Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2016 | Nov. 23, 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 | Sep. 30, 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 | 3,342,325 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2,016 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 |
CURRENT ASSETS: | ||
Cash | $ 10,981 | |
Accounts Receivable | 191,224 | |
Inventory | 312,568 | |
Prepaid and Other | 78 | |
Total Current Assets | 514,852 | |
NON-CURRENT ASSETS | ||
Property and Equipment, net | 1,860 | |
Total Non-current assets | 1,860 | |
Total Assets | 516,712 | |
CURRENT LIABILITIES: | ||
Notes Payable (net of discount of $8,155 at September 30, 2016) | 1,959,023 | |
Accounts Payable | 721,259 | |
Accrued Expenses | 514,401 | |
Accrued Interest | 630,979 | |
Derivative liability | 555,695 | |
Total Current Liabilities | 4,381,214 | |
STOCKHOLDERS' DEFICIENCY: | ||
Common stock at $0.001 par value: 800,000,000 shares authorized; 3,342,325 and 300 shares issued and outstanding at September 30, 2016 and December 31, 2015, respectively | 3,342 | 300 |
Additional paid-in capital | 22,153,263 | 977 |
Accumulated deficit | (26,021,277) | (1,277) |
Total Stockholders' Deficiency | (3,864,644) | 0 |
Total Liabilities and Stockholders' Deficiency | 516,712 | 0 |
Series E Preferred Stock [Member] | ||
STOCKHOLDERS' DEFICIENCY: | ||
Preferred Series | 29 | |
Total Stockholders' Deficiency | $ 29 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 |
Statement of Financial Position [Abstract] | ||
Debt discount | $ 8,155 | |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, authorized | 800,000,000 | 800,000,000 |
Common stock, issued | 3,342,325 | 300 |
Common stock, outstanding | 3,342,325 | 300 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2016 |
INCOME: | |||
Revenue | $ 452,385 | $ 503,237 | |
Cost of Goods Sold | 387,428 | 431,816 | |
Gross Profit | 64,957 | 71,420 | |
OPERATING EXPENSES: | |||
Professional Fees | 42,661 | 42,661 | |
Transportation, Storage and Broker Fees | 19,234 | 19,234 | |
General and Administrative Expenses | 1,277 | 8,480 | 8,480 |
Sales and Marketing | 3,575 | 3,575 | |
Total operating expenses | 1,277 | 73,950 | 73,950 |
INCOME (LOSS) FROM OPERATIONS | (1,277) | (8,993) | (2,529) |
OTHER INCOME (EXPENSE): | |||
Interest expense | (49,215) | (49,349) | |
Loss on Conversion of debt | (5,653) | (5,653) | |
Gain on elimination of Registration rights liability | 12,324 | 12,324 | |
Gain on change in derivative liability | 71,915 | 71,915 | |
Other income (expense), net | 29,371 | 29,237 | |
Income (Loss) before income tax provision | (1,277) | 20,378 | 26,707 |
Income tax provision | |||
NET INCOME (LOSS) | $ (1,277) | $ 20,378 | $ 26,707 |
Earnings per share | |||
Basic (in dollars per shares) | $ (4.26) | $ 0.01 | $ 0.01 |
Diluted (in dollars per shares) | $ (4.26) | ||
Weighted average common shares outstanding | |||
Basic (in shares) | 300 | 3,174,929 | 3,147,913 |
Diluted (in shares) | 300 | 63,498,578 | 62,958,255 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2016 | Sep. 30, 2016 | |
Common Stock [Member] | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||
Balance at Beginning | $ 300 | ||
Balance at Beginning (in shares) | 300 | ||
Elimination of common stock of Omni Shrimp upon merger | $ (300) | ||
Elimination of common stock of Omni Shrimp upon merger (in shares) | (300) | ||
Capital Contribution from Reverse Merger | $ 2,912 | ||
Capital Contribution from Reverse Merger (in shares) | 2,911,658 | ||
Issuance of common stock for conversion of debt | $ 431 | ||
Issuance of common stock for conversion of debt (in shares) | 430,667 | ||
Balance at Ending | $ 3,342 | $ 3,342 | $ 3,342 |
Balance in Ending (in shares) | 3,342,325 | 3,342,325 | 3,342,325 |
Series E Preferred Stock [Member] | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||
Balance at Beginning | |||
Issuance of Series E Preferred stock upon acquisition of Omni Shrimp | $ 29 | ||
Issuance of Series E Preferred stock upon acquisition of Omni Shrimp (in shares) | 28,500 | ||
Balance at Ending | $ 29 | $ 29 | $ 29 |
Balance in Ending (in shares) | 28,500 | 28,500 | 28,500 |
Additional Paid-in Capital [Member] | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||
Balance at Beginning | $ 977 | ||
Elimination of common stock of Omni Shrimp upon merger | (977) | ||
Capital Contribution from Reverse Merger | 22,040,728 | ||
Issuance of Series E Preferred stock upon acquisition of Omni Shrimp | 103,645 | ||
Issuance of common stock for conversion of debt | 8,890 | ||
Balance at Ending | $ 22,153,263 | $ 22,153,263 | 22,153,263 |
Accumulated Deficit [Member] | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||
Balance at Beginning | (1,277) | ||
Elimination of common stock of Omni Shrimp upon merger | 1,277 | ||
Capital Contribution from Reverse Merger | (26,047,985) | ||
Net income | 26,707 | ||
Balance at Ending | (26,021,136) | (26,021,136) | (26,021,136) |
Balance at Beginning | 0 | ||
Elimination of common stock of Omni Shrimp upon merger | |||
Capital Contribution from Reverse Merger | (4,004,345) | ||
Issuance of Series E Preferred stock upon acquisition of Omni Shrimp | 103,674 | ||
Issuance of common stock for conversion of debt | 9,320 | ||
Net income | 20,378 | 26,707 | 26,707 |
Balance at Ending | $ (3,864,644) | $ (3,864,644) | $ (3,864,644) |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) | Sep. 30, 2015 | Sep. 30, 2016 |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net Income (loss) | $ (1,277) | $ 26,707 |
Gain (Loss) from Discontinued Operations, net of tax | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Elimination of Cash overdraft | (151) | |
Loss on Conversion of debt | 5,653 | |
Gain on elimination of Registration rights liability | (12,324) | |
Gain on change in derivative liability | (71,915) | |
Amortization of Convertible note discount | 1,036 | |
Accrued interest on converted debt | 1,898 | |
