Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2016 | Aug. 11, 2016 | |
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 | Mar. 31, 2016 | |
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 | 3,054,469 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2,016 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) | Mar. 31, 2016 | Dec. 31, 2015 |
CURRENT ASSETS: | ||
Cash | $ 19,011 | $ 4,743 |
Inventory, net | 119,641 | 98,200 |
Prepaid and Other | 7,040 | 7,040 |
Total Current Assets | 145,692 | 109,983 |
Total Assets | 145,692 | 109,983 |
CURRENT LIABILITIES: | ||
Notes Payable | 1,580,441 | 1,929,941 |
Accounts Payable | 472,397 | 476,127 |
Accrued Expenses | 107,616 | 101,544 |
Accrued Interest | 584,629 | 506,598 |
Accrued Payroll | 1,128,948 | 1,151,448 |
Registration Rights Liability | 12,324 | 12,324 |
Derivative liability | 637,918 | 687,014 |
Total Current Liabilities | 4,524,273 | 4,864,996 |
LONG-TERM LIABILITIES: | ||
Convertible debentures, net | 344,000 | |
Derivative liability | 9,675 | |
Total Long-Term Liabilities | 353,675 | |
Total Liabilities | 4,877,948 | 4,864,996 |
STOCKHOLDERS' DEFICIT: | ||
Common stock at $0.001 par value: 800,000,000 shares authorized; 2,691,002 and 2,293,502 shares issued and outstanding at March 31, 2016 and December 31, 2015, respectively | 2,691 | 2,294 |
Additional paid-in capital | 21,978,263 | 21,953,148 |
Accumulated deficit | (26,714,409) | (26,711,654) |
Total Stockholders' Deficit | (4,733,455) | (4,756,212) |
Total Liabilities and Stockholders' Deficit | 145,692 | 109,983 |
Series B Preferred Stock [Member] | ||
LONG-TERM LIABILITIES: | ||
Preferred Stock - $.001 par value, 10 million shares authorized Series B - 5,000 shares issued and outstanding with an aggregate liquidation preference of $10 | $ 1,199 | $ 1,199 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares | Mar. 31, 2016 | Dec. 31, 2015 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, authorized | 800,000,000 | 800,000,000 |
Common stock, issued | 2,691,002 | 2,293,502 |
Common stock, outstanding | 2,691,002 | 2,293,502 |
Series B Preferred Stock [Member] | ||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, authorized | 10,000,000 | 10,000,000 |
Preferred stock, issued | 5,000 | 5,000 |
Preferred stock, outstanding | 5,000 | 5,000 |
Preferred stock, liquidation preference | $ 10 | $ 10 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
INCOME: | ||
Revenue | $ 122,448 | $ 115,085 |
Cost of Goods Sold | 4,400 | 27,408 |
Gross Profit | 118,049 | 87,677 |
OPERATING EXPENSES: | ||
General and Administrative Expense | 62,183 | 190,326 |
Research and Development | 3,284 | |
Stock based compensation attributable to warrant grants | 25,292 | 61,106 |
Total operating expenses | 87,475 | 254,716 |
GAIN (LOSS) FROM OPERATIONS | 30,574 | (167,039) |
OTHER INCOME (EXPENSE): | ||
Interest expense | (78,033) | (65,095) |
Gain on forgiveness, conversions and modifications of debt | 5,634 | 7,900 |
Gain on change in derivative liability | 39,068 | 146,277 |
Other income (expense), net | (33,331) | 89,082 |
Loss before income tax provision | (2,757) | (77,957) |
Income tax provision | ||
Net loss | $ (2,757) | $ (77,957) |
Loss per common share- basic and diluted (in dollars per share) | $ 0 | $ (0.04) |
Weighted average common shares outstanding- Basic and diluted (in shares) | 2,584,271 | 2,093,502 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY (Unaudited) | 3 Months Ended |
Mar. 31, 2016USD ($)shares | |
Common Stock [Member] | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |
Balance at Beginning | $ 2,297 |
Balance at Beginning (in shares) | shares | 2,293,502 |
Exercise of cashless warrants for services | $ 287 |
Exercise of cashless warrants for services (in shares) | shares | 287,500 |
Shares issued for conversion of long term debt | $ 110 |
Shares issued for conversion of long term debt (in shares) | shares | 110,000 |
Net loss | |
Balance at Ending | $ 2,691 |
Balance in Ending (in shares) | shares | 2,691,102 |
Series D Preferred Stock [Member] | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |
Balance at Beginning | |
Balance at Beginning (in shares) | shares | 100 |
Exercise of cashless warrants for services | |
Shares issued for conversion of long term debt | |
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 | $ 21,953,148 |
Exercise of cashless warrants for services | (287) |
Warrants issued for services | 25,292 |
Shares issued for conversion of long term debt | 110 |
Net loss | |
Balance at Ending | 21,978,263 |
