Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2015 | Aug. 14, 2015 | |
Document and Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jun. 30, 2015 | |
Entity Registrant Name | FLEXPOINT SENSOR SYSTEMS INC | |
Entity Central Index Key | 925,660 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2,015 | |
Document Fiscal Period Focus | Q2 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 58,827,114 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) | Jun. 30, 2015 | Dec. 31, 2014 |
Current Assets | ||
Cash and cash equivalents | $ 5,505 | $ 18,307 |
Accounts receivable, net of allowance for bad debts of $2,601 and $2,601 | 89,293 | 79,048 |
Notes Receivable | 82,998 | 29,313 |
Deposits and prepaid expenses | 11,919 | 11,889 |
Total Current Assets | 189,715 | 138,557 |
Long-Term Deposits | $ 6,550 | $ 6,550 |
Property and Equipment, net of accumulated depreciation of $586,394 and $586,394 | ||
Patents and Proprietary Technology, net of accumulated amortization of $741,933 and $639,950 | $ 230,461 | $ 278,500 |
Goodwill | 4,896,917 | 4,896,917 |
Total Assets | 5,323,643 | 5,320,524 |
Current Liabilities | ||
Accounts payable | 180,027 | 189,078 |
Accounts payable - related party | 4,495 | 712 |
Accrued liabilities | 593,806 | 568,627 |
Convertible notes payable, net of discount of $761,037 and $139,603 | 268,011 | 865,397 |
Convertible notes payable - related party | 40,000 | $ 40,000 |
Note payable | 51,000 | |
Total Liabilities | $ 1,137,339 | $ 1,663,814 |
Stockholders' Equity | ||
Preferred stock - $0.001 par value; 1,000,000 shares authorized; no shares issued or outstanding | ||
Common stock - $0.001 par value; 100,000,000 shares authorized; 58,827,114 shares and 53,377,114 shares issued and outstanding | $ 58,827 | $ 53,377 |
Additional paid-in capital | 26,439,600 | 24,990,927 |
Accumulated deficit | (22,312,123) | (21,387,594) |
Total Stockholders' Equity | 4,186,304 | 3,656,710 |
Total Liabilities and Stockholders' Equity | $ 5,323,643 | $ 5,320,524 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Jun. 30, 2015 | Dec. 31, 2014 |
CONDENSED CONSOLIDATED BALANCE SHEETS [Abstract] | ||
Accounts receivable, allowance for bad debts | $ 2,601 | $ 2,601 |
Property and Equipment, accumulated depreciation | 586,394 | 586,394 |
Patents and Proprietary Technology, accumulated amortization | 741,933 | 639,950 |
Convertible notes payable, discount | $ 761,037 | $ 139,603 |
Preferred stock, par value per share | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value per share | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 58,827,114 | 53,377,114 |
Common stock, shares outstanding | 58,827,114 | 53,377,114 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS [Abstract] | ||||
Design, Contract and Testing Revenue | $ 48,469 | $ 43,302 | $ 80,469 | $ 96,653 |
Operating Costs and Expenses | ||||
Amortization of patents and proprietary technology | 24,634 | 25,977 | 50,219 | 52,454 |
Cost of revenue | 1,191 | 1,395 | 4,018 | 3,559 |
Administrative and marketing expense | 151,969 | 169,596 | 313,678 | 349,841 |
Research and development expense | 66,222 | 74,422 | 132,642 | 138,690 |
Total Operating Costs and Expenses | 244,016 | 271,390 | 500,557 | 544,544 |
Other Income and Expenses | ||||
Interest expense | (252,836) | (23,464) | (394,374) | (48,619) |
Interest income | $ 2,543 | $ 20 | 2,558 | $ 30 |
Loss on extinguishment of debt | (168,286) | |||
Gain on stock debt exchange | 55,661 | |||
Net Other Income (Expense) | $ (250,293) | $ (23,444) | (504,441) | $ (48,589) |
Net Income (Loss) | $ (445,840) | $ (251,532) | $ (924,529) | $ (496,480) |
Basic and Diluted Loss per Common Share | $ (0.01) | $ 0 | $ (0.02) | $ (0.01) |
Basic and Diluted Weighted-Average Common Shares Outstanding | 58,827,114 | 53,377,114 | 58,348,661 | 53,377,114 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 6 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Cash Flows from Operating Activities: | ||
Net loss | $ (924,529) | $ (496,480) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation | 37,607 | |
Amortization of patents and proprietary technology | 50,219 | 52,454 |
Amortization of discount on note payable | 337,209 | $ 15,209 |
Loss on extinguishment of debt | 168,286 | |
(Gain)/loss on conversion of notes payable to common stock | (55,661) | |
Changes in operating assets and liabilities: | ||
Accounts receivable | $ (10,245) | $ (3,206) |
Inventory | 488 | |
Deposits and prepaid expenses | $ (29) | (29) |
Accounts payable | (9,051) | (11,735) |
Accounts payable - related parties | 3,783 | 2,822 |
Accrued liabilities | 172,082 | 165,604 |
Deferred revenue | (10,000) | |
Net Cash Used in Operating Activities | (267,936) | $ (247,266) |
Cash Flows from Investing Activities: | ||
Note receivable interest income | (2,528) | |
Payment for note receivable | (51,157) | |
Payments for patents | (2,181) | |
Net Cash Used in Investing Activities | (55,866) | |
Cash Flows from Financing Activities: | ||
Proceeds from borrowings under note payable | 51,000 | |
Proceeds from borrowings under convertible note payable | 260,000 | $ 240,000 |
Net Cash Provided by Financing Activities | 311,000 | 240,000 |
Net Change in Cash and Cash Equivalents | (12,802) | (7,266) |
Cash and Cash Equivalents at Beginning of Period | 18,307 | 35,221 |
Cash and Cash Equivalents at End of Period | $ 5,505 | $ 27,955 |
Supplemental Cash Flow Information: | ||
Cash paid for income taxes | ||
Cash paid for interest | ||
Supplemental Disclosure on Noncash Investing and Financing Activities | ||