Changes in operating assets and liabilities: | ||
Accounts Receivable | 28,381 | |
Inventory | (238,427) | |
Prepaid and Other | 2,789 | |
Accounts Payable and Accrued Expenses | 104,827 | |
Accrued Interest | 45,574 | |
NET CASH USED IN OPERATING ACTIVITIES | (1,277) | (105,951) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchases of property and equipment | (1,860) | |
NET CASH FROM IN INVESTING ACTIVITIES | (1,860) | |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Issuance of common stock | 1,277 | |
Issuance of convertible debt | 30,000 | |
Increase in bridge notes (net) | 3,000 | |
NET CASH PROVIDED BY FINANCING ACTIVITIES | 1,277 | 33,000 |
NET CHANGE IN CASH | (74,811) | |
Cash at beginning of period | 85,792 | |
Cash at end of period | 10,981 | |
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: | ||
Debt reduced through issuance of common stock | $ 1,355 |
PRINCIPAL BUSINESS ACTIVITY, MA
PRINCIPAL BUSINESS ACTIVITY, MATERIAL DEFINITIVE AGREEMENT AND SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
PRINCIPAL BUSINESS ACTIVITY, MATERIAL DEFINITIVE AGREEMENT AND SIGNIFICANT ACCOUNTING POLICIES | 1. PRINCIPAL BUSINESS ACTIVITY, MATERIAL DEFINITIVE AGREEMENT AND SIGNIFICANT ACCOUNTING POLICIES Interim Financial Statements The condensed consolidated financial statements include the following: 1) Balance sheets as of September 30, 2016 and December 31, 2015; 2) Statements of Operations for the three months ended September 30, 2016; 3) Statement of Operations from the Date of Acquisition (June 23, 2016) through September 30, 2016 (“Acquisition Period”) ; 4) Statement of Operations from the period Date of Inception (September 22, 2015) through September 2015 (“Inception Period”) 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 Company’s 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 net income for the Acquisition Period of approximately $26,000 and had negative working capital and stockholders’ deficiency of approximately $3,866,000 at September 30, 2016. Since, inception the Company’s growth has been funded through the issuance of convertible debt, borrowings under lines of credit and internal operations These factors, among others, may indicate that the Company will be unable to continue as a going concern for a reasonable period of time. The Company’s continuation as a going concern is dependent upon its ability to generate sufficient cash flow to meet its obligations, to obtain additional financing, renegotiate the terms of existing financing obligations and ultimately to attain successful operations. The ability to successfully achieve those items is uncertain. The financial statements do not include any adjustments that might result from the uncertainty. 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 Omni Shrimp, Inc., a Florida corporation. All significant inter-company accounts and transactions have been eliminated in consolidation. Accounting for Reverse Capitalization The Company follows the guidelines set forth in Topic 12: Reverse Acquisitions and Reverse Capitalizations of the SEC Financial Reporting Material Definitive Agreement On July 5, 2016, the staff of the Securities and Exchange Commission’s Division of Corporation Finance advised the Company that in light of the information set forth in the Form 8-K filed on June 29, 2016, the Staff was of the opinion that the Company was a “shell company” as defined in Rule 405 under the Securities Act of 1933 and Rule 12b-2 of the Exchange Act. The Company replied with a letter to the Staff contesting the factual basis of such determination, and the Staff replied with a subsequent letter affirming its prior determination. The Company intends to have further communications with the Staff regarding their determination as to the Company’s shell company status. The financial statements enclosed herewith were prepared on the assumption that the Company was not a shell company on June 23, 2016 and is not a shell company at the present time. Pursuant to the SEC Manual, the Company filed a form 8-K/A on September 1, 2016 and November 14, 2016, and in Item 9.01 of those filings, the Company reported the required financial statements, including audited financial statements of Omni and pro forma financial information. Material Definitive Agreement On June 23, 2016 (the “Effective Date”), the Company announced that 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, surrendered those shares to the Company. Additionally, on the Effective Date the Company entered into an Asset Purchase Agreement with James Wemett, the former President and CEO, pursuant to which Mr. Wemett acquired all right, title and interest to the existing business activities of the Company prior to that date; specifically, those activities were (i) developing and commercializing material additives based on a technology utilizing halloysite nanotubes and (ii) reselling Ebola personal protective equipment and ancillary supplies, and assumed the related liabilities. In connection with that transaction, Mr. Wemett waived all accumulated compensation due to him from the Company. In connection with the Asset Purchase Agreement, the Company and Mr. Wemett exchanged releases, and the Company issued to Mr. Wemett a six year divisible Warrant with cashless exercise to purchase up to 2,000,000 shares of the Company's common stock at a purchase price of $0.05 per share. Surrender and Amendment Agreement (“Surrender and Amendment”) Concurrent with the Material Definitive Agreement on the Effective Date, owners of the Senior Secured Convertible Notes and Promissory Notes agreed to surrender the following back to the Company: • $150,436 of face value debt, and • $79,411 of related accrued interest. The Company did not issue any additional consideration for these securities. In addition, the Company retired the following owned by its former Chief Executive Officer • 5,000 shares of Series B Preferred Stock • 100 shares of Series D Preferred stock Concurrent with this