Accumulated Deficit [Member] | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |
Balance at Beginning | (26,711,654) |
Exercise of cashless warrants for services | |
Warrants issued for services | |
Shares issued for conversion of long term debt | |
Net loss | (2,757) |
Balance at Ending | (26,714,709) |
Balance at Beginning | (4,756,212) |
Exercise of cashless warrants for services | |
Warrants issued for services | 25,292 |
Shares issued for conversion of long term debt | 220 |
Net loss | (2,757) |
Balance at Ending | $ (4,733,455) |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
NET LOSS | $ (2,757) | $ (77,957) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Issuance of warrants for services | 25,292 | 61,106 |
(Gain)/Loss on settlement of debt | (5,634) | (7,900) |
Change in fair value of derivative liabilities | (39,068) | (146,277) |
Changes in operating assets and liabilities: | ||
Accounts Receivable | 689 | |
Inventory | (21,441) | 35,033 |
Prepaid Expenses and Other Current Assets | 48,848 | |
Notes Payable | (5,500) | |
Accounts Payable and Accrued Expenses | 2,342 | 25,524 |
Accrued Interest | 78,031 | |
Accrued Payroll | (22,500) | |
NET CASH USED IN OPERATING ACTIVITIES | 8,768 | (60,934) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
NET CASH USED IN INVESTING ACTIVITIES | ||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Liabilities settled through issuance of Common stock | 5,500 | |
Proceeds from Senior secured promissory notes | 61,000 | |
NET CASH PROVIDED BY FINANCING ACTIVITIES | 5,500 | 61,000 |
NET CHANGE IN CASH | 14,268 | 66 |
Cash at beginning of period | 4,743 | |
Cash at end of period | 19,011 | 66 |
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | ||
Cash paid during the period for interest | ||
Cash paid during the period for income taxes | ||
NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||
Common stock issued for settlement of convertible debentures | $ 5,500 |
PRINCIPAL BUSINESS ACTIVITY AND
PRINCIPAL BUSINESS ACTIVITY AND SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Mar. 31, 2016 | |
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 March 31, 2016 and for the three months ended March 31, 2016 and 2015 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, 2015. 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 three months ended March 31, 2016 of approximately ($3,000), had negative working capital of approximately $4,378,000 and a stockholders deficiency of approximately $4,733,000 at March 31, 2016. 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 March 31, 2016, 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 New lines of Business Shrimp Omni Shrimp On June 23, 2016, the Company announced the acquisition of all the outstanding shares of, Omni Shrimp (Omni) a Florida corporation, located in Madeira Beach, Florida on the Gulf of Mexico. Omni is a seller of wild American shrimp. Omni wholesales its locally caught shrimp, predominantly the highly popular Key West pink variety, to large distributors in the United States, who then resell the product to grocery store chains, restaurants and other retail stores in the Florida, Boston and New York markets. See Note 7. Subsequent Events for more detail. Omni believes that it differentiates itself from its competitors not only by the quality of its product but its relationships with distributors allowing it to get its product to market as quickly as possible in order to guarantee freshness and taste. Existing lines of Business (as of March 31, 2016) On June 23, 2016, the following businesses were transferred to the former Management of the Company. See Note 8 to the Consolidated Financial statements below. 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. Significant Accounting Policies 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 March 2016 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 month periods ending March 31, 2016 and 2015. 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 March 31, 2016 and 2015 there were 39,567,578 and 9,130,044 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 March 31, 2015 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 | 3 Months Ended |
Mar. 31, 2016 | |
Debt Disclosure [Abstract] | |