Common stock issued for debt conversion | $ 305,073 | |
Convertible notes issued and debt discount relieved in debt extinguishment | 1,079,453 | |
Beneficial conversion feature on convertible notes payable | $ 1,149,048 |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Jun. 30, 2015 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Condensed Consolidated Interim Financial Statements The accompanying unaudited condensed consolidated financial statements include the accounts of Flexpoint Sensor Systems, Inc. and its subsidiaries (the Company). These financial statements are condensed and, therefore, do not include all disclosures normally required by accounting principles generally accepted in the United States of America. Therefore, these statements should be read in conjunction with the most recent annual consolidated financial statements of Flexpoint Sensor Systems, Inc. and subsidiaries for the year ended December 31, 2014 included in the Company's Form 10-K filed with the Securities and Exchange Commission on March 30, 2015. In particular, the Company's significant accounting principles were presented as Note 1 to the Consolidated Financial Statements in that report. In the opinion of management, all adjustments necessary for a fair presentation have been included in the accompanying condensed consolidated financial statements and consist of only normal recurring adjustments. The results of operations presented in the accompanying condensed consolidated financial statements are not necessarily indicative of the results that may be expected for the full year ending December 31, 2015. Nature of Operations The Company is located near Salt Lake City, in Draper, Utah and is a company engaged principally in designing, engineering, and manufacturing sensor technology products and equipment using Bend Sensors ® flexible potentiometer technology. The Company suffered losses of $ 924,529 496,480 267,936 247,266 22,312,123 These matters raise doubt about the Company's ability to continue as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result should the Company be unable to continue as a going concern. Cash and Cash Equivalents Cash and cash equivalents are considered to be cash and highly liquid securities with original maturities of three 5,505 18,307 Fair Value of Financial Instruments - The carrying amounts reported in the balance sheets for accounts receivable, accounts payable and accrued liabilities approximate fair value because of the immediate or short-term nature of these financial instruments. The carrying amounts reported for notes payable approximate fair value because the underlying instruments are at interest rates that approximate current market rates. Accounts Receivable Trade accounts receivable are recorded at the time product is shipped or services are provided, including any shipping and handling fees, and are shown net of the allowance for bad debts. Due to the limited amount of transactions, collectability of the trade receivables is reasonably assured; however, the Company has created an allowance for doubtful accounts to provide for any bad debts experienced. 50 will be reviewed to insure it adequately provides for uncollectible accounts. Inventories Inventories are stated at the lower of cost or market. Cost is determined by using the first in, first out (FIFO) method. Inventories consist of raw materials. Property and Equipment Property and equipment are stated at cost. Additions and major improvements are capitalized while maintenance and repairs are charged to operations. Upon trade-in, sale, or retirement of property and equipment, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is recognized. Valuation of Long-lived Assets The carrying values of the Company's long-lived assets are reviewed for impairment quarterly and whenever events or changes in circumstances indicate that they may not be recoverable. When projections indicate that the carrying value of the long-lived asset is not recoverable, the carrying value is reduced by the estimated excess of the carrying value over the projected discounted cash flows. The Company's analysis did not indicate any impairment of assets as of June 30, 2015. Intangible Assets Costs to obtain or develop patents are capitalized and amortized over the remaining life of the patents, and technology rights are amortized over their estimated useful lives. The Company currently has the rights to several patents and proprietary technology. Patents and technology are amortized from the date the Company acquires or is awarded the patent or technology rights, over their estimated useful lives, which range from 5 15 Research and Development Research and development costs are recognized as an expense during the period incurred until the conceptual formulation, design, and testing of a process is completed and the process has been determined to be commercially viable. Goodwill Goodwill represents the excess of the Company's reorganization value over the fair value of net assets of the Company upon emergence from bankruptcy. Goodwill is not amortized, but is tested for impairment annually, or when a triggering event occurs. As described in ASC 360, the Company has adopted the two step goodwill impairment analysis that includes quantitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test. A fair-value-based test is applied at the overall Company level. The test compares the estimated fair value of the Company at the date of the analysis to the carrying value of its net assets. The analysis also requires various judgments and estimates, including general and