retirement, the Company issued 2,000,000 warrants Description of the Business Omni Shrimp, Inc. (Omni) is a subsidiary of the Company and was formed on September 22, 2015 in the state of Florida. Omni is a provider of shrimp. According to National Fisheries Institute (NFI), shrimp is the most consumed seafood within the United States at over 4 pounds of shrimp consumed per person in the United States annually. Shrimps come in many varieties which are differentiated by their color. We specialize in the a very high, domestic and wild caught shrimp called Key West Pink Shrimp also referred to as “pinks”. They derive their name from their pink color which is the result of growing up in the coral sands off the west coast of Florida. Key West Pink Shrimp are also great tasting and may be enjoyed as “peel and eat” or in a wide variety of recipes. The harvesting season for “Pinks” is from November through June. Throughout the year, Omni also purchases and sells “Brown” and “White” shrimp also grown in the United States and harvested in the wild. Omni believes that it differentiates itself from its competitors not only by the quality of its product but its relationships with Shrimp boat captains and fishermen, shrimp seafood company owners and some of the top shrimp processors in the U.S. These relationships allow Omni to get its product to market as quickly as possible in order to guarantee freshness and taste. The vessels who supply our shrimp have refrigeration units and freezing capabilities on board which locks in freshness. Additionally, we use a large, approved, industry accepted processor in Louisiana which allows our haul to get out to the dining public within two to three days of catch resulting in delivery of fresh shrimp with uncompromised taste to our customers. Most consumers in the United States are not aware of the origin of their store-bought or restaurant purchased shrimp. Omni’s shrimp product is free of pesticide, chemicals and antibiotics, caught in the U.S. and wild caught, facts that we believe is highly attractive, becoming more and more sought after and beneficial in terms of our eventual marketing success. Management is strongly optimistic that it has positioned the Company to capitalize on the high growth segments of the burgeoning shrimp and seafood markets. 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 Company’s own assumptions used to measure assets and liabilities at fair value. A financial asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement. The 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 Company’s 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 30, 2016 considering company specific factors including the changes in forward estimated revenues and market factors, market multiples for comparable companies, and the Company’s 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 Company’s 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 period of Acquisition and period of Inception. Net income/ (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, 2016 and 2015 there were 71,101,371 and -0- shares, respectively, underlying preferred stock, convertible debt, outstanding options and warrants that could potentially dilute future earnings. These potentially dilutive shares have been limited by certain debt and equity agreements with 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. Shares associated with the issuance of Series E Preferred stock are reported on an as converted basis 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, 2016 | |
Debt Disclosure [Abstract] | |
NOTES PAYABLE | 2. NOTES PAYABLE Notes payable at September 30, 2016 consisted of the following: Notes Issued under the Surrender and Amendment Agreement $ 1,428,650 Cape One Master Notes 344,000 Notes Issued Subsequent to Surrender and Amendment Agreement 49,630 Bridge loans 136,743 Total $ 1,959,023 Notes Issued under the Surrender and Amendment Agreement On the Effecttive date, the Company entered into the Surrender and Amendment Agreement. Pursuant to this agreement, the Company entered into certain modificiations of outstanding indebtedness to four bondholders. In total, the Company retired $150, 436 and $79,411 of accrued interest. See Surrender and Amendment Agreement Each Amending Holder waives any reset, repricing or ratchet right such Amending Holder may have related to the Retained Notes for any issuances of the Company's common stock or common stock equivalents that have occurred prior to the date of this Agreement. b. The issuance of the Series E Preferred Shares pursuant to the Share Exchange Agreement shall be an Exempt Issuance (as define in the Retained Notes) and shall not trigger any reset, repricing or ratchet right such Amending Holder may have related to the Retained Notes. c. The Conversion Price of the Retained Notes is amended to be the lower of: (i) the conversion price as would be in effect pursuant to the terms of the Retained Notes as currently in effect; or (ii) 50% of the lowest closing bid price of the Company's common stock on its principal trading market as reported by Bloomberg LP, for the twenty trading days prior to the date of conversion. d. The Maturity Date of the Retained Notes is hereby extended to one year from the date of this Agreement. e. Except for the notes held by Oscaleta Partners LLC All interest that has accrued through the date hereof is waived and all interest that will accrue on the Retained Notes will be payable on the Maturity Date. The following lists the creditors and the amounts owed to each Alpha Anstalt Capital $ 900,000 Marlin Capital Investments LLC 210,000 Bull Hunter LLC 140,000 Oscaleta Partners LLC* 178,600 Total Convertible debt $ 1,428,650 * - Net of $1,355 of Notes Payable converted Cape One Master Notes On December 15, 2015, NaturalNano Corp. exchanged 6,666,667 shares for Notes totaling $344,000. These notes are due on September 30, 2017 and are convertible at $.02 per share. Notes Issued Subsequent to