |
Common stock, shares authorized | 800,000,000 | 800,000,000 | ||||
Preferred stock, shares authorized | 10,000,000 | |||||
Stock conversion limit percentage | 4.99% | |||||
Number of shares underlying preferred stock, convertible debt (in shares) | 29,959,112 | |||||
Common stock warrants outstanding | 1,217,941 | 545,294 | ||||
Series B Preferred Stock [Member] | ||||||
Stock issued during period, shares, conversion of shares | 160 | |||||
Stock conversion limit percentage | 4.99% | |||||
Cape One Master Fund II LP [Member] | ||||||
Number of potentially dilutive shares (in shares) | 6,666,667 | 6,666,667 | 6,666,667 | |||
Board Members [Member] | ||||||
Warrants, granted | 300,000 | |||||
Fair value of the warrants granted | $ 61,106 | |||||
Expected volatility assumption | 140.00% | |||||
Rsk-free interest rate | 1.62% | |||||
Market price of common stock (in dollars per share) | $ 0.12 | $ 0.22 | ||||
Exercise price of stock (in dollars per share) | $ 0.05 | $ 0.10 | ||||
Warrant life | 5 years | |||||
Dividend yield | 0.00% | |||||
Board Members & One Consultant [Member] | ||||||
Warrants, granted | 375,000 | |||||
Fair value of the warrants granted | $ 41,676 | |||||
Expected volatility assumption | 140.00% | |||||
Rsk-free interest rate | 1.49% | |||||
Warrant life | 5 years | |||||
Dividend yield | 0.00% |
INCENTIVE STOCK PLANS (Details)
INCENTIVE STOCK PLANS (Details) - Incentive Stock Plans [Member] | 9 Months Ended |
Sep. 30, 2015$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | |
Outstanding at beginning balance | 2,363 |
Expired unexercised | (1,264) |
Outstanding at ending balance | 1,099 |
Exercisable at end of the period | 1,099 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Roll Forward] | |
Outstanding at beginnig of period | $ / shares | $ 921 |
Outstanding at end of period | $ / shares | 2,008 |
Exercisable at end of the period | $ / shares | $ 2,008 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Remaining Contractual Term [Roll Forward] | |
Outstanding at beginnig of period | 3 years 6 months 11 days |
Outstanding at end of period | 1 year 3 months 25 days |
Exercisable at end of the period | 1 year 3 months 25 days |
INCENTIVE STOCK PLANS (Details
INCENTIVE STOCK PLANS (Details Narrative) | Sep. 30, 2015USD ($) |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Aggregate intrinsic value of the stock options outstanding | $ 0 |
Aggregate intrinsic value of the stock options exercisable | $ 0 |
REVERSE STOCK SPLIT (Details Na
REVERSE STOCK SPLIT (Details Narrative) | 9 Months Ended |
Sep. 30, 2015 | |
Reverse Stock Split Details Narrative | |
Stockholders' equity, reverse stock split | 1-for-300 reverse stock split of its common stock |