macroeconomic conditions, industry and the Company's targeted market conditions, as well as relevant entity-specific events, such as a change in the market for the Company's products and services. After considering the qualitative factors that would indicate a need for interim impairment of goodwill and applying the two-step process described in ASC 360, management has determined that the value of Company's assets is not more likely than not less than the carrying value of the Company including goodwill, and that no impairment charge needs be recognized during the reporting periods. Revenue Recognition Revenue is recognized when persuasive evidence of an arrangement exists, services have been provided or goods delivered, the price to the buyer is fixed or determinable and collectability is reasonably assured. Revenue from the sale of products is recorded at the time of shipment to the customers. Revenue from research and development engineering contracts is recognized as the services are provided and accepted by the customer. Revenue from contracts to license technology to others is deferred until all conditions under the contracts are met and then recognized as licensing royalty revenue over the remaining term of the contracts. Stock-Based Compensation Under ASC Topic 718, Stock Compensation, the Company is required to recognize the cost of employee services received in exchange for stock options and awards of equity instruments based on the grant-date fair value of such options and awards, over the period they vest. Prior to 2006, no compensation was recorded in earnings for the Company's stock-based options granted under the 2005 Stock Incentive Plan (the Plan). Under ASC 718, all share-based compensation is measured at the grant date, based on the fair value of the award, and is recognized as an expense in operations over the requisite service period. On January 1, 2006, the Company adopted the provisions of ASC 718, for its share-based compensations plans and began recognizing the unvested portion of employee compensation from stock options and awards equal to the unamortized grant-date fair value over the remaining vesting period. Furthermore, compensation costs will also be recognized for any awards issued, modified, repurchased, or canceled after January 1, 2006. Basic and Diluted Earnings Per Share Basic earnings per share is computed by dividing net income by the weighted-average number of common shares outstanding during the period. Diluted earnings per share is computed by dividing net earnings by the weighted-average number of common shares and dilutive potential common shares outstanding during the period. At June 30, 2015, there were outstanding options to purchase 2,024,000 and $ 1,080,048 These options and convertible notes amounted to 21,140,220 Concentrations and Credit Risk - The Company has a major customer who represents a significant portion of revenue, accounts receivable and notes receivable. |
STOCK OPTION PLANS
STOCK OPTION PLANS | 6 Months Ended |
Jun. 30, 2015 | |
STOCK OPTION PLANS [Abstract] | |
STOCK OPTION PLANS | NOTE 2 STOCK OPTION PLANS On August 25, 2005, the Board of Directors of the Company approved and adopted the 2005 Stock Incentive Plan (the Plan). The Plan became effective upon its adoption by the Board and will continue in effect for ten This plan was approved by the stockholders of the Company on November 22, 2005. Under the Plan, the exercise price for all options issued will not be less than the average quoted closing market price of the Company's trading common stock for the thirty period immediately preceding the grant date plus a premium of ten The maximum aggregate number of shares that may be awarded under the Plan is 2,500,000 The Company continues to utilize the Black- Sc holes option-pricing model for calculating the fair value as defined by ASC Topic 718, which is an acceptable valuation approach under ASC 718. This model requires the input of subjective assumptions, including the expected price volatility of the underlying stock. Projected data related to the expected volatility and expected life of stock options is based upon historical and other information, and notably, the Company's common stock has limited trading history. The Company uses the simplified method to calculate the expected term. Changes in these subjective assumptions can materially affect the fair value of the estimate, and therefore, the existing valuation models do not provide a precise measure of the fair value of the Co mpany's employee stock options. During the six month period ended June 30, 201 5 the Company recognized $ 0 of stock-based compensation expense, compared to $ 0 during the same period in 201 4 . There were 2,0 24,000 employee stock options outstanding at June 30, 201 5 . A summary of all employee options outstanding and exercisable under the plan as of June 30, 201 5 and changes during the six months then ended is set forth below: Options Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life (Years) Aggregate Intrinsic Value Outstanding at the beginning of period 2,024,000 $ 1.10 0.4 $ - Granted - - - - Expired - - - - Forfeited - - - - Outstanding at the end of Period 2,024,000 $ 1.10 0.15 $ - Exercisable at the end of Period 2,024,000 $ 1.10 0.15 $ - B ased upon the current options issued a s of June 30, 201 5 , there was no unrecognized compensation cost related to employee stock options that will be recognize d. |
COMMON STOCK
COMMON STOCK | 6 Months Ended |
Jun. 30, 2015 | |
COMMON STOCK [Abstract] | |