Surrender and Amendment Agreement Notes Issued subsequent to Surrender and Amendment comprised $49,630 as follows: Notes reclassified from Bridge notes $ 27,785 Newly issued debt 21,845 Total debt $ 49,630 Notes reclassified from Bridge Notes During the prior quarter , Notes which were originally issued as promissory notes were renegotiated to be convertible into shares of common stock at a 50% discount to the closing bid price for the twenty days prior to conversion. Such notes totalled $27,785. Newly Issued Debt During the quarter ended September 30, 2016, the following notes were issued: On August 10, 2016, the Company issued a note for $15,000 for proceeds received. The convertible promissory bears interest at a rate of ten percent 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. The Company recorded a debt discount of $4,596 based on the fair value of the common stock into which the note is convertible into and allocated $10,404 of the proceeds to the note $658 of interest expense was amortized into interest expense for the quarter ended September 30, 2016. As of the date of this filing, there have been no conversions of this Note and the entire amount is outstanding On August 31, 2016, the Company issued a note for $15,000 for proceeds received. The convertible promissory bears interest at a rate of ten percent and matures on September 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. The Company recorded a debt discount of $4,596 based on the fair value of the common stock into which the note is convertible into and allocated $10,404 of the proceeds to the note $378 of interest expense was amortized into interest expense for the quarter ended September 30, 2016. As of the date of this filing, there have been no conversions of this Note and the entire amount is outstanding A reconciliation of the Notes follows; August 10, 2016 August 31, 2016 Total Cash proceeds received $ 15,000 $ 15,000 $ 30,000 Discount Applied (4,596 ) (4,596 ) (9,192 ) Discount amortized into Interest expense 658 378 1,036 Book value of notes $ 11,062 $ 10,782 $ 21,845 Bridge Loans Bridge loans are short term notes taken on demand. They totaled $136,743 at September 30, 2016 as follows: The $136,743 at Omni Shrimp, Inc. was as follows: Date Issued Originally Amount Interest Rate Holder February 12, 2016 $ 111,000 5.25 % Madeira Beach Seafood, Inc. April 7, 2016 25,743 5.25 % Madeira Beach Seafood, Inc. Total $ 136,743 |
SEGMENT INFORMATION
SEGMENT INFORMATION | 9 Months Ended |
Sep. 30, 2016 | |
Segment Reporting [Abstract] | |
SEGMENT INFORMATION | 3. SEGMENT INFORMATION Subsequent to the Acquisition of Omni and the disposition of the Nanotechnology and Viral Protec businesses, the Company operates in only segment, Shrimp. Therefore, Segment data is not required. |
DERIVATIVE LIABILITY
DERIVATIVE LIABILITY | 9 Months Ended |
Sep. 30, 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 September 2016, market comparables, and the market value of the Company’s 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 Company’s 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 Company’s derivative liabilities as of September 30, 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 Company’s 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, 2016 and December 31, 2015. The fair value of the derivative liabilities as of September 30, 2016 and December 31, 2015 are as follows: September 30, December 31, Note conversion feature liabilities $ 552,719 $ 686,255 Warrant liability 2,976 759 Total 555,695 687,014 |
STOCKHOLDERS EQUITY
STOCKHOLDERS EQUITY | 9 Months Ended |
Sep. 30, 2016 | |
Stockholders' Equity Note [Abstract] | |
STOCKHOLDERS EQUITY | 5. STOCKHOLDERS EQUITY Authorized Common Stock: Preferred Stock Issuances The Series E Convertible Preferred Stock is convertible into 95% of the Company’s common stock and votes on an as-converted basis. The Series E 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. Preferred Stock Cancellations As a part of the June 23rd Forbearance agreement, 5,000 shares of Series B Preferred stock and 100 shares of Series D Preferred stock were also cancelled. Warrants Grants The Company has issued warrants to purchase shares of its common stock to certain consultants and debt holders. As of June 23, 2016 and December 31, 2015 there were common stock warrants outstanding to purchase an aggregate of 2,917,941 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 Company’s 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 Company’s 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 Company’s 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 Company’s 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 Company’s 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 Company’s 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 On June 23, 2016, the Company granted a total of 2,000,000 warrants to the Company’s former Chief Executive Officer. 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 $.031. An expected volatility assumption of 140% was used based on the volatility of the Company’s 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 Company’s common stock on the grant date was $0.034 per share. The expiration date used in the valuation model aligns with the warrant life of nine 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 3.82 Issued 2,450,000 $ .05 5.73 Exercised (750,000 ) $ .05 4.50 Warrants outstanding at September 30, 2016 2,917,941 $ .17 4.50 |
INCENTIVE STOCK PLANS
INCENTIVE STOCK PLANS | 9 Months Ended |