NOTES PAYABLE | 2. NOTES PAYABLE Notes payable consisted of the following: Notes Payable March 31, December 31, Senior Secured Convertible Notes $ 441,988 $ 441,988 Senior Secured Promissory Notes 398,938 398,938 2014-2015 Convertible Promissory Notes 739,515 745,015 Convertible Promissory Notes 344,000 344,000 Total Notes Payable Outstanding 1,924,441 1,929,941 Total Notes- Non-current portion (344,000 ) -0- Total Notes Payable Outstanding-Current $ 1,580,441 $ 1,929,941 Senior Secured Convertible Notes and Senior Secured Promissory Notes As of March 31, 2016 and December 31, 2015 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. 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 March 31, 2016, 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 March 10, 2016, an investor converted $5,500 of principal into 110,000 shares. 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. 2015 Exchange of Cape One Master Fund II LLP shares for Convertible Promissory Notes On December 15, 2015, the Companys board of directors determined that it was in the best interest of the corporation to exchange 6,666,667 reserved shares of the Companys common stock, held by Cape One Master Fund II LLP (as described below), for four convertible promissory notes totaling $344,000 with an interest rate of 8% per annum due June 30, 2017. These promissory notes are convertible to common stock at the rate of $0.05 per share. In the event that the Company shall, at any time, issue any additional shares of common stock or equivalents at a price per share less than the $0.05 conversion price then the conversion price for these convertible promissory notes shall be reduced. The Company recognized a loss on the exchange of the rights to reserved commons shares upon the issuance of these convertible promissory notes of approximately $305,000 in 2015. On January 5, 2016 the conversion price on the debt was adjusted to $0.02 per share upon the issuance of 450,000 warrants exercisable at $0.02 per share. |
SEGMENT INFORMATION
SEGMENT INFORMATION | 3 Months Ended |
Mar. 31, 2016 | |
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 March 31, 2016 and 2015 are as follows: Nanotechnology ViralProtec Consolidated For the three months ended For the three months ended For the three months ended March 31, March 31, March 31, March 31, March 31, March 31, Revenue $ 122,448 $ 67,827 $ - 47,258 $ 122,448 $ 115,085 Gain (Loss) from operations 30,574 (180,260 ) $ - 13,221 30,574 $ (167,039 ) Interest expense (78,033 ) (65,095 ) - - (78,033 ) (65,095 ) Gain on derivative liabilities 39,068 146,277 - - 39,068 146,277 Gain on forgiveness, conversions and modification of debt 5,634 7,900 - - 5,634 7,900 Net (loss) $ (2,757 ) $ (91,178 ) $ -0- 13,221 $ (2,757 ) $ (77,957 ) Assets $ 53,919 $ 40,738 $ 91,773 184,698 $ 145,692 $ 225,436 Geographic Areas - |
DERIVATIVE LIABILITY
DERIVATIVE LIABILITY | 3 Months Ended |
Mar. 31, 2016 | |
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 March 2016, 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 March 31, 2016 and December 31, 2015 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 March 31, 2016 and December 31, 2015. The fair value of the derivative liabilities as of March 31, 2016 and December 31, 2015 are as follows: March 31, December 31, Note conversion feature liabilities $ 646,155 $ 686,255 Warrant liability 1,438 759 Total 647,593 687,014 Derivative Liability-non-current 9,675 Derivative liability-current $ 637,918 $ 687,014 The change in the fair value of the derivative liability resulted in a gain of $39,421and $146,277 in the first quarter of 2016 and 2015, respectively and has been recognized in the related statement of operations. 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 | 3 Months Ended |
Mar. 31, 2016 | |
Stockholders' Equity Note [Abstract] | |
STOCKHOLDERS EQUITY | 5. STOCKHOLDERS EQUITY As of March 31, 2016 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 March 31, 2016 and December 31, 2015 there were common stock warrants outstanding to purchase an aggregate of 1,217,941 and 1,217,941 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 January 6, 2016, the Company granted a total of 450,000 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 $0.02 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 $25,292. 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 1.00% 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 $0.06 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, 2016 1,217,941 $ .35 4.32 Issued 450,000 $ .02 4.77 Exercised (450,000 ) $ .07 9.04 Warrants outstanding at March 31, 2016 1,217,941 $ .33 2.74 |
INCENTIVE STOCK PLANS
INCENTIVE STOCK PLANS | 3 Months Ended |
Mar. 31, 2016 | |