COMMON STOCK | NOTE 3 COMMON STOCK On January 12, 2015 165,000 34,605 2,800,000 0.07 11,847 On January 20, 2015 135,000 26,129 2,650,000 0.06 43,815 |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 6 Months Ended |
Jun. 30, 2015 | |
RELATED PARTY TRANSACTIONS [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 4 RELATED PARTY TRANSACTIONS The Company has a related party payable to its President, CEO and Director for reimbursement of travel and other related expenses incurred on behalf of the Company. The amount due to the President as of June 30, 2015 and December 31, 2014 is $ 4,495 712 40,000 10 15 July 31, 2015 0.20 40,000 15,767 40,000 14,100 |
NOTES RECEIVABLE
NOTES RECEIVABLE | 6 Months Ended |
Jun. 30, 2015 | |
NOTES RECEIVABLE [Abstract] | |
NOTES RECEIVABLE | NOTE 5 NOTES RECEIVABLE On April 1, 2015, the Company paid $ 51,157 Concentrations and Credit Risk 10 April 1, 2015 5 |
NOTES PAYABLE
NOTES PAYABLE | 6 Months Ended |
Jun. 30, 2015 | |
NOTES PAYABLE [Abstract] | |
NOTES PAYABLE | NOTE 6 NOTES PAYABLE Convertible Notes Payable Third Parties Prior to 2014, the Company had obtained financing by issuing multiple convertible notes payable to third parties. These notes an annual interest rate of 10 15 .07 .05 525,000 4,653 During 2014, the Company secured additional financing to cover its ongoing operations in the amount of $ 480,000 10 15 .08 .02 1,005,000 the 2014 Capital Communication Notes 210,000 75,050 139,603 123,273 During 2015, the Company secured additional financing from Capital Communications to cover its ongoing operations in the amount of $ 120,000 the 2014 Capital Communication Notes 1,125,000 the $1,125,000 Notes 120,000 Conversion of convertible Notes Payable Third Parties during 2015 On January 12, 2015 the $1,125,000 Notes 165,000 34,605 2,800,000 0.07 11,847 On January 20, 2015 the $1,125,000 Notes 135,000 26,129 2,650,000 0.06 43,815 Consolidation of convertible Notes Payable Third Parties during 2015 On March 13, 2015, the Board of Directors approved the consolidation of $ 225,000 40,714 the $1,125,000 Notes March 13, 2015 257,103 600,000 45,452 the $1,125,000 Notes March 31, 2015 631,945 the Consolidated Capital Communication Notes 10 15 March 31, 2016 168,286 The Consolidated Capital Communication Notes .05 889,048 Convertible Notes Payable Third Parties (post March consolidation) On June 18, 2015, the Board of Directors approved an Amendment to the Consolidated Capital Communication Notes 200,000 Pursuant to the Amendment, during April, May and June 2015, the Company has raised an additional $ 260,000 10 15 the Consolidated Capital Communication Notes .05 March 31, 2016 Given the aforementioned, Convertible Notes Payable principal of $ 1,029,048 761,038 337,209 27,974 57,602 Notes Payable Third Parties On April 1, 2015 51,000 10 15 51,157 |
LITIGATION
LITIGATION | 6 Months Ended |
Jun. 30, 2015 | |
LITIGATION [Abstract] | |
LITIGATION | NOTE 7 - LITIGATION R&D Products, LLC - On June 23, 2010, the Company, along with David B. Beck, the Company's Director of Engineering, filed a complaint against R&D Products, LLC, Persimmon Investments, Inc. and Jules A. deGreef, the managing member of R&D Products, LLC. The complaint alleged that all of the intellectual properties owned by R&D Products and Mr. deGreef, specifically patented applications using Bend Sensor ® technology that were filed jointly by Mr. Beck and Mr. deGreef, and later assigned solely to Mr. deGreef and R&D Products, are the property of the Company. The assignment by Mr. Beck of his rights in the patents and intellectual properties were improperly given and are the property of the Company. The Company believed that since Mr. Beck was an employee of the Company during the time that he became the primary creative force and inventor of the Bend Sensor ® applications for R&D Products and Mr. deGreef, and the inventions and applications were created using Flexpoint resources, the Company claimed that such intellectual properties, patents, etc. filed by deGreef, Persimmon and R&D belong to Flexpoint and therefore is sought financial damages and ownership of all intellectual rights, patents and inventions created by Mr. Beck for deGreef, Persimmon and R&D Products. On April 9, 2013, the parties of the above referenced litigation reached a favorable universal settlement agreement that reinforces the Company's rights to the intellectual properties and their related products, including the medical bed. In order to secure the Company had exclusive rights to all patents and intellectual properties associated with this litigation the Company advanced to Mr. deGreef $ 25,000 10 April 8, 2015. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Jun. 30, 2015 | |
COMMITMENTS AND CONTINGENCIES [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 8 - COMMITMENTS AND CONTINGENCIES On the same date as part of the settlement agreement (see Note 7- Litigation), the Company entered into an exclusive licensing agreement that granted the Company the sole and exclusive rights to all products, devices, and commercial applications of any type or nature that relate to or are derived from the patents and application for patents controlled by Mr. deGreef and his companies. As additional compensation for the settlement the Company also received a note in the amount of $ 360,000 5 At the time of this filing the Company does not have orders for products or devices, contracts for, or contracts that are currently being negotiated; or any type of existing or negotiated royalty agreement that uses the patents or technology identified in the settlement and licensing agreement. Because the source of repayment of the $ 360,000 note receivable is from future royalty income from the sales of product, devices or uses of the technology, |