Sep. 30, 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 Average Options outstanding at January 1, 2016 1,099 $ 2,008 1.32 Options exercisable at September 30, 2016 1,099 $ 2,008 .82 All compensation costs for the above options have been previously recognized in operations. As of September 30, 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 September 30, 2016 and 2015. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2016 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | 7. SUBSEQUENT EVENTS Issuance of Debt On October 14, 2016, the Company borrowed $15,000 from a third party. The convertible promissory note bears interest at 8% per annum and matures on October 15, 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. On November 15, 2016, the Company borrowed $21,000 from a third party. The convertible promissory note bears interest at 8% per annum and matures on November 15, 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. |
PRINCIPAL BUSINESS ACTIVITY, 14
PRINCIPAL BUSINESS ACTIVITY, MATERIAL DEFINITIVE AGREEMENT AND SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Interim Financial Statements | Interim Financial Statements The condensed consolidated financial statements include the following: 1) Balance sheets as of September 30, 2016 and December 31, 2015; 2) Statements of Operations for the three months ended September 30, 2016; 3) Statement of Operations from the Date of Acquisition (June 23, 2016) through September 30, 2016 (“Acquisition Period”) ; 4) Statement of Operations from the period Date of Inception (September 22, 2015) through September 2015 (“Inception Period”) 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 Company’s 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 net income for the Acquisition Period of approximately $26,000 and had negative working capital and stockholders’ deficiency of approximately $3,866,000 at September 30, 2016. Since, inception the Company’s growth has been funded through the issuance of convertible debt, borrowings under lines of credit and internal operations These factors, among others, may indicate that the Company will be unable to continue as a going concern for a reasonable period of time. The Company’s continuation as a going concern is dependent upon its ability to generate sufficient cash flow to meet its obligations, to obtain additional financing, renegotiate the terms of existing financing obligations and ultimately to attain successful operations. The ability to successfully achieve those items is uncertain. The financial statements do not include any adjustments that might result from the uncertainty. |
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 Omni Shrimp, Inc., a Florida corporation. All significant inter-company accounts and transactions have been eliminated in consolidation. |
Accounting for Reverse Capitalization | Accounting for Reverse Capitalization The Company follows the guidelines set forth in Topic 12: Reverse Acquisitions and Reverse Capitalizations of the SEC Financial Reporting Material Definitive Agreement On July 5, 2016, the staff of the Securities and Exchange Commission’s Division of Corporation Finance advised the Company that in light of the information set forth in the Form 8-K filed on June 29, 2016, the Staff was of the opinion that the Company was a “shell company” as defined in Rule 405 under the Securities Act of 1933 and Rule 12b-2 of the Exchange Act. The Company replied with a letter to the Staff contesting the factual basis of such determination, and the Staff replied with a subsequent letter affirming its prior determination. The Company intends to have further communications with the Staff regarding their determination as to the Company’s shell company status. The financial statements enclosed herewith were prepared on the assumption that the Company was not a shell company on June 23, 2016 and is not a shell company at the present time. Pursuant to the SEC Manual, the Company filed a form 8-K/A on September 1, 2016 and November 14, 2016, and in Item 9.01 of those filings, the Company reported the required financial statements, including audited financial statements of Omni and pro forma financial information. |
Material Definitive Agreement | Material Definitive Agreement On June 23, 2016 (the “Effective Date”), the Company announced that 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, surrendered those shares to the Company. Additionally, on the Effective Date the Company entered into an Asset Purchase Agreement with James Wemett, the former President and CEO, pursuant to which Mr. Wemett acquired all right, title and interest to the existing business activities of the Company prior to that date; specifically, those activities were (i) developing and commercializing material additives based on a technology utilizing halloysite nanotubes and (ii) reselling Ebola personal protective equipment and ancillary supplies, and assumed the related liabilities. In connection with that transaction, Mr. Wemett waived all accumulated compensation due to him from the Company. In connection with the Asset Purchase Agreement, the Company and Mr. Wemett exchanged releases, and the Company issued to Mr. Wemett a six year divisible Warrant with cashless exercise to purchase up to 2,000,000 shares of the Company's common stock at a purchase price of $0.05 per share. |
Surrender and Amendment Agreement (''Surrender and Amendment'') | Surrender and Amendment Agreement (“Surrender and Amendment”) Concurrent with the Material Definitive Agreement on the Effective Date, owners of the Senior Secured Convertible Notes and Promissory Notes agreed to surrender the following back to the Company: • $150,436 of face value debt, and • $79,411 of related accrued interest. The Company did not issue any additional consideration for these securities. In addition, the Company retired the following owned by its former Chief Executive Officer • 5,000 shares of Series B Preferred Stock • 100 shares of Series D Preferred stock Concurrent with this retirement, the Company issued 2,000,000 warrants |