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 Options outstanding at January 1, 2016 1,099 $ 2,008 1.32 Options outstanding at March 31, 2016 1,099 $ 2,008 1.07 Options exercisable at March 31, 2016 1,099 $ 2,008 1.07 All compensation costs for the above options have been previously recognized in operations. As of March 31, 2016, the aggregate intrinsic value of the stock options outstanding and exercisable was $0. There were no option grants made in the three month periods ended March 31, 2016 and 2015. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 3 Months Ended |
Mar. 31, 2016 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | 7. SUBSEQUENT EVENTS Material Definitive Agreement The Company announced on June 23, 2016 (the Effective Date) , it entered into a Share Exchange Agreement (the "Exchange Agreement") with all of the shareholders of Omni Shrimp, Inc., a Florida corporation ("Omni"), pursuant to which the shareholders exchanged with the Company all of the outstanding shares of stock of Omni and Omni thereupon became a wholly owned subsidiary of the Company. In consideration for the exchange of those Omni shares, the Company issued 28,500 shares of a newly created Series E Preferred Stock of the Company (the "Series E Preferred Stock"). As a result of their ownership of the Series E Preferred Stock, the Omni shareholders acquired the right to vote 95% of the voting control of the Company. The Series E Preferred Stock is also convertible into common stock which, in the aggregate, would represent up to 95% of the outstanding common stock after the conversion. In addition, on the Effective Date, the holders of all of the Company's outstanding Series B and Series D Preferred Stock, including James Wemett, who was a director of the Company and was an officer and principal shareholder of the company prior to the effective date, as the holder of the Series D shares, surrendered those shares to the Company. In connection with the Exchange Agreement and the disposition of the company's existing business, the company has relocated its principal offices to 13613 Gulf Boulevard, Madeira Beach, Florida 33738. Forebearance Agreement Concurrent with the Exchange Agreement on the Effective Date, owners of the Senior Secured Convertible Notes and the Promissory Notes agreed to surrender the following back to the Company: · Approximately $300,000 of face value debt and accrued interest · 5,000 shares of Series B Preferred Stock The Company did not issue any additional consideration for these securities Transfer of Former Lines of Business Subsequent to the closing of the Exchange Transaction pursuant to which Omni became a wholly-owned subsidiary of the Company, the Company entered into an Asset Purchase Agreement, with James Wemett, who had been the President and CEO of the Company until the closing of the Exchange Transaction and NaturalNano Corp., a New York corporation wholly-owned by Mr. Wemett ("Transferee"), pursuant to which the Transferee acquired all right, title and interest to those specific business activities of the Company which the Company had been conducting immediately prior to the closing of the Exchange Transaction, specifically, (i) developing and commercializing material additives based on a technology utilizing halloysite nanotubes, which line of business the Company had been engaged in for more than three years prior to the Effective Date, and (ii) reselling Ebola personal protective equipment and ancillary supplies. These business activities generated revenues for the Company, which revenues increased from $125,638 in 2012 to $368,066 in 2015. In connection with the transaction contemplated by the Asset Purchase Agreement, Mr. Wemett waived all accumulated compensation due to him from the Company, the Transferee assumed certain liabilities relating to those transferred business activities, the Company and Mr. Wemett exchanged releases, and the Company issued to Mr. Wemett a six year divisible Warrant with cashless exercise rights to purchase up to 2,000,000 shares of the Company's common stock at a purchase price of $0.05 per share. Management Change As disclosed in an Information Statement pursuant to Rule 14f filed on June 27, 2016, two of the Company's directors, Isaac Onn and Alex Ruckdaschel, resigned from those positions on June 15, 2016. Neither of the resignations was the result of any disagreement with the management of the Company. On June 21, 2016, to fill one of the Board vacancies, Colm Wrynn was elected as a director of the Company. On the Effective Date, James Wemett resigned as an officer of the Company and Colm Wrynn, the President of Omni became the President and Chief Executive Officer of the Company, and Daniel Stelcer, a Vice President of