NEW ACCOUNTING PRONOUNCEMENTS
NEW ACCOUNTING PRONOUNCEMENTS | 6 Months Ended |
Jun. 30, 2015 | |
NEW ACCOUNTING PRONOUNCEMENTS [Abstract] | |
NEW ACCOUNTING PRONOUNCEMENTS | NOTE 9 NEW ACCOUNTING PRONOUNCEMENTS In April 2015, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2015-03 to simplify the presentation of debt issuance costs. Also in April 2015, the FASB issued ASU 2015-05 related to customer's accounting for fees paid in a cloud computing arrangement. The Company has reviewed all other recently issued, but not yet adopted, accounting standards in order to determine their effects, if any, on its consolidated results of operation, financial position and cash flows. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 6 Months Ended |
Jun. 30, 2015 | |
SUBSEQUENT EVENTS [Abstract] | |
SUBSEQUENT EVENTS | NOTE 10 - SUBSEQUENT EVENTS On July 15, 2015 60,000 10 .05 July 15, 2016 |
SUMMARY OF SIGNIFICANT ACCOUN16
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Jun. 30, 2015 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |
Condensed Consolidated Interim Financial Statements | Condensed Consolidated Interim Financial Statements The accompanying unaudited condensed consolidated financial statements include the accounts of Flexpoint Sensor Systems, Inc. and its subsidiaries (the Company). These financial statements are condensed and, therefore, do not include all disclosures normally required by accounting principles generally accepted in the United States of America. Therefore, these statements should be read in conjunction with the most recent annual consolidated financial statements of Flexpoint Sensor Systems, Inc. and subsidiaries for the year ended December 31, 2014 included in the Company's Form 10-K filed with the Securities and Exchange Commission on March 30, 2015. In particular, the Company's significant accounting principles were presented as Note 1 to the Consolidated Financial Statements in that report. In the opinion of management, all adjustments necessary for a fair presentation have been included in the accompanying condensed consolidated financial statements and consist of only normal recurring adjustments. The results of operations presented in the accompanying condensed consolidated financial statements are not necessarily indicative of the results that may be expected for the full year ending December 31, 2015. |
Nature of Operations | Nature of Operations The Company is located near Salt Lake City, in Draper, Utah and is a company engaged principally in designing, engineering, and manufacturing sensor technology products and equipment using Bend Sensors ® flexible potentiometer technology. The Company suffered losses of $ 924,529 496,480 267,936 247,266 22,312,123 These matters raise doubt about the Company's ability to continue as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result should the Company be unable to continue as a going concern. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents are considered to be cash and highly liquid securities with original maturities of three 5,505 18,307 |
Fair Value of Financial Instruments | Fair Value of Financial Instruments - The carrying amounts reported in the balance sheets for accounts receivable, accounts payable and accrued liabilities approximate fair value because of the immediate or short-term nature of these financial instruments. The carrying amounts reported for notes payable approximate fair value because the underlying instruments are at interest rates that approximate current market rates. |
Accounts Receivable | Accounts Receivable Trade accounts receivable are recorded at the time product is shipped or services are provided, including any shipping and handling fees, and are shown net of the allowance for bad debts. Due to the limited amount of transactions, collectability of the trade receivables is reasonably assured; however, the Company has created an allowance for doubtful accounts to provide for any bad debts experienced. 50 will be reviewed to insure it adequately provides for uncollectible accounts. |
Inventories | Inventories Inventories are stated at the lower of cost or market. Cost is determined by using the first in, first out (FIFO) method. Inventories consist of raw materials. |
Property and Equipment | Property and Equipment Property and equipment are stated at cost. Additions and major improvements are capitalized while maintenance and repairs are charged to operations. Upon trade-in, sale, or retirement of property and equipment, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is recognized. |
Valuation of Long-lived Assets | Valuation of Long-lived Assets The carrying values of the Company's long-lived assets are reviewed for impairment quarterly and whenever events or changes in circumstances indicate that they may not be recoverable. When projections indicate that the carrying value of the long-lived asset is not recoverable, the carrying value is reduced by the estimated excess of the carrying value over the projected discounted cash flows. The Company's analysis did not indicate any impairment of assets as of June 30, 2015. |
Intangible Assets | Intangible Assets Costs to obtain or develop patents are capitalized and amortized over the remaining life of the patents, and technology rights are amortized over their estimated useful lives. The Company currently has the rights to several patents and proprietary technology. Patents and technology are amortized from the date the Company acquires or is awarded the patent or technology rights, over their estimated useful lives, which range from 5 15 |