Description of the Business | Description of the Business Omni Shrimp, Inc. (Omni) is a subsidiary of the Company and was formed on September 22, 2015 in the state of Florida. Omni is a provider of shrimp. According to National Fisheries Institute (NFI), shrimp is the most consumed seafood within the United States at over 4 pounds of shrimp consumed per person in the United States annually. Shrimps come in many varieties which are differentiated by their color. We specialize in the a very high, domestic and wild caught shrimp called Key West Pink Shrimp also referred to as “pinks”. They derive their name from their pink color which is the result of growing up in the coral sands off the west coast of Florida. Key West Pink Shrimp are also great tasting and may be enjoyed as “peel and eat” or in a wide variety of recipes. The harvesting season for “Pinks” is from November through June. Throughout the year, Omni also purchases and sells “Brown” and “White” shrimp also grown in the United States and harvested in the wild. Omni believes that it differentiates itself from its competitors not only by the quality of its product but its relationships with Shrimp boat captains and fishermen, shrimp seafood company owners and some of the top shrimp processors in the U.S. These relationships allow Omni to get its product to market as quickly as possible in order to guarantee freshness and taste. The vessels who supply our shrimp have refrigeration units and freezing capabilities on board which locks in freshness. Additionally, we use a large, approved, industry accepted processor in Louisiana which allows our haul to get out to the dining public within two to three days of catch resulting in delivery of fresh shrimp with uncompromised taste to our customers. Most consumers in the United States are not aware of the origin of their store-bought or restaurant purchased shrimp. Omni’s shrimp product is free of pesticide, chemicals and antibiotics, caught in the U.S. and wild caught, facts that we believe is highly attractive, becoming more and more sought after and beneficial in terms of our eventual marketing success. Management is strongly optimistic that it has positioned the Company to capitalize on the high growth segments of the burgeoning shrimp and seafood markets. |
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 Company’s own assumptions used to measure assets and liabilities at fair value. A financial asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement. The 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 Company’s 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 30, 2016 considering company specific factors including the changes in forward estimated revenues and market factors, market multiples for comparable companies, and the Company’s 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 Company’s 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 period of Acquisition and period of Inception. |
Net income/ (Loss) Per Share | Net income/ (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, 2016 and 2015 there were 71,101,371 and -0- shares, respectively, underlying preferred stock, convertible debt, outstanding options and warrants that could potentially dilute future earnings. These potentially dilutive shares have been limited by certain debt and equity agreements with 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. Shares associated with the issuance of Series E Preferred stock are reported on an as converted basis |
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, 2016 | |
Debt Disclosure [Abstract] | |
Schedule of notes payable | Notes payable at September 30, 2016 consisted of the following: Notes Issued under the Surrender and Amendment Agreement $ 1,428,650 Cape One Master Notes 344,000 Notes Issued Subsequent to Surrender and Amendment Agreement 49,630 Bridge loans 136,743 Total $ 1,959,023 |
Schedule of convertible debt | The following lists the creditors and the amounts owed to each Alpha Anstalt Capital $ 900,000 Marlin Capital Investments LLC 210,000 Bull Hunter LLC 140,000 Oscaleta Partners LLC* 178,600 Total Convertible debt $ 1,428,650 * - Net of $1,355 of Notes Payable converted |
Schedule of total debt | Notes Issued subsequent to Surrender and Amendment comprised $49,630 as follows: Notes reclassified from bridge notes $ 27,785 Newly issued debt 21,845 Total debt $ 49,630 |
Schedule of reconciliation of notes | A reconciliation of the Notes follows; August 10, 2016 August 31, 2016 Total Cash proceeds received $ 15,000 $ 15,000 $ 30,000 Discount Applied (4,596 ) (4,596 ) (9,192 ) Discount amortized into Interest expense 658 378 1,036 Book value of notes $ 11,062 $ 10,782 $ 21,845 |
Schedule of bridge loans | The $136,743 at Omni Shrimp, Inc. was as follows: Date Issued Originally Amount Interest Rate Holder February 12, 2016 $ 111,000 5.25 % Madeira Beach Seafood, Inc. April 7, 2016 25,743 5.25 % Madeira Beach Seafood, Inc. Total $ 136,743 |
DERIVATIVE LIABILITY (Tables)
DERIVATIVE LIABILITY (Tables) | 9 Months Ended |
Sep. 30, 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 September 30, 2016 and December 31, 2015 are as follows: September 30, December 31, Note conversion feature liabilities $ 552,719 $ 686,255 Warrant liability 2,976 759 Total 555,695 687,014 |
STOCKHOLDERS EQUITY (Tables)
STOCKHOLDERS EQUITY (Tables) | 9 Months Ended |
Sep. 30, 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 3.82 Issued 2,450,000 $ .05 5.73 Exercised (750,000 ) $ .05 4.50 Warrants outstanding at September 30, 2016 2,917,941 $ .17 4.50 |
INCENTIVE STOCK PLANS (Tables)
INCENTIVE STOCK PLANS (Tables) | 9 Months Ended |
Sep. 30, 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 Average Options outstanding at January 1, 2016 1,099 $ 2,008 1.32 Options exercisable at September 30, 2016 1,099 $ 2,008 .82 |
PRINCIPAL BUSINESS ACTIVITY, 19
PRINCIPAL BUSINESS ACTIVITY, MATERIAL DEFINITIVE AGREEMENT AND SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | Jun. 23, 2016 | Jun. 23, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 |
Net income | $ (1,277) | $ 20,378 | $ 26,707 | $ 26,707 | |||||
Stockholders' deficiency | (3,864,644) | (3,864,644) | $ (3,864,644) | $ 0 | |||||
Income tax expense | $ 0 | $ 0 | |||||||
Percentage of stock conversion limit | 4.99% | ||||||||