Omni became the Secretary and Chief Operating Officer of the Company. Mr. Wemett resigned as a director of the Company, and Mr. Stelcer will be appointed in his stead, effective as of ten (10) days after the delivery to the shareholders of the Company of an Information Statement pursuant to Rule 14f-1. Change in Independent Registered Public Accounting Firm On August 3, 2016, the Board of Directors of the Company notified Freed Maxick CPAs, P.C (Freed Maxick) that it had determined to dismiss them as the Companys independent registered public accounting firm, effective as of August 3, 2016. Also on August 3, 2016, the Board determined to engage Scrudato & Co., PA as its new independent registered public accounting firm to replace Freed Maxick. Please see our form 8-K filed on August 3, 2016 for more detail. Issuance of Common shares and Conversion of debt On April 13, 2016, the Company issued 220,656 shares for the exercise of cashless warrants On July 6, 2016, the Company issued 142,811 shares due to the conversion of $1,000 of notes payable plus $785 of accrued interest. Issuance of Debt On August 8, 2016, the Company borrowed $20,000 from a third party. The convertible promissory note bears interest at 10% per annum and matures on August 1, 2017. The third party has the option to convert all or a portion of the note plus accrued interest into common stock at a conversion price equal to 50% of the lowest closing bid price for the twenty days prior to the conversion. New Lease Commencing August 1, 2016, for a period of twelve months, the Company entered into a lease for its Madeira Beach location. The monthly rent shall be $1,500. |
PRINCIPAL BUSINESS ACTIVITY A14
PRINCIPAL BUSINESS ACTIVITY AND SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Mar. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Interim Financial Statements | Interim Financial Statements The condensed consolidated financial statements as of March 31, 2016 and for the three months ended March 31, 2016 and 2015 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, 2015. |
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 three months ended March 31, 2016 of approximately ($3,000), had negative working capital of approximately $4,378,000 and a stockholders deficiency of approximately $4,733,000 at March 31, 2016. 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 March 31, 2016, 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 New lines of Business Shrimp Omni Shrimp On June 23, 2016, the Company announced the acquisition of all the outstanding shares of, Omni Shrimp (Omni) a Florida corporation, located in Madeira Beach, Florida on the Gulf of Mexico. Omni is a seller of wild American shrimp. Omni wholesales its locally caught shrimp, predominantly the highly popular Key West pink variety, to large distributors in the United States, who then resell the product to grocery store chains, restaurants and other retail stores in the Florida, Boston and New York markets. See Note 8. Subsequent Events for more detail. Omni believes that it differentiates itself from its competitors not only by the quality of its product but its relationships with distributors allowing it to get its product to market as quickly as possible in order to guarantee freshness and taste. Existing lines of Business (as of March 31, 2016) On June 23, 2016, the following businesses were transferred to the former Management of the Company. See Note 8 to the Consolidated Financial statements below. 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 March 2016 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 month periods ending March 31, 2016 and 2015. |
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 March 31, 2016 and 2015 there were 39,567,578 and 9,130,044 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 March 31, 2015 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) | 3 Months Ended |
Mar. 31, 2016 | |
Debt Disclosure [Abstract] | |
Schedule of notes payable | Notes payable consisted of the following: Notes Payable March 31, December 31, Senior Secured Convertible Notes $ 441,988 $ 441,988 Senior Secured Promissory Notes 398,938 398,938 2014-2015 Convertible Promissory Notes 739,515 745,015 Convertible Promissory Notes 344,000 344,000 Total Notes Payable Outstanding 1,924,441 1,929,941 Total Notes- Non-current portion 344,000 -0- Total Notes Payable Outstanding-Current $ 1,580,441 $ 1,929,941 |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Segment Reporting [Abstract] | |