Research and Development | Research and Development Research and development costs are recognized as an expense during the period incurred until the conceptual formulation, design, and testing of a process is completed and the process has been determined to be commercially viable. |
Goodwill | Goodwill Goodwill represents the excess of the Company's reorganization value over the fair value of net assets of the Company upon emergence from bankruptcy. Goodwill is not amortized, but is tested for impairment annually, or when a triggering event occurs. As described in ASC 360, the Company has adopted the two step goodwill impairment analysis that includes quantitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test. A fair-value-based test is applied at the overall Company level. The test compares the estimated fair value of the Company at the date of the analysis to the carrying value of its net assets. The analysis also requires various judgments and estimates, including general and macroeconomic conditions, industry and the Company's targeted market conditions, as well as relevant entity-specific events, such as a change in the market for the Company's products and services. After considering the qualitative factors that would indicate a need for interim impairment of goodwill and applying the two-step process described in ASC 360, management has determined that the value of Company's assets is not more likely than not less than the carrying value of the Company including goodwill, and that no impairment charge needs be recognized during the reporting periods. |
Revenue Recognition | Revenue Recognition Revenue is recognized when persuasive evidence of an arrangement exists, services have been provided or goods delivered, the price to the buyer is fixed or determinable and collectability is reasonably assured. Revenue from the sale of products is recorded at the time of shipment to the customers. Revenue from research and development engineering contracts is recognized as the services are provided and accepted by the customer. Revenue from contracts to license technology to others is deferred until all conditions under the contracts are met and then recognized as licensing royalty revenue over the remaining term of the contracts. |
Stock-Based Compensation | Stock-Based Compensation Under ASC Topic 718, Stock Compensation, the Company is required to recognize the cost of employee services received in exchange for stock options and awards of equity instruments based on the grant-date fair value of such options and awards, over the period they vest. Prior to 2006, no compensation was recorded in earnings for the Company's stock-based options granted under the 2005 Stock Incentive Plan (the Plan). Under ASC 718, all share-based compensation is measured at the grant date, based on the fair value of the award, and is recognized as an expense in operations over the requisite service period. On January 1, 2006, the Company adopted the provisions of ASC 718, for its share-based compensations plans and began recognizing the unvested portion of employee compensation from stock options and awards equal to the unamortized grant-date fair value over the remaining vesting period. Furthermore, compensation costs will also be recognized for any awards issued, modified, repurchased, or canceled after January 1, 2006. |
Basic and Diluted Earnings Per Share | Basic and Diluted Earnings Per Share Basic earnings per share is computed by dividing net income by the weighted-average number of common shares outstanding during the period. Diluted earnings per share is computed by dividing net earnings by the weighted-average number of common shares and dilutive potential common shares outstanding during the period. At June 30, 2015, there were outstanding options to purchase 2,024,000 and $ 1,080,048 These options and convertible notes amounted to 21,140,220 |
Concentrations and Credit Risk | Concentrations and Credit Risk - The Company has a major customer who represents a significant portion of revenue, accounts receivable and notes receivable. |
STOCK OPTION PLANS (Tables)
STOCK OPTION PLANS (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
STOCK OPTION PLANS [Abstract] | |
Schedule of Stock Option Activity | Options Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life (Years) Aggregate Intrinsic Value Outstanding at the beginning of period 2,024,000 $ 1.10 0.4 $ - Granted - - - - Expired - - - - Forfeited - - - - Outstanding at the end of Period 2,024,000 $ 1.10 0.15 $ - Exercisable at the end of Period 2,024,000 $ 1.10 0.15 $ - |
SUMMARY OF SIGNIFICANT ACCOUN18
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | |
Finite-Lived Intangible Assets [Line Items] | ||||||
Cash and cash equivalents | $ 5,505 | $ 27,955 | $ 5,505 | $ 27,955 | $ 18,307 | $ 35,221 |
Net loss | (445,840) | $ (251,532) | (924,529) | (496,480) | ||
Net cash used in operating activities | (267,936) | $ (247,266) | ||||
Accumulated deficit | $ (22,312,123) | $ (22,312,123) | $ (21,387,594) | |||
Common share equivalents not included in computation of diluted loss per share as their effect would have been anti-dilutive | 21,140,220 | |||||
Stock options outstanding | 2,024,000 | 2,024,000 | 2,024,000 | |||
Convertible notes principal and interest | $ 1,080,048 | $ 1,080,048 | ||||
Minimum [Member] | ||||||
Finite-Lived Intangible Assets [Line Items] | ||||||