Debt accrued interest | (1,898) | ||||||||
Chief Executive Officer [Member] | |||||||||
Share price (in dollars per share) | $ 0.034 | $ 0.034 | |||||||
Warrant term | 9 years | ||||||||
Series E Preferred Stock [Member] | |||||||||
Stockholders' deficiency | 29 | 29 | $ 29 | ||||||
Number of shares issued | 28,500 | ||||||||
Percentage of stock conversion limit | 4.99% | ||||||||
Options And Securities [Member] | |||||||||
Number of shares underlying preferred stock, convertible debt (in shares) | 71,101,371 | 0 | |||||||
Share Exchange Agreement [Member] | Omni Shrimp, Inc [Member] | Series E Preferred Stock [Member] | |||||||||
Number of shares issued | 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. | ||||||||
Asset Purchase Agreement [Member] | Mr. James Wemett [Member] | Divisible Warrant [Member] | |||||||||
Number of warrants granted | 2,000,000 | 2,000,000 | |||||||
Share price (in dollars per share) | $ 0.05 | $ 0.05 | |||||||
Warrant term | 6 years | ||||||||
Surrender and Amendment Agreement ("Surrender and Amendment") [Member] | |||||||||
Face value debt | 150,436 | 150,436 | $ 150,436 | ||||||
Debt accrued interest | 79,411 | ||||||||
Surrender and Amendment Agreement ("Surrender and Amendment") [Member] | Senior Secured Convertible Notes and Senior Secured Promissory Notes [Member] | |||||||||
Face value debt | $ 150,436 | $ 150,436 | 150,436 | ||||||
Debt accrued interest | $ 79,411 | ||||||||
Surrender and Amendment Agreement ("Surrender and Amendment") [Member] | Warrant [Member] | |||||||||
Number of shares issued | 2,000,000 | ||||||||
Surrender and Amendment Agreement ("Surrender and Amendment") [Member] | Series D Preferred Stock [Member] | |||||||||
Number of share retired | 100 | ||||||||
Surrender and Amendment Agreement ("Surrender and Amendment") [Member] | Series D Preferred Stock [Member] | Chief Executive Officer [Member] | |||||||||
Number of share retired | 100 | ||||||||
Surrender and Amendment Agreement ("Surrender and Amendment") [Member] | Series B Preferred Stock [Member] | |||||||||
Number of share retired | 5,000 | ||||||||
Surrender and Amendment Agreement ("Surrender and Amendment") [Member] | Series B Preferred Stock [Member] | Chief Executive Officer [Member] | |||||||||
Number of share retired | 5,000 |
NOTES PAYABLE (Details)
NOTES PAYABLE (Details) - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 |
Notes payable | $ 1,959,023 | |
Notes Payable [Member] | Cape One Master Fund II LP [Member] | ||
Notes payable | 344,000 | |
Bridge Loan [Member] | ||
Notes payable | 136,743 | |
Surrender and Amendment Agreement ("Surrender and Amendment") [Member] | Senior Secured Convertible Notes and Senior Secured Promissory Notes [Member] | ||
Notes payable | 1,428,650 | |
Subsequent to Surrender and Amendment Agreement ("Surrender and Amendment") [Member] | Senior Secured Convertible Notes and Senior Secured Promissory Notes [Member] | ||
Notes payable | 49,630 | |
Subsequent to Surrender and Amendment Agreement ("Surrender and Amendment") [Member] | Bridge Loan [Member] | ||
Notes payable | $ 27,785 |
NOTES PAYABLE (Details 1)
NOTES PAYABLE (Details 1) - Convertible Debt [Member] | Sep. 30, 2016USD ($) | |
Total Convertible debt | $ 1,428,650 | |
Alpha Anstalt Capital [Member] | ||
Total Convertible debt | 900,000 | |
Marlin Capital Investments LLC [Member] | ||
Total Convertible debt | 210,000 | |
Bull Hunter LLC [Member] | ||
Total Convertible debt | 140,000 | |
Oscaleta Partners LLC [Member] | ||
Total Convertible debt | $ 178,600 | [1] |
[1] | Net of $1,355 of Notes Payable Converted |
NOTES PAYABLE (Details 2)
NOTES PAYABLE (Details 2) - USD ($) | Sep. 30, 2016 | Aug. 31, 2016 | Aug. 10, 2016 | Dec. 31, 2015 |
Notes payable | $ 1,959,023 | |||
Bridge Loan [Member] | ||||
Notes payable | 136,743 | |||
Subsequent to Surrender and Amendment Agreement ("Surrender and Amendment") [Member] | Senior Secured Convertible Notes and Senior Secured Promissory Notes [Member] | ||||
Notes payable | 49,630 | |||
Subsequent to Surrender and Amendment Agreement ("Surrender and Amendment") [Member] | Bridge Loan [Member] | ||||
Notes payable | 27,785 | |||
Subsequent to Surrender and Amendment Agreement ("Surrender and Amendment") [Member] | Newly Issued Debt [Member] | ||||
Notes payable | $ 21,845 | $ 10,782 | $ 11,062 |
NOTES PAYABLE (Details 3)
NOTES PAYABLE (Details 3) - USD ($) | Aug. 31, 2016 | Aug. 10, 2016 | Sep. 30, 2016 | Sep. 30, 2016 | Dec. 31, 2015 |
Cash proceeds received | $ 3,000 | ||||
Discount Applied | 8,155 | $ 8,155 | |||
Discount amortized into | |||||
Book value of notes | 1,959,023 | 1,959,023 | |||
Subsequent to Surrender and Amendment Agreement ("Surrender and Amendment") [Member] | Newly Issued Debt [Member] | |||||
Cash proceeds received | $ 15,000 | $ 15,000 | 30,000 | ||
Discount Applied | (4,596) | (4,596) | (9,192) | (9,192) | |
Discount amortized into | |||||
Interest expense | 378 | 658 | 1,036 | ||
Book value of notes | $ 10,782 | $ 11,062 | $ 21,845 | $ 21,845 |
NOTES PAYABLE (Details 4)
NOTES PAYABLE (Details 4) - Omni Shrimp, Inc [Member] | Sep. 30, 2016USD ($) |
Bridge Loan [Member] | |
Lines of credit | $ 136,743 |
5.25% Madeira Beach Seafood, Inc Issued February 12, 2016 [Member] | |
Lines of credit | 111,000 |
5.25% Madeira Beach Seafood, Inc Issued April 7, 2016 [Member] | |
Lines of credit | $ 25,743 |
NOTES PAYABLE (Details Narrativ
NOTES PAYABLE (Details Narrative) - USD ($) | Dec. 15, 2015 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2016 | Dec. 31, 2015 |
Notes payable | $ 1,959,023 | $ 1,959,023 | |||
Proceeds from notes payable | 3,000 | ||||
Debt accrued interest | (1,898) | ||||
Debt discount | 8,155 | 8,155 | |||
Surrender and Amendment Agreement ("Surrender and Amendment") [Member] | |||||
Face value debt | 150,436 | 150,436 | |||
Debt accrued interest | $ 79,411 | ||||