Schedule of operations by reportable segment | Information concerning the Companys operations by reportable segment for the three and nine months ended March 31, 2016 and 2015 are as follows: Nanotechnology ViralProtec Consolidated For the three months ended For the three months ended For the three months ended March 31, March 31, March 31, March 31, March 31, March 31, Revenue $ 122,448 $ 67,827 $ - 47,258 $ 122,448 $ 115,085 Gain (Loss) from operations 30,574 (180,260 ) $ - 13,221 30,574 $ (167,039 ) Interest expense (78,033 ) (65,095 ) - - (78,033 ) (65,095 ) Gain on derivative liabilities 39,068 146,277 - - 39,068 146,277 Gain on forgiveness, conversions and modification of debt 5,634 7,900 - - 5,634 7,900 Net (loss) $ (2,757 ) $ (91,178 ) $ -0- 13,221 $ (2,757 ) $ (77,957 ) Assets $ 53,919 $ 40,738 $ 91,773 184,698 $ 145,692 $ 225,436 |
DERIVATIVE LIABILITY (Tables)
DERIVATIVE LIABILITY (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
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 March 31, 2016 and December 31, 2015 are as follows: March 31, December 31, Note conversion feature liabilities $ 646,155 $ 686,255 Warrant liability 1,438 759 Total $ 647,593 $ 687,014 Derivative Liability-non-current 9,675 Derivative liability-current 637,918 $ 687,014 |
STOCKHOLDERS EQUITY (Tables)
STOCKHOLDERS EQUITY (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Stockholders' Equity Note [Abstract] | |
Schedule of outstanding warrants | A summary of the outstanding warrants is presented below: Shares Weighted Weighted Outstanding at January 1, 2016 1,217,941 $ .35 4.32 Issued 450,000 $ .02 4.77 Exercised (450,000 ) $ .07 9.04 Warrants outstanding at March 31, 2016 1,217,941 $ .33 2.74 |
INCENTIVE STOCK PLANS (Tables)
INCENTIVE STOCK PLANS (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
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 Options outstanding at January 1, 2016 1,099 $ 2,008 1.32 Options outstanding at March 31, 2016 1,099 $ 2,008 1.07 Options exercisable at March 31, 2016 1,099 $ 2,008 1.07 |
PRINCIPAL BUSINESS ACTIVITY A20
PRINCIPAL BUSINESS ACTIVITY AND SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 3 Months Ended | |||
Mar. 31, 2016 | Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2015 | |
Net loss | $ (2,757) | $ (77,957) | ||
Working capital deficit | (4,378,000) | |||
Stockholders' deficiency | (4,733,455) | $ (4,756,212) | ||
Income tax expense | ||||
Number of shares underlying preferred stock, convertible debt (in shares) | 29,959,112 | |||
Percentage of stock conversion limit | 4.99% | |||
Cape One Master Fund II LP [Member] | Exchange And Right To Shares Agreement [Member] | ||||
Number of potentially dilutive shares (in shares) | 6,666,667 | |||
Options And Securities [Member] | ||||
Number of shares underlying preferred stock, convertible debt (in shares) | 39,567,578 | 9,130,044 |
NOTES PAYABLE (Details)
NOTES PAYABLE (Details) - USD ($) | Mar. 31, 2016 | Dec. 31, 2015 |
Short-term Debt [Line Items] | ||
Total Notes Payable Outstanding | $ 1,924,441 | $ 1,929,941 |
Total Notes- Non-current portion | (344,000) | 0 |
Total Notes Payable Outstanding-Current | 1,580,441 | 1,929,941 |
Senior Secured Convertible Notes [Member] | ||
Short-term Debt [Line Items] | ||
Total Notes Payable Outstanding | 441,988 | 441,988 |
Senior Secured Promissory Note [Member] | ||
Short-term Debt [Line Items] | ||
Total Notes Payable Outstanding | 398,938 | 398,938 |
2014-2015 Convertible Promissory Notes [Member] | ||
Short-term Debt [Line Items] | ||
Total Notes Payable Outstanding | 739,515 | 745,015 |
8% Convertible Promissory Notes Due On June 30, 2017 [Member] | ||
Short-term Debt [Line Items] | ||
Total Notes Payable Outstanding | $ 344,000 | $ 344,000 |
NOTES PAYABLE (Details Narrativ
NOTES PAYABLE (Details Narrative) - USD ($) | Mar. 10, 2016 | Dec. 15, 2015 | May 30, 2015 | Feb. 15, 2015 | Jul. 23, 2014 | Mar. 31, 2016 | Mar. 31, 2015 | Jan. 05, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
Notes payable current | $ 1,580,441 | $ 1,929,941 | ||||||||
Proceeds from notes payable | $ 61,000 | |||||||||
Notes payable | 1,924,441 | $ 1,929,941 | ||||||||
Gain on extinguishment of debt | $ 5,634 | $ 7,900 | ||||||||
Number of warrants purchased | 1,217,941 | 1,217,941 | ||||||||
Senior Secured Convertible Notes and Senior Secured Promissory Notes [Member] | ||||||||||
Notes payable current | $ 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% | |||||||||
Senior Secured Convertible Notes and Senior Secured Promissory Notes [Member] | Investor [Member] | ||||||||||
Principal amount | $ 5,500 | |||||||||