Intangible assets, useful lives | 5 years | |||||
Maximum [Member] | ||||||
Finite-Lived Intangible Assets [Line Items] | ||||||
Intangible assets, useful lives | 15 years |
STOCK OPTION PLANS (Narrative)
STOCK OPTION PLANS (Narrative) (Details) - USD ($) | 6 Months Ended | |||
Jun. 30, 2015 | Jun. 30, 2014 | Dec. 31, 2014 | Aug. 25, 2005 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Shares authorized | 2,500,000 | |||
Stock based compensation expense | $ 0 | $ 0 | ||
Employee stock options outstanding | 2,024,000 | 2,024,000 |
STOCK OPTION PLANS (Schedule of
STOCK OPTION PLANS (Schedule of Stock Option Activity) (Details) - USD ($) None in scaling factor is -9223372036854775296 | 6 Months Ended | 12 Months Ended |
Jun. 30, 2015 | Dec. 31, 2014 | |
STOCK OPTION PLANS [Abstract] | ||
Outstanding at the beginning of period, shares | 2,024,000 | |
Granted, shares | ||
Expired, shares | ||
Forfeited, shares | ||
Outstanding at the end of Period, shares | 2,024,000 | 2,024,000 |
Exercisable at the end of the Period, shares | 2,024,000 | |
Outstanding at the beginning of period, weighted average exercise price | $ 1.10 | |
Granted, weighted average exercise price | ||
Expired, weighted average exercise price | ||
Forfeited, weighted average exercise price | ||
Outstanding at the end of Period, weighted average exercise price | $ 1.10 | $ 1.10 |
Exercisable at the end of Period, weighted average exercise price | $ 1.10 | |
SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsOutstandingWeightedAverageRemainingContractualTerm2 | 1 month 24 days | 4 months 24 days |
Granted, weighted average remaining contractual life | ||
Expired, weighted average remaining contractual life | ||
Forfeited, weighted average remaining contractual life | ||
SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsOutstandingWeightedAverageRemainingContractualTerm2 | 1 month 24 days | 4 months 24 days |
Exercisable at the end of Period, weighted average remaining contractual life | 1 month 24 days | |
Outstanding at the beginning of period, aggregate intrinsic value | ||
Granted, aggregate intrinsic value | ||
Expired, aggregate intrinsic value | ||
Forfeited, aggregate intrinsic value | ||
Outstanding at the end of Period, aggregate intrinsic value | ||
Exercisable at the end of the Period, aggregate intrinsic value |
COMMON STOCK (Details)
COMMON STOCK (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Debt Conversion [Line Items] | ||||
Gain on stock debt exchange | $ 55,661 | |||
The $1,125,000 Notes [Member] | Debt Conversion, January 12, 2015 [Member] | ||||
Debt Conversion [Line Items] | ||||
Debt conversion, date | Jan. 12, 2015 | |||
Conversion of convertible notes, amount | $ 165,000 | |||
Conversion of convertible notes, interest accrued and unpaid, amount | $ 34,605 | |||
Conversion of convertible notes, shares issued | 2,800,000 | |||
Average conversion price for converted debt instruments | $ 0.07 | |||
Gain on stock debt exchange | $ 11,847 | |||
The $1,125,000 Notes [Member] | Debt Conversion, January 20, 2015 [Member] | ||||
Debt Conversion [Line Items] | ||||
Debt conversion, date | Jan. 20, 2015 | |||
Conversion of convertible notes, amount | $ 135,000 | |||
Conversion of convertible notes, interest accrued and unpaid, amount | $ 26,129 | |||
Conversion of convertible notes, shares issued | 2,650,000 | |||
Average conversion price for converted debt instruments | $ 0.06 | |||
Gain on stock debt exchange | $ 43,815 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2015 | Dec. 31, 2014 | |
Related Party Transaction [Line Items] | ||
Related party payable | $ 4,495 | $ 712 |
President [Member] | ||
Related Party Transaction [Line Items] | ||
Related party payable | 4,495 | 712 |
A Board Member [Member] | Convertible Promissory Note 2011 [Member] | ||
Related Party Transaction [Line Items] | ||
Debt instrument, face amount | $ 40,000 | |
Debt instrument, interest rate | 10.00% | |
Debt instrument, default rate | 15.00% | |
Debt conversion, conversion price | $ 0.20 | |
Debt instrument, maturity date | Jul. 31, 2015 | |
Debt instrument, amount outstanding | $ 40,000 | 40,000 |
Interest payable | $ 15,767 | $ 14,100 |
NOTES RECEIVABLE (Details)
NOTES RECEIVABLE (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
NOTES RECEIVABLE [Abstract] | ||
Payment for note receivable | $ 51,157 | |
Interest rate | 10.00% | |
Maturity date | Apr. 1, 2015 | |
Conversion right, ownership percentage | 5.00% |
NOTES PAYABLE (Details)
NOTES PAYABLE (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | Dec. 31, 2014 | Jun. 18, 2015 | Dec. 31, 2013 | |
Debt Instrument [Line Items] | |||||||
Loss on extinguishment of debt | $ 168,286 | ||||||
Amortization expense | 337,209 | $ 15,209 | |||||
Discount balance | $ 761,037 | 761,037 | $ 139,603 | ||||
Proceeds from borrowings under convertible note payable | 260,000 | $ 240,000 | |||||
Gain on stock debt exchange | 55,661 | ||||||
Convertible Notes Payable, Third Parties [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Debt instrument, interest rate | 10.00% | ||||||
Debt instrument, default rate | 15.00% | ||||||
Convertible notes payable, balance | $ 525,000 | ||||||
Discount balance | $ 4,653 | ||||||
Convertible Notes Payable, Third Parties [Member] | Maximum [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Debt instrument, conversion price | $ 0.07 | ||||||
Convertible Notes Payable, Third Parties [Member] | Minimum [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Debt instrument, conversion price | $ 0.05 | ||||||