Description of debt conversion | The Conversion Price of the Retained Notes is amended to be the lower of: (i) the conversion price as would be in effect pursuant to the terms of the Retained Notes as currently in effect; or (ii) 50% of the lowest closing bid price of the Company's common stock on its principal trading market as reported by Bloomberg LP, for the twenty trading days prior to the date of conversion. | ||||
Maturity term | 1 year | ||||
Convertible Promissory Notes Due On September 30, 2017 [Member] | Cape One Master Fund II LP [Member] | |||||
Proceeds from notes payable | $ 344,000 | ||||
Exercise price (in dollars per share) | $ 0.02 | ||||
Number of reserve common stock issued | 6,666,667 | ||||
Bridge Loan [Member] | |||||
Notes payable | 136,743 | $ 136,743 | |||
Bridge Loan [Member] | Subsequent to Surrender and Amendment Agreement ("Surrender and Amendment") [Member] | |||||
Notes payable | 27,785 | $ 27,785 | |||
Description of debt conversion | Promissory notes were renegotiated to be convertible into shares of common stock at a 50% discount to the closing bid price for the twenty days prior to conversion. | ||||
10% Convertible Promissory Notes Due On August 1, 2017 [Member] | Subsequent to Surrender and Amendment Agreement ("Surrender and Amendment") [Member] | Third Party [Member] | |||||
Notes payable | 10,404 | $ 10,404 | |||
Proceeds from notes payable | $ 15,000 | ||||
Description of debt conversion | 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. | ||||
Issuance date | Aug. 10, 2016 | ||||
Debt discount | 4,596 | $ 4,596 | |||
Interest expense | 658 | ||||
10% Convertible Promissory Notes Due On September 1, 2017 [Member] | Subsequent to Surrender and Amendment Agreement ("Surrender and Amendment") [Member] | Third Party [Member] | |||||
Notes payable | 10,404 | 10,404 | |||
Proceeds from notes payable | $ 15,000 | ||||
Description of debt conversion | 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. | ||||
Issuance date | Aug. 31, 2016 | ||||
Debt discount | $ 4,596 | $ 4,596 | |||
Interest expense | $ 378 |
DERIVATIVE LIABILITY (Details)
DERIVATIVE LIABILITY (Details) - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 |
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Note conversion feature liabilities | $ 552,719 | $ 686,255 |
Total | 555,695 | 687,014 |
Warrant Liability [Member] | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Total | $ 2,976 | $ 759 |
STOCKHOLDERS EQUITY (Details)
STOCKHOLDERS EQUITY (Details) | 9 Months Ended |
Sep. 30, 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 | 2,450,000 |
Exercised | shares | (750,000) |
Outstanding at end of period | shares | 2,917,941 |
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 | 0.05 |
Exercised | $ / shares | 0.05 |
Outstanding at end of period | $ / shares | $ 0.17 |
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 | 3 years 9 months 25 days |
Issued | 5 years 8 months 23 days |
Exercised | 4 years 6 months |
Outstanding at end of period | 4 years 6 months |
STOCKHOLDERS EQUITY (Details Na
STOCKHOLDERS EQUITY (Details Narrative) - USD ($) | Jun. 23, 2016 | Jan. 06, 2016 | Feb. 15, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | Dec. 31, 2013 |
Common stock, authorized | 800,000,000 | 800,000,000 | 800,000,000 | ||||
Percentage of stock conversion limit | 4.99% | ||||||
Common stock warrants outstanding | 2,917,941 | 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 | ||||||
Warrant term | 5 years | ||||||
Dividend yield | 0.00% | ||||||
Chief Executive Officer [Member] | |||||||
Warrants, granted | 2,000,000 | ||||||
Fair value of the warrants granted (in dollars per share) | $ 0.031 | ||||||
Expected volatility assumption | 140.00% | ||||||
Risk-free interest rate | 1.00% | ||||||
Market price of common stock (in dollars per share) | $ 0.034 | ||||||
Exercise price of stock (in dollars per share) | $ 0.05 | ||||||
Warrant term | 9 years | ||||||
Dividend yield | 0.00% | ||||||
Options And Securities [Member] | |||||||
Number of shares underlying preferred stock, convertible debt (in shares) | 71,101,371 | 0 | |||||
Series E Preferred Stock [Member] | |||||||
Percentage of stock conversion limit | 4.99% | ||||||
Percentage of common stock converted | 95.00% | ||||||
Series B Preferred Stock [Member] | Surrender and Amendment Agreement ("Surrender and Amendment") [Member] | |||||||
Number of shares cancelled | 5,000 | ||||||
Series B Preferred Stock [Member] | Chief Executive Officer [Member] | Surrender and Amendment Agreement ("Surrender and Amendment") [Member] | |||||||
Number of shares cancelled | 5,000 | ||||||
Series D Preferred Stock [Member] | Surrender and Amendment Agreement ("Surrender and Amendment") [Member] | |||||||
Number of shares cancelled | 100 | ||||||
Series D Preferred Stock [Member] | Chief Executive Officer [Member] | Surrender and Amendment Agreement ("Surrender and Amendment") [Member] | |||||||
Number of shares cancelled | 100 |
INCENTIVE STOCK PLANS (Details)
INCENTIVE STOCK PLANS (Details) - Incentive Stock Plans [Member] | 9 Months Ended |
Sep. 30, 2016$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | |
Options outstanding at beginning 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 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 25 days |
Options exercisable at end of the period | 9 months 25 days |
INCENTIVE STOCK PLANS (Details
INCENTIVE STOCK PLANS (Details Narrative) | Sep. 30, 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 ($) | Nov. 15, 2016 | Oct. 14, 2016 | Sep. 30, 2016 |
Proceeds from notes payable | $ 3,000 | ||
Subsequent Event [Member] | Third Party [Member] | 8% Convertible Promissory Notes Due On October 15, 2017 [Member] | |||
Proceeds from notes payable | $ 15,000 | ||
Description of debt conversion | 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. | ||
Subsequent Event [Member] | Third Party [Member] | 8% Convertible Promissory Notes Due On November 15, 2017 [Member] | |||
Proceeds from notes payable | $ 21,000 | ||
Description of debt conversion | 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. |