Number of shares issued on conversion | 110,000 | |||||||||
2014-2015 Convertible Promissory Notes [Member] | ||||||||||
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) | $ 0.30 | |||||||||
Revised conversion price (in dollars per share) | $ 0.05 | |||||||||
Notes payable | $ 739,515 | 745,015 | ||||||||
2014-2015 Convertible Promissory Notes [Member] | Board Members [Member] | Warrant [Member] | ||||||||||
Number of shares issued | 300,000 | |||||||||
Exercise price (in dollars per share) | $ 0.10 | |||||||||
2014-2015 Convertible Promissory Notes [Member] | Board Members & One Consultant [Member] | Warrant [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. | |||||||||
8% Convertible Promissory Notes Due On June 30, 2017 [Member] | ||||||||||
Notes payable | $ 344,000 | $ 344,000 | ||||||||
8% Convertible Promissory Notes Due On June 30, 2017 [Member] | Cape One Master Fund II LP [Member] | ||||||||||
Number of promissory notes issued | 4 | |||||||||
Proceeds from notes payable | $ 344,000 | |||||||||
Conversion price (in dollars per share) | $ 0.05 | |||||||||
Revised conversion price (in dollars per share) | $ 0.02 | |||||||||
Number of reserve common stock issued | 6,666,667 | |||||||||
Loss on modification of debt | $ 305,000 | |||||||||
8% Convertible Promissory Notes Due On June 30, 2017 [Member] | Warrant [Member] | Cape One Master Fund II LP [Member] | ||||||||||
Exercise price (in dollars per share) | $ 0.02 | |||||||||
Number of warrants purchased | 450,000 |
SEGMENT INFORMATION (Details)
SEGMENT INFORMATION (Details) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | Dec. 31, 2015 | Dec. 31, 2012 | |
Revenue | $ 122,448 | $ 115,085 | $ 368,066 | $ 125,638 |
Gain (Loss) from operations | 30,574 | (167,039) | ||
Interest expense | (78,033) | (65,095) | ||
Gain on derivative liabilities | 39,068 | 146,277 | ||
Gain on forgiveness, conversions and modification of debt | 5,634 | 7,900 | ||
Net (loss) | (2,757) | (77,957) | ||
Assets | 145,692 | 225,436 | $ 109,983 | |
Nanotechnology Segment [Member] | ||||
Revenue | 122,448 | 67,827 | ||
Gain (Loss) from operations | 30,574 | (180,260) | ||
Interest expense | (78,033) | (65,095) | ||
Gain on derivative liabilities | 39,068 | 146,277 | ||
Gain on forgiveness, conversions and modification of debt | 5,634 | 7,900 | ||
Net (loss) | (2,757) | (91,178) | ||
Assets | 53,919 | 40,738 | ||
ViralProtec Segment [Member] | ||||
Revenue | 47,258 | |||
Gain (Loss) from operations | 13,221 | |||
Interest expense | ||||
Gain on derivative liabilities | ||||
Gain on forgiveness, conversions and modification of debt | ||||
Net (loss) | 0 | 13,221 | ||
Assets | $ 91,773 | $ 184,698 |
SEGMENT INFORMATION (Details Na
SEGMENT INFORMATION (Details Narrative) | 3 Months Ended |
Mar. 31, 2016Number | |
Segment Reporting [Abstract] | |
Number of operating segment | 2 |
DERIVATIVE LIABILITY (Details)
DERIVATIVE LIABILITY (Details) - USD ($) | Mar. 31, 2016 | Dec. 31, 2015 |
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Note conversion feature liabilities | $ 646,155 | $ 686,255 |
Total | 647,593 | 687,014 |
Derivative Liability-non-current | 9,675 | |
Derivative liability-current | 637,918 | 687,014 |
Warrant Liability [Member] | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Total | $ 1,438 | $ 759 |
DERIVATIVE LIABILITY (Details N
DERIVATIVE LIABILITY (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||
Net (loss) gain on derivative liability | $ 39,068 | $ 146,277 |
STOCKHOLDERS EQUITY (Details)
STOCKHOLDERS EQUITY (Details) - Warrant [Member] | 3 Months Ended |
Mar. 31, 2016$ / 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 | shares | 1,217,941 |
Issued | shares | 450,000 |
Exercised | shares | (450,000) |
Outstanding at end of period | shares | 1,217,941 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Exercise Price [Roll Forward] | |
Outstanding at beginning of period | $ / shares | $ 0.35 |
Issued | $ / shares | 0.02 |
Exercised | $ / shares | 0.07 |
Outstanding at end of period | $ / shares | $ 0.33 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Remaining Life-years [Roll Forward] | |
Outstanding at beginning of period | 4 years 3 months 25 days |
Issued | 4 years 9 months 7 days |
Exercised | 9 years 24 days |
Outstanding at end of period | 2 years 9 months 7 days |
STOCKHOLDERS EQUITY (Details Na
STOCKHOLDERS EQUITY (Details Narrative) - USD ($) | Jan. 06, 2016 | Feb. 15, 2015 | Mar. 31, 2016 | Mar. 31, 2014 | Dec. 31, 2015 |
Common stock, authorized | 800,000,000 | 800,000,000 | |||
Percentage of stock conversion limit | 4.99% | ||||