The 2014 Capital Communication Notes [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Debt instrument, interest rate | 10.00% | ||||||
Debt instrument, default rate | 15.00% | ||||||
Convertible notes payable, balance | $ 1,005,000 | ||||||
Beneficial conversion feature | 210,000 | ||||||
Amortization expense | 75,050 | ||||||
Discount balance | 139,603 | ||||||
Accrued interest | 123,273 | ||||||
Proceeds from borrowings under convertible note payable | $ 480,000 | ||||||
The 2014 Capital Communication Notes [Member] | Maximum [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Debt instrument, conversion price | $ 0.08 | ||||||
The 2014 Capital Communication Notes [Member] | Minimum [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Debt instrument, conversion price | $ 0.02 | ||||||
The $1,125,000 Notes [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Convertible notes payable, balance | $ 1,125,000 | 1,125,000 | |||||
Beneficial conversion feature | 120,000 | ||||||
Proceeds from borrowings under convertible note payable | $ 120,000 | ||||||
The $1,125,000 Notes [Member] | Debt Conversion, January 12, 2015 [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Conversion of convertible notes, date | Jan. 12, 2015 | ||||||
Conversion of convertible notes, amount | $ 165,000 | ||||||
Conversion of convertible notes, interest accrued and unpaid, amount | $ 34,605 | ||||||
Conversion of convertible notes, shares issued | 2,800,000 | ||||||
Average conversion price for converted debt instruments | $ 0.07 | ||||||
Gain on stock debt exchange | $ 11,847 | ||||||
The $1,125,000 Notes [Member] | Debt Conversion, January 20, 2015 [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Conversion of convertible notes, date | Jan. 20, 2015 | ||||||
Conversion of convertible notes, amount | $ 135,000 | ||||||
Conversion of convertible notes, interest accrued and unpaid, amount | $ 26,129 | ||||||
Conversion of convertible notes, shares issued | 2,650,000 | ||||||
Average conversion price for converted debt instruments | $ 0.06 | ||||||
Gain on stock debt exchange | $ 43,815 | ||||||
The $1,125,000 Notes [Member] | Consolidation Of Convertible Notes Transaction One [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Conversion of convertible notes, date | Mar. 13, 2015 | ||||||
Conversion of convertible notes, amount | $ 225,000 | ||||||
Conversion of convertible notes, interest accrued and unpaid, amount | 40,714 | ||||||
Conversion of convertible notes, converted instrument amount | $ 257,103 | ||||||
The $1,125,000 Notes [Member] | Consolidation Of Convertible Notes Transaction Two [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Conversion of convertible notes, date | Mar. 31, 2015 | ||||||
Conversion of convertible notes, amount | $ 600,000 | ||||||
Conversion of convertible notes, interest accrued and unpaid, amount | 45,452 | ||||||
Conversion of convertible notes, converted instrument amount | $ 631,945 | ||||||
The Consolidated Capital Communication Notes [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Debt instrument, conversion price | $ 0.05 | $ 0.05 | |||||
Debt instrument, interest rate | 10.00% | 10.00% | |||||
Debt instrument, default rate | 15.00% | 15.00% | |||||
Conversion of convertible notes, new note maturity date | Mar. 31, 2016 | ||||||
Loss on extinguishment of debt | $ 168,286 | ||||||
Beneficial conversion feature | 889,048 | ||||||
Amendment to the Consolidated Capital Communication Notes, agreement amount | $ 200,000 | ||||||
Amendment to the Consolidated Capital Communication Notes (post March Consolidation) [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Debt instrument, face amount | $ 260,000 | $ 260,000 | |||||
Debt instrument, conversion price | $ 0.05 | $ 0.05 | |||||
Debt instrument, maturity date | Mar. 31, 2016 | ||||||
Debt instrument, interest rate | 10.00% | 10.00% | |||||
Debt instrument, default rate | 15.00% | 15.00% | |||||
Notes Payable Third Parties [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Debt instrument, face amount | $ 51,000 | $ 51,000 | |||||
Debt instrument, issuance date | Apr. 1, 2015 | ||||||
Debt instrument, interest rate | 10.00% | 10.00% | |||||
Debt instrument, default rate | 15.00% | 15.00% | |||||
Debt instrument, collateral amount | $ 51,157 | $ 51,157 | |||||
Convertible Notes Payable [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Debt instrument, face amount | 1,029,048 | 1,029,048 | |||||
Beneficial conversion feature | 761,038 | ||||||
Amortization expense | 337,209 | ||||||
Accrued interest | $ 27,974 | 27,974 | |||||
Interest expense | $ 57,602 |
LITIGATION (Details)
LITIGATION (Details) - Apr. 09, 2013 - Settled Litigation [Member] - R&D Products, LLC [Member] - Notes Receivable One [Member] - USD ($) | Total |
Legal Settlement [Line Items] | |
Notes receivable | $ 25,000 |
Interest rate | 10.00% |
Maturity date | Apr. 8, 2015 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) - Apr. 09, 2013 - Settled Litigation [Member] - R&D Products, LLC [Member] - Notes Receivable Two [Member] - USD ($) | Total |
Legal Settlement [Line Items] | |
Notes receivable | $ 360,000 |
Interest rate | 5.00% |
Maturity date | Apr. 8, 2018 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - Jul. 15, 2015 - Subsequent Event [Member] - Convertible Notes Payable [Member] - USD ($) | Total |
Subsequent Event [Line Items] | |
Debt instrument, face amount | $ 60,000 |
Debt instrument, interest rate | 10.00% |
Debt instrument, conversion price | $ 0.05 |
Debt instrument, issuance date | Jul. 15, 2015 |
Debt instrument, maturity date | Jul. 15, 2016 |