Number of shares underlying preferred stock, convertible debt (in shares) | 29,959,112 | ||||
Common stock warrants outstanding | 1,217,941 | 1,217,941 | |||
Board Members [Member] | |||||
Warrants, granted | 300,000 | ||||
Fair value of the warrants granted | $ 61,106 | ||||
Expected volatility assumption | 140.00% | ||||
Risk-free interest rate | 1.62% | ||||
Market price of common stock (in dollars per share) | $ 0.22 | ||||
Exercise price of stock (in dollars per share) | $ 0.10 | ||||
Warrant term | 5 years | ||||
Dividend yield | 0.00% | ||||
Board Members & One Consultant [Member] | |||||
Warrants, granted | 450,000 | ||||
Fair value of the warrants granted | $ 25,292 | ||||
Expected volatility assumption | 140.00% | ||||
Risk-free interest rate | 1.00% | ||||
Market price of common stock (in dollars per share) | $ 0.06 | ||||
Exercise price of stock (in dollars per share) | $ 0.02 | ||||
Options And Securities [Member] | |||||
Number of shares underlying preferred stock, convertible debt (in shares) | 39,567,578 | 9,130,044 | |||
Series B Preferred Stock [Member] | |||||
Preferred stock, authorized | 10,000,000 | 10,000,000 | |||
Stock issued during period, shares, conversion of shares | 160 | ||||
Percentage of stock conversion limit | 4.99% |
INCENTIVE STOCK PLANS (Details)
INCENTIVE STOCK PLANS (Details) - Incentive Stock Plans [Member] | 3 Months Ended |
Mar. 31, 2016$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | |
Options outstanding at beginning balance | shares | 1,099 |
Options outstanding at ending balance | shares | 1,099 |
Options exercisable at end of the period | shares | 1,099 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Roll Forward] | |
Options outstanding at beginnig of period | $ / shares | $ 2,008 |
Options outstanding at end of period | $ / shares | 2,008 |
Options exercisable at end of the period | $ / shares | $ 2,008 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Remaining Life-years [Roll Forward] | |
Options outstanding at beginnig of period | 1 year 3 months 26 days |
Options outstanding at end of period | 1 year 26 days |
Options exercisable at end of the period | 1 year 26 days |
INCENTIVE STOCK PLANS (Details
INCENTIVE STOCK PLANS (Details Narrative) | Mar. 31, 2016USD ($) |
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 |
SUBSEQUENT EVENTS (Details Narr
SUBSEQUENT EVENTS (Details Narrative) - USD ($) | Aug. 01, 2016 | Jul. 06, 2016 | Jun. 23, 2016 | Mar. 31, 2016 | Mar. 31, 2015 | Dec. 31, 2015 | Dec. 31, 2012 | Aug. 08, 2016 | Apr. 13, 2016 |
Subsequent Event [Line Items] | |||||||||
Revenue | $ 122,448 | $ 115,085 | $ 368,066 | $ 125,638 | |||||
Subsequent Event [Member] | |||||||||
Subsequent Event [Line Items] | |||||||||
Lease term | 12 months | ||||||||
Monthly rent | $ 1,500 | ||||||||
Subsequent Event [Member] | Warrant [Member] | |||||||||
Subsequent Event [Line Items] | |||||||||
Number of shares issued | 220,656 | ||||||||
Subsequent Event [Member] | Notes Payable [Member] | |||||||||
Subsequent Event [Line Items] | |||||||||
Face amount | $ 1,000 | ||||||||
Accrued interest | $ 785 | ||||||||
Number of shares issued on conversion | 142,811 | ||||||||
Subsequent Event [Member] | 10% Convertible Promissory Note Due August 1, 2017 [Member] | |||||||||
Subsequent Event [Line Items] | |||||||||
Face amount | $ 20,000 | ||||||||
Subsequent Event [Member] | Share Exchange Agreement [Member] | Omni Shrimp, Inc [Member] | Series E Preferred Stock [Member] | |||||||||
Subsequent Event [Line Items] | |||||||||
Number of shares issued for acquistion | 28,500 | ||||||||
Description of voting rights | 95% of the voting control. | ||||||||
Description of conversion terms | Convertible into common stock which, in the aggregate, would represent up to 95% of the outstanding common stock after the conversion. | ||||||||
Subsequent Event [Member] | Forebearance Agreement [Member] | Senior Secured Convertible Notes and the Promissory Notes [Member] | |||||||||
Subsequent Event [Line Items] | |||||||||
Repayment of debt & accrued interest | $ 300,000 | ||||||||
Subsequent Event [Member] | Forebearance Agreement [Member] | Series B Preferred Stock [Member] | |||||||||
Subsequent Event [Line Items] | |||||||||
Number of shares repurchased | 5,000 | ||||||||
Subsequent Event [Member] | Asset Purchase Agreement [Member] | Mr. James Wemett [Member] | Divisible Warrant [Member] | |||||||||
Subsequent Event [Line Items] | |||||||||
Number of shares issued | 2,000,000 | ||||||||
Share price (in dollars per share) | $ 0.05 | ||||||||
Warrant term